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Online Dispute Resolution: Companies Implementing ODR

Last updated by Annaleigh Hobbs, JD '25

Introduction: Companies Implementing ODR

Many companies have turned to using ODR as a method of dispute resolution. eBay, PayPal, and ICANN are the front runners in ODR, and thus will be highlighted in this research guide. It is important to note companies using ODR are not doing this to resolve an exceptionally large number of disputes. Rather, the goal is to maximize the number of successful transactions, and resolving disputes is essential to increasing that volume. 

ODR is key for businesses because it is estimated 3-5% of e-commerce transactions ends in a dispute. For sites without a feedback or reputation system that users can consult before making a purchase, the percentage is even greater. ODR is a neutral process that provides quick decisions to both the buyer and seller. 


History of eBay ODR

eBay began ODR in the late 1990s when an experienced human mediator used email to interact with the disputants using the same strategies with which he engaged disputants offline (e.g., assisted storytelling and joint problem solving). eBay's ODR system features a purposeful design that challenges the boundaries of existing ADR approaches, which incorporates various types of computer mediated communications (CMC). eBay ODR can be used by both buyers and sellers. 

eBay ODR Tiered System

There are five main steps to eBay's ODR system outlined below: 

1. Go to Resolution Center

2. Resolution Center asks a series of questions to diagnose the problem and ensure the complaint is within eBay’s coverage for a Money Back Guarantee and that the purchaser used the “pay now” option and asserted the complaint within 30 days after the actual or estimated delivery date.

3. Resolution Center gathers the proposed resolution and encourages the two parties to communicate through the eBay messaging platform. 
4. If that does not succeed in resolving the dispute within 3 business days, the claimant may escalate the case back to the Resolution Center for an evaluation.
5. Resolution Services team then contacts the Buyer within 48 hours with a determination as to whether the complaint qualifies for a refund. These refunds are enforced through chargebacks. 


History of PayPal ODR

In 2010, eBay and PayPal conducted a study that was not intended to measure satisfaction in the traditional manner, by surveying disputants before and after participating in a dispute resolution process. Rather, it would compare the actual behavior of participants before and after the process, something it could easily measure with data they routinely collected. eBay did not look at what users said but at their actions as buyers or sellers after participating in ODR.

Participation in ODR led to increased activity by both winners of the dispute (e.g., received a reimbursement) and those who lost (did not receive a reimbursement). The only buyers who decreased their activity after filing their first dispute where buyers for whom the process took a long time (more than six weeks). This lesson affirmed the feedback that buyers preferred to lose their case quickly than to have the resolution process go on for an extended period of time. This is technological support for the maxim “justice delayed is justice denied.” This research paved the way for faster ODR systems. 

PayPal ODR Tiered System

Two types: dispute and claim
•Once a buyer begins the dispute resolution process, PayPal puts a hold on the transaction’s funds until things are resolved
•PayPal then asks for a response from the seller about their explanation of what happened
•Buyer and seller have 20 days to come up with a resolution
•After 20 days without a resolution, either party can escalate the dispute to a claim
•PayPal then investigates the case and determines an outcome
•Limited appeals process
On PayPal's ODR system, only the seller can appeal meaning the decision was reached in favor of the buyer. There are only three reasons a seller can appeal and they are (1) item is returned to seller, but not in the same condition as the buyer first received it; (2) no item was returned at all; or (3) wrong item was returned. 

Internet Corporation for Assigned Names and Numbers (ICANN)

History of ICANN

The domain naming system was invented in 1984 but grew rapidly starting in the mid-1990s. In 1990, there were 8,000 domain names but by 2000 there were over a million. Today, there are over 290 million. ICANN has handled over 50,000 disputes between owners of a domain name and holders of a trademark that is identical or similar to the domain name. ICANN requires that organizations that provide arbitrators publish the decisions. Almost all of the cases heard by an arbitrator are from either the World Intellectual Property Organization (WIPO) or the National Arbitration Forum (NAF). Statistics show that both organizations rule in favor of trademark holders approximately 85% of the time. Because of this, a small percentage of domain names are currently being challenged because those behind the website have a good idea of how the arbitrators will rule. ICANN's work in the domain name arbitration process has been very successful. ICANN is much less expensive than going to court, and decisions are usually made in fewer than 40 days. 

ICANN ODR Tiered System

To invoke the UDRP, a trademark owner should either (a) file a complaint in a court of proper jurisdiction against the domain name holder (or where appropriate an in-rem action concerning the domain name) or (b) in cases of abusive registration, submit a complaint to an approved dispute-resolution service provider.