Kleros Enterprise: Dispute Resolution for Companies and Governments

Kleros Enterprise: Dispute Resolution for Companies and Governments

Implement Kleros’ “justice as a service” in your institution easily, without the complexities of dealing directly with cryptocurrency.

In recent years, there has been significant growth in digital companies across finance, e-commerce, insurance, travel, and more.

Since the pandemic began, there's been a 54% increase in adults shopping online. In the second quarter of 2023, MercadoLibre, a leading online marketplace in Latin America, averaged 41 sales per second.

It is estimated that approximately 3 to 5% of online transactions result in disputes, and around 25% of users create at least one dispute per year.

Consumer disputes not only cause legal costs for companies but also lead to customer churn and revenue loss. A study by Lemon Cash, one of the main cryptocurrency exchanges in Argentina with over 2 million users, indicates that 80% of its users would prefer to stop using the app rather than initiate a small claim against the company.

At a societal level, an exponentially growing number of consumer claims, paired with slow growth in the capacity of small claims courts, creates a concerning justice gap.

The growing justice gap in the online economy.

Kleros' vision is to help reduce the justice gap by providing an efficient and fair dispute resolution service for many disputes in the new economy.

However, there's a catch...

Kleros is relatively straightforward to implement for on-chain dispute resolution in Web3 protocols. Yet, implementing it in enterprise or institutional segments can be challenging. Due to organizational or regulatory reasons, mainstream companies and governments often encounter significant friction when interacting with cryptocurrencies.

How can Kleros meet the needs of these companies and institutions? How can they utilize the Kleros protocol for efficient and fair dispute resolution without direct interaction with the blockchain?

This is precisely the problem that Kleros Enterprise aims to solve.

"Layer 2 for Dapps: When Decentralized Protocols Meet the Real World", a talk by Federico Ast at the Ethereum France 2020 conference, explaining some early ideas that led to Kleros Enterprise.

Kleros Enterprise: Dispute Resolution for Companies and Governments

Kleros Enterprise is a new unit within the Kleros Cooperative which helps mainstream organizations interact with the Kleros Protocol. Through this service, companies and governments can submit disputes to Kleros and, in return, receive decisions from the jurors participating in the Kleros network.

Kleros Enterprise handles all the complexities of interacting with the Kleros protocol, making the process seamless from the perspective of the partner. From the point of view of the partner, it basically operates just like traditional business process outsourcing.

The integration process is remarkably simple. Disputes are uploaded to the platform by the Kleros team, eliminating the need for any technical involvement from the partner.

Kleros and Lemon: Resolving Disputes in Fintech

The first working pilot of the Kleros Enteprise service was implemented in cryptocurrency exchange Lemon to resolve claims between the company and users.

Here's a brief explanation of how it functions:

1. A user submits a claim to the company's customer service department.

2. The customer service department rejects the claim.

3. The user expresses dissatisfaction with the decision received.

4. The company suggests escalating the case to Kleros, engaging in a fair and impartial arbitration process with a neutral third party.

5. The company commits to respecting Kleros' decision as binding. If the user remains dissatisfied with the arbitration outcome, they retain the right to pursue the claim in Small Claims Court.

According to another survey conducted by Lemon Cash among users who underwent the process, even in cases where Kleros ruled against the user, the company achieved a 90% retention rate.

The Kleros dispute resolution process in an enterprise setting.

A talk by Federico Ast in the Telefónica Legal Tech Forum México 2024 explaining the use of Kleros for consumer dispute resolution. In Spanish but with English subtitles.

Why Kleros Enterprise?

Kleros Enterprise offers significant advantages over other alternative dispute resolution methods.

Firstly, the resolution timeframe is notably short. Disputes can be resolved in just a few days, compared to consumer claims that may take up to 30 days at best.

Secondly, disputes can typically be resolved at a very low cost, often just a few dozen dollars per case. This cost is likely to decrease in the future as case volume increases. This is particularly significant when considering that traditional justice processes often incur costs ranging from hundreds to thousands of dollars.

Thirdly, there is the perception of justice for the user. Impartial jurors drawn from among peers, along with multiple justifications provided by the jurors, are fundamental aspects that leave users more satisfied.

Cryptocurrency exchanges, digital banks, marketplaces, insurers, and even governments have already expressed interest in incorporating Kleros for resolving their users' or citizens' disputes.

Integrations of this nature can contribute to a fairer world leading to higher user retention rates for companies and happier citizens, as well as an increased caseload for Kleros' jurors.

As more companies and institutions adopt our platform, momentum will build. No entity will want to be left behind – neither users nor businesses.

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