Modria Launches Dispute Resolution Tool to Scale Former eBay and PayPal Tech

What happens when a customer orders something online and realizes it’s the wrong size, didn’t come at all, or doesn’t look like what the pictures showed online? Online dispute resolution happens in 1-3 percent of online purchases according to Colin Rule, founder and CEO of Modria. However, the majority of them end up being misunderstandings that can be quickly resolved without the need for human interaction. To help resolve issues automatically, the company has officially launched its Fairness Engine, a new platform that aims to help companies save both time and money, while also avoiding negative feedback from customers.

The startup spun out of the offices of eBay and PayPal, where Rule was the first ever Director of Online Dispute Resolution and his team built out a technology that today solves over 60 million cases a year. After recognizing the potential for the technology, Rule licensed it from eBay and started Modria in April 2011.

“It was very clear that the tools we were building inside eBay and PayPal would be more widely useful across the internet and for other kinds of disputes as well,” said Rule in an interview with BetaKit. “Our goal really is to build a resolution system that can work for the broader internet. At eBay and PayPal we had to build our resolution system because the courts wouldn’t work for the kind of disputes we had and we realized there were lots and lots of websites and also offline companies…they have lots of cases that the tools we built at eBay and PayPal would be useful for.”

The name Modria stands for Modular Online Dispute Resolution and offers a variety of software and modules which can be integrated into an enterprise’s backend system with features that can help them diagnose problems and provide direct negotiation support with a customer. By automating the process, the company believes it can prevent any frustration from building up on the consumer’s end. However, in the event where human intervention is required, companies can directly reach out to the customer, and if even that doesn’t work, the company also provides both mediation and arbitration services.

“What we’ve done over the last year and a half is expand that platform and apply it to certain channels…and now we’re opening up the fairness engine so that anyone can come and use that platform on their website or even for individual disputes,” Rule added. “Consumers are encountering problems on the internet all the time. If you rent a room on Airbnb, or you get a job on eLance, or rent a car on RelayRides, get somebody to run an errand for you on TaskRabbit. Misunderstandings can turn into more complicated disputes if they’re not addressed early.”

The SaaS startup plans on charging a volume-based monthly subscription for its Fairness Engine technology and then on a per-case basis depending on complexity for its third-party mediation and arbitration services if organizations do choose to go past only purchasing the technology. However the cases requiring further involvement would make up for a very small percentage of cases, since Rule noted that most disputes are usually handled primarily based on company policies and so are quickly resolved.

Rule also mentioned that states like San Francisco are increasingly slashing their civil dispute budgets and leaning towards increasingly privatizing the arena, something he believes his company’s technology is well suited for. Other startups looking to enter the space include eQuibbly and ZipCourt among others, but Modria’s advantage is the fact that the technology has been used to handle almost 400 million cases since launching in the labs of eBay and PayPal.

The company is currently in talks with multiple government agencies and enterprises to provide their software for consumer protection cases in addition to property and insurance disputes. With the launch today, the company is out to convince organizations of all sizes why the new era of online commerce necessitates a new set of tools to deal with the disputes that may emerge. Whether companies feel they need an extra layer of dispute resolution on top of their existing support tools will likely depend on the type of business, and the level to which companies want to automate their support.


Humayun Khan

Humayun Khan is a Senior Writer and Analyst at BetaKit. A marketing graduate with honors, Humayun's work experience spans the fields of consumer behaviour with noted contributions in an academic paper published in the Journal of Consumer Psychology and market research consulting having coordinated projects for a major financial services client at Decode Inc. More recently he was involved in business strategy as a Business Analyst for an equipment rental outlet and prior in the National Marketing Department at Ernst & Young LLP. He is passionate about emerging and disrupting technology and its ability to transform and create entirely new industries.

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