Consumer trust in the digital economy: The case for online dispute resolution


UNCTAD Research Paper No. 72

As e-commerce expansion surges, consumer trust remains fragile. This mismatch, greatly fuelled by the COVID-19 pandemic, reveals disparities between the rapid pace with which consumer activities are being migrated online and inadequate consumer protection.

Dispute resolution mechanism has been proposed by consumer experts as an essential tool that helps to foster trust. The notion of trust is unpacked to theorize why it matters in business transaction, and how a third-party can serve as an institutional mechanism to help transacting parties overcome distrust and settle dispute.

To examine how the theories work in practice, selected studies are reviewed to determine whether the presence of consumer dispute resolution promotes trust and whether its absence leads to business costs. This includes in-house business online dispute resolution such as customer support and third-party e-payment systems. The findings confirm that effective online dispute resolution processes can increase trust along with consumer loyalty and repurchasing intentions, as well as prevent customer churn and dissatisfaction.

The trust-enabling benefits of online dispute resolution are yet to be fully realized, especially for cross-border business-to-consumer e-commerce. Wider awareness and implementation are needed, but these global challenges require timely collaborations by the international community.

Consumer trust in the digital economy: The case for online dispute resolution - UNCTAD Research Paper No. 72  (UNCTAD/SER.RP/2021/15)
08 Nov 2021