Building a Global ODR System:Lessons from eBay and PayPal

Colin RuleDirector of Online Dispute Resolution, PayPal

UNCITRAL ODR MeetingVienna March 29, 2010

Why Do eCommerce Companies Invest in ODR?

All markets must provide redress• Without it, users lose trust• Trust is essential to online marketplaces• Redress is just one element of trust building

Offline, redress is usually judicial• Courts provide civil and criminal options• Law enforcement guarantees outcomes

Online, markets must provide it themselves• Geographies are irrelevant• Enforcement must reside in the code

eBay’s ecosystem is big

More than 240 million users

More than 4 billion feedbacks left

More than 60m disputesfiled per year

If eBay users were counted as citizens, eBay would be the 5th largest country in the world

How does eBay provide redess?

eBay is not a seller

eBay has no product,other than a website

eBay and PayPalhave created a global economic democracy

eBay’s job is to ensure that the marketplace continues to run smoothly – as such, eBay is a third party convenor

B S

B S

The eBay/PayPal Platform

Types of Low Value, Cross-Border Commercial Disputes

BusinessConsumer

CS Agent

C2CConsumer to Consumer

Consumer B2CBusiness to Consumer

ConsumerBusiness

B2BBusiness to Business

Business

B2CCustomer Support

to Consumer

Consumer

What Lessons Have We Learned?

• Buyer Lessons

• Seller Lessons

• Enforcement

• Platform

Buyer Lessons

• For buyers, it’s all about trust and predictability• Keep the process simple• Make it easy to find• Lots of support and ways to access it

(phone, email, live chat, contextual help)• Clear status meters• Buyers need education and expectation setting• Resolutions must be quick• Keep attentive for buyer fraud• Protection programs are important• Buyers are more likely to leave forever

Seller Lessons

• Good sellers want to work issues out• Let sellers play the lead with their customers• The majority of issues are misunderstandings• Some sellers are fraudsters

• All cases of fraud first appear as disputes• Must be aware of the dolphins in the net

•Set incentives and sellers respond• Give sellers the tools to work at volume• Sellers’ priority is on fairness• Communicate clear policies• There is a clear economic value for trust

Enforcement

• Enforcement is essential to success

• Sellers will ignore outcomes with no enforcement

• Buyers don’t want decisions, they want results

• Funds should be held in escrow at the time of filing

• Buyers must receive refunds ASAP after decision

• Refunds should come through the same channel as the original payment

• Fraudulent sellers must be held accountable

• Enforcement actions need not be transparent

Platform Lessons

• Use the Fourth Party• It’s the only way to scale• When carefully designed, it works well

• Automation can be appropriate online• Put resolution processes in the transaction flow• API enable all work flows• Don’t work all volumes manually• Crowd-source complex cases to scale• Be aware of perverse incentives• Platforms must always evolve and self-improve• Track feedback from all process participants

OASCaseDB

Central Clearinghouse

NationalAdministrator

NationalAdministrator

ODRProviders

Key Components:A Central Clearinghouse, who maintains the case database; National Administrators; and ODR providers approved by the National Administrators

Seller

Seller

Seller

OAS-ODR Overall System Design

Sellers each opt-in to the system voluntarily

ODR providers apply and are approved individually

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Conclusions

• It is possible to build scalable ODR systems• No system will be perfect at launch• We must learn from existing systems• We should allow for continuing innovation• The goal is a safety net, not primary redress

• The best resolution is no dispute• Second best is seller handles the matter

Any system must meet buyer and seller needs• If it does not, it will quickly become irrelevant• Online users ignore tools they don’t like

Resources

The National Center for Technology and Dispute Resolution: http://odr.info

The UN Working Group on ODR:httwww.odr2010.com.ar

The ODR International Workshop series:http://odrworkshop.info

ADR Cyberweek: http://www.odr.info/cyberweek.php