Market arbitrators, who work in the marketing and data division of the Australian Competition and Consumer Commission, are used to taking a cut of sales and advertising fees and collecting a small fee when you sell something online.
But with the rise of online shopping platforms like Amazon and Apple, the market arbitrators’ jobs have been transformed by the rise in the number of online shoppers and the popularity of online services like Amazon Prime.
Market arbiters can award consumers and businesses the right to sell on their websites, and the market will pay them a commission of about one per cent of sales.
But what happens when a market participant’s customer is not a consumer?
Market arbitrator Craig Fergusson, who has worked with some of the largest retailers including Gap, has been the subject of a complaint from a consumer who alleges the arbitrator made unfair or deceptive practices.
The consumer says the arbitrators compensation for a customer is about three times what it would be if the customer were a consumer, and he believes the arbitrating body was unfair to him.
“The arbitrator did not give me fair value,” he said.
“What they were trying to do was take a commission, a commission which is just not fair.”
The consumer is a business and is represented by the business group Market Fairness Australia.
The arbitrators settlement Mr Ferguson says the arbitration was conducted in good faith.
He says he was never charged a commission and was not given a cut when he sold a product to a customer.
He says the consumer’s claim of unfair practice is also based on the Consumer Price Index, which excludes a range of items from the cost of living index.
What’s the problem?
The consumer’s claims are based on two different Consumer Price Indices, and a consumer is not entitled to equal compensation when they purchase goods and services in a way that is consistent with a standard of living based on a person’s ability to live.
The Consumer Price index measures inflation, the cost to consumers of living.
The Arbitration Act requires a dispute to be resolved by an arbitrator who has agreed to “the equitable distribution of the costs of dispute, including costs of litigation”.
But consumer groups say there is no such requirement for the arbitral system.
How to resolve a market arbitration dispute Consumer groups have raised concerns about how the arbitration system operates, and have called for changes.
Market Fairness’s Craig Faggusson says arbitrators should be allowed to award a proportion of compensation to consumers based on what they are selling and not based on whether they are a consumer or a business.
Mr Fagguson said the consumer had not been awarded fair value, and that arbitrators had been given a proportionally unfair amount of compensation for selling a product on Amazon.
Consumer groups have also criticised the arbiters compensation, saying it was “not reasonable”.
“It is unfair to an arbitral award for a consumer to be awarded compensation for buying a product and then being told they cannot sell it because it is not comparable with the product they bought,” Mr Faggs said.
It’s a different story when the arbitration is based on an internet service provider’s website.
The arbitrators decision is not binding on the service provider, but is binding on consumers who choose to use the service.
And while the arbitors award is based only on a product or service, the arbitrations decision can apply to a range for consumers.
‘It’s unfair to consumers’ What are the consumer rights?
Mr Naughton says there are several consumer rights that are not covered by the arbitration, including the right for a court to make an order, but not an injunction.
A consumer has the right not to pay the arbitrater a commission or to be excluded from a commission award.
The Australian Consumer Law says consumers can refuse to pay an arbitrator, which can be a big financial burden.
However, Mr Naughtons claim that a consumer’s choice is not affected by an arbitration, and it is also not an issue in a dispute between two parties.
If you want to resolve your dispute with the Arbitration Tribunal, you can call them on 1300 966 523.
Read more about arbitration here.