Dispute Resolution (P2P)

The P2P model’s dispute resolution system operates on a fundamentally different principle than traditional e-commerce: instead of relying on third-party arbitrators, it uses economic incentives and mutual collateral to encourage fair resolution between the parties themselves.

Fund Freezing Mechanism

Immediate Response to Disputes

Automatic Trigger:

Either buyer or seller can report an order at any time
Smart contract immediately freezes all escrowed funds
No human intervention required for fund locking
Irreversible process until mutual agreement is reached

What Gets Frozen:

Product payment (meant for seller)
Buyer’s collateral deposit
Seller’s collateral deposit
Any accumulated interest or rewards

Smart Contract State:

Status: REPORTED
Buyer funds: LOCKED
Seller funds: LOCKED
Release mechanism: MUTUAL_AGREEMENT_ONLY
Auto-release: DISABLED

Technical Implementation

Blockchain Security:

Funds are cryptographically locked in smart contract
No single party (including Ruxaby platform) can unilaterally release funds
Requires explicit approval signatures from both buyer and seller
All actions are recorded immutably on-chain

Protection Against Gaming:

Cannot report dispute multiple times to reset negotiations
Both parties’ funds remain equally at risk
No time-based automatic releases once disputed
Platform cannot override mutual agreement requirement

Incentive Design Philosophy

Economic Alignment

Shared Financial Risk: Both parties lose access to their deposits until they reach agreement:

Buyer loses: Opportunity cost of locked funds + potential product loss
Seller loses: Opportunity cost of locked funds + time investment
Mutual pressure: Both parties motivated to resolve quickly and fairly

Anti-Fraud Incentives:

Scammer’s dilemma: Fraudulent party cannot access their deposit without victim’s agreement
Victim’s leverage: Legitimate party can demand fair resolution knowing scammer’s funds are also locked
Reputation cost: Unresolved disputes damage both parties’ platform standing

Game Theory Application

Nash Equilibrium: The optimal strategy for both parties is honest dealing and fair resolution:

Refusing reasonable settlements hurts both parties equally
Extreme demands lead to indefinite fund locking
Cooperation produces better outcomes than conflict

Prisoner’s Dilemma Resolution: Traditional e-commerce creates a prisoner’s dilemma where fraud can be profitable. P2P model changes the payoff matrix:

Mutual cooperation: Both parties win (get deposits back)
Mutual defection: Both parties lose (funds locked forever)
Unilateral defection: Defector gains nothing but blocks everyone

Resolution Process Steps

1. Dispute Initiation

Who Can Report:

Buyer: Product not received, not as described, or defective
Seller: Buyer harassment, false claims, or payment issues

Initial Actions:

Reporting party submits dispute reason and evidence
Platform notifies other party of dispute
Smart contract locks all funds automatically
Negotiation period begins immediately

Required Information:

Specific description of the issue
Supporting evidence (photos, communications, etc.)
Proposed resolution or desired outcome
Timeline of events leading to dispute

2. Evidence Presentation

Both Parties Submit:

Factual evidence: Photos, screenshots, communications
Supporting documentation: Receipts, shipping info, product specs
Proposed solutions: Preferred resolution terms
Negotiation parameters: Minimum acceptable outcomes

Platform’s Role:

Facilitate evidence sharing between parties
Provide secure communication channel
Offer dispute resolution templates
Track negotiation progress (but not participate in decisions)

3. Direct Negotiation

Communication Channels:

Secure platform messaging system
Evidence sharing interface
Resolution proposal system
Real-time negotiation tools

Common Initial Positions:

Buyer: “Product was defective, I want full refund”
Seller: “Product was fine, buyer is trying to scam”
Reality: Usually somewhere in between

Negotiation Dynamics:

Both parties initially stake out strong positions
Economic pressure builds over time as funds remain locked
Gradual movement toward compromise as costs accumulate
Platform provides resolution suggestion templates

4. Finding Middle Ground

Typical Compromise Patterns:

Partial Refunds (Most Common):

70% refund for minor defects
50% refund for subjective quality issues
30% refund for late delivery or minor damage
Custom percentages based on specific circumstances

Alternative Resolutions:

Replacement product shipment
Store credit for future purchases
Partial refund plus seller keeps some payment
Buyer keeps product at discounted price

