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Jurisdiction for consumer disputes

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An important question in relation to consumer disputes with online vendors is: What is the appropriate jurisdiction for the resolution of those disputes?

U.S. courts generally allow consumers to sue businesses in the consumers’ home forum, as long as it is fair and reasonable to do so. They also generally apply the consumers’ home country law, based on the application of several factors. European law gives, if a number of requirements are met, consumers the right to sue businesses in the consumer’s home country and for the consumer protection laws of the consumer’s home country or key aspects of those laws to be applied in determining the dispute.

Generally, consumer groups favor a “country of destination” approach, under which consumers can rely on their home country protections and sue in their home country courts. They argue that this is the only way to ensure adequate consumer protection. Some industry groups favor a “country of origin” approach, under which companies would be subject only to the laws and courts of their home country. They argue that this approach is needed to encourage the growth of electronic commerce, as the “country of destination” approach would be too costly for businesses.

The U.S. government has been involved in discussions on these issues and has been promoting alternative dispute resolution as a method of providing practical and cost-effective dispute resolution for e-commerce transactions.

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