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Private Dispute Resolution in the Card Context: Structure, Reputation, and Incentives

96 Pages Posted: 3 Jun 2005  

Andrew P. Morriss

Texas A&M School of Law; PERC - Property and Environment Research Center; George Mason University - Mercatus Center

Jason A. Korosec

Case Western Reserve University School of Law; MasterCard Advisors; Texas A&M University, School of Law

Date Written: June 2005

Abstract

Explosive growth in credit, debit, and other card payment systems in recent years has produced a parallel growth in private dispute resolution systems based on the web of contracts entered into by merchants, merchant acquirers, consumers, card issuers, card associations, and transaction processors. These contracts have produced a legal system based on contract and whose enforcement rests primarily on reputational constraints. To cost-effectively resolve disputes, these private legal systems have evolved innovative procedures, including incentive-payments for producing information, rigid deadlines for parties' actions, and the use of the lowest-possible level resources to resolve disputes. This paper describes and analyzes these legal systems and their procedures as a potential model for resolving other categories of disputes.

Keywords: Private Dispute Resolution, Private Legal Systems, Credit Cards, Debit Cards, High Cost, Lack of Speed, Due Process, Fairness, Payment System, Value Transfer Network, Chargebacks, Retrievals

JEL Classification: K10, K12, K29, K41

Suggested Citation

Morriss, Andrew P. and Korosec, Jason A., Private Dispute Resolution in the Card Context: Structure, Reputation, and Incentives (June 2005). Case Legal Studies Research Paper No. 05-12. Available at SSRN: https://ssrn.com/abstract=735283 or http://dx.doi.org/10.2139/ssrn.735283

Andrew P. Morriss (Contact Author)

Texas A&M School of Law ( email )

1515 Commerce Street
Fort Worth, TX 76133
United States

PERC - Property and Environment Research Center ( email )

2048 Analysis Drive
Suite A
Bozeman, MT 59718
United States

George Mason University - Mercatus Center ( email )

3434 Washington Blvd., 4th Floor
Arlington, VA 22201
United States

Jason A. Korosec

Case Western Reserve University School of Law ( email )

11075 East Boulevard
Cleveland, OH 44106-7148
United States
+1 (440) 729.5601 (Phone)

HOME PAGE: http://law.case.edu

MasterCard Advisors ( email )

2000 Purchase Street
Purchase, NY 10577
United States
+1 (914) 249-5601 (Phone)

HOME PAGE: http://www.mastercardadvisors.com/experts/jason-korosec.html

Texas A&M University, School of Law

1515 Commerce St.
Fort Worth, TX 76102
United States

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