Creative Solutions:

Split shipping costs for returns
Seller provides additional products as compensation
Graduated refund based on product condition upon return
Future discount codes or service upgrades

5. Mutual Agreement Execution

Agreement Requirements:

Both parties must explicitly accept identical terms
Smart contract verifies matching agreement signatures
Funds distributed according to agreed terms
Dispute marked as resolved on-chain

Technical Process:

1. Buyer signs resolution terms
2. Seller signs identical resolution terms
3. Smart contract verifies signature match
4. Automated fund distribution executes
5. Deposits returned to respective parties
6. Order marked as resolved

Advanced Resolution Scenarios

Indefinite Lock Situations

When It Happens:

Parties have irreconcilable differences
One party becomes unresponsive
Unreasonable demands from either side
Fundamental disagreement about facts

Economic Consequences:

All funds remain locked indefinitely
Opportunity cost grows over time
Neither party can access their deposits
Maximum pressure for eventual resolution

Resolution Pressure Points:

Time value of money incentivizes quick resolution
Reputation damage from unresolved disputes
Inability to conduct other transactions with locked funds
Platform may limit services for users with chronic unresolved disputes

Unresponsive Party Handling

Challenge: What if one party simply disappears?

Platform Solutions:

Escalating notification attempts
Contact through multiple channels (email, platform messages)
Account restrictions for non-responsive users
Community reputation impacts

Economic Reality:

Unresponsive party also loses their deposit
Responsive party must weigh cost of indefinite lock vs. compromise
Often leads to eventual resolution when absent party returns

Bad Faith Actors

Identifying Bad Faith:

Unreasonable demands despite clear evidence
Refusal to engage in good faith negotiation
Pattern of similar disputes across multiple transactions
Demands that would result in profit from dispute

Platform Response:

Account reputation scoring
Dispute pattern analysis
Community feedback systems
Potential account restrictions for serial bad actors

Market Solutions:

Reputation systems help users avoid problematic traders
Deposit requirements can be adjusted based on user history
Community-driven feedback reduces bad actor success

Best Practices for Successful Resolution

For Both Parties

Effective Communication:

Stay factual and avoid emotional language
Provide clear evidence to support claims
Be specific about desired outcomes
Respond promptly to negotiation attempts

Realistic Expectations:

Perfect outcomes are rare in disputes
Compromise is usually necessary for resolution
Consider the time value of locked funds
Focus on fair rather than maximum outcomes

Documentation:

Keep records of all communications
Screenshot evidence before it can be altered
Maintain timeline of events
Save all transaction-related documents

For Buyers

Before Escalating:

Contact seller directly first
Give reasonable time for seller response
Clearly explain the specific issue
Propose reasonable solution initially

During Negotiation:

Be specific about defects or issues
Provide photographic evidence
Consider partial solutions
Remember seller also has funds at stake

For Sellers

Dispute Prevention:

Accurate product descriptions
Clear communication about condition/quality
Prompt shipping and tracking updates
Responsive customer service

During Resolution:

Acknowledge legitimate concerns
Provide evidence of proper fulfillment
Consider reputation cost vs. financial cost
Be willing to make reasonable concessions

Platform Evolution and Learning

Data-Driven Improvements

Metrics Tracking:

Average resolution time by dispute type
Success rate of different resolution approaches
User satisfaction with P2P vs. Trustful outcomes
Economic impact of indefinite locks

System Refinements:

Improved negotiation interfaces
Better evidence presentation tools
Enhanced communication features
Automated suggestion systems

Community Feedback Integration

User Education:

Case study examples of successful resolutions
Best practice guides based on real outcomes
Dispute prevention resources
Negotiation strategy recommendations

Policy Evolution:

Deposit amount guidelines based on outcome data
Product category risk assessments
User reputation integration improvements
Enhanced dispute prevention tools

The P2P dispute resolution system represents a paradigm shift from traditional arbitrated e-commerce to truly peer-to-peer resolution. While it requires more maturity and good faith from users, it provides unprecedented fairness and eliminates the bias inherent in third-party arbitration systems. Success depends on both parties recognizing their shared economic interests in reaching fair, mutually acceptable solutions.