The ODR System has an initial detailed intake and registration stage that includes screening questions that automatically disqualify cases based on the parties’ assessment of their ability to proceed online. This initial stage comprises two short mandatory animated educational videos explaining small claims cases and ODR. If a case is determined eligible for ODR, the parties participate in no more than three rounds of blind bidding. Claimants have up to three opportunities to enter the dollar amount they would like to be paid and a lower amount they would be willing to accept. Defendants also have up to three options to submit the amount they would like to pay and the higher amount they would be willing to pay. If a Claimant’s and a Defendant’s bids overlap, the ODR system divides the overlap and reveals the settlement amount. Once the settlement amount is determined, the parties engage in a structured negotiation process to establish payment terms. The defendant can propose the payment method (check, credit card, or payment app), the number of payments, the first payment date, and the frequency of those payments. The defendant can also propose the consequences if the defendant fails to make the scheduled payments. The Claimant will enter an Affidavit Upon Default with the Civil Court for the default option the defendant selects. Those options are judgment in the total amount initially sued for without further notice to the defendant, less any payments made, together with interest and disbursements; decision in the settlement amount without details, less any payments made, together with interest and disbursements; or place the case on the calendar for trial. If the Claimant agrees to the defendant’s proposed terms, the ODR System auto-populates a settlement agreement that the parties can review and sign. If the Claimant does not agree to one or more proposed terms, the Claimant can make a counterproposal. If the Claimant wants to communicate directly with the defendant, the parties can use a Conversation tab to exchange text-based proposals. If the parties still cannot agree on the terms, then either party can request a mediator. If a party believes mediation would not be productive, that party can request a return to the court system to wait for a hearing date. If the parties agree to all the terms, but a party subsequently reconsiders and refuses to sign the auto-populated Stipulation of Settlement, then either party can request mediation. Whenever mediation is asked for, both parties are required to consent expressly. Hyperlinks are offered to resources that provide information regarding legal services’ availability and explain what happens during mediation.

It is fair to say that Credit card debt collection practices have a troubling history. In most cases, consumers targeted by those practices either have default judgments entered against them or sign settlement agreements that may be very difficult to satisfy. Although legal service providers offer valuable assistance, they do not have the resources or personnel to assist each of the thousands of consumers being sued by credit card debt collectors.

The New York pilot project, rather than experimenting with ODR to determine whether it could improve access to justice for unrepresented litigants in relatively straightforward cases, the New York court system decided that its ODR system should focus exclusively on credit card debt collection cases. I learned at my first meeting in October 2016 that credit card debt collection was going to be the case type for the ODR system. I expressed concern that the subject matter was too regulated, complicated, and inappropriate for a pilot ODR project. The New York staff explained that consumer debt was chosen because of the significant numbers of unrepresented litigants in these case types who do not have access to legal representation. The New York court system was not mistaken in recognising that the credit card debt collection process in New York is deeply flawed. When debt holders sue consumers, counsel represents only four per cent of consumer defendants. Consumer defendants frequently do not file answers in debt collection lawsuits for various reasons. Although New York recognises that there is a problem with some process servers who never actually serve defendants (“sewer service”) and does have a two-step process wherein the Court mails out a second notice to the defendant, individuals still may not receive that second notice or may not have the time or resources to leave their employment or home and travel for a court hearing. Debt collectors regularly obtain default judgments, allowing debt holders to attach wages, seize property, and seriously damage consumers’ credit histories.

Essentially, we set up an expert system stage where consumers can work through or try to educate them a little bit – we have videos talking about what small claims does. It is pertinent to point out that the ODR pilot project would determine whether default rates could be reduced and consumers’ access to justice could be increased via an online dispute resolution system. Clearly, this is an admirable goal, but it created substantial regulatory compliance challenges and unanticipated resistance. Because credit card debt collection is so heavily regulated, I suggested that New York focus on small claims cases at that first meeting in October 2016. But the court system wanted to address the real consumer debtor access to justice problem.

One obvious obstacle was funding and educating everyone involved, such as people who do not like technology.