Ebay Spinoff Modria Is Judge Judy For Cyber Shoppers

Online disputes are high volume and low value. Courts don’t want them. That’s why Colin Rule is building a kind of "People's Court" for e-commerce users.

I’m going into mediation with Mark Zuckerberg. In the hypothetical situation that Modria’s founder, Colin Rule, has set up for me, I’m dissatisfied with the guest house I’ve been renting from Facebook’s CEO and am requesting a refund of—it has been randomly decided—$5,768,597. Seems reasonable.

Colin Rule

Rule shows me how to upload my evidence in a Modria dashboard where Zuckerberg and my mediator would see it. Assuming I actually had any complaint or evidence, and that Zuckerberg showed up, the three of us could come to an agreement using this online interface. We could have our own version of small claims court without even changing out of our bathrobes.

This, Rule believes, is the justice system of the future.

The self-described nerd started building his first online courtroom for eBay and PayPal in 2003. By the time he left in 2011, there were about 60 million disputes on the company’s properties each year: arguments over objects that arrive used when they were advertised new, broken returns, and any number of other conflicts that can arise throughout the buying, shipping, and return of an object from one user to another. He had built a system that handled about 90% of them without ever involving a human.

Now, by spinning out the technology and starting out Modria (Modular Online Dispute Resolution Implementation Assistant, in case you were wondering), Rule hopes to bring Internet justice to more online entities.

"There are millions of times where people are wronged on the Internet, but they don’t have access to the court system," he tells Fast Company. "What Modia is trying to do is provide low-cost resolution processes that can provide fair outcomes in cases."

Here’s how it works: The system identifies common problems and solutions. In some cases, the person with the complaint puts together a solution proposal using pre-populated drop-down menus. That proposal is sent to the other party in the dispute, who can counteroffer, and the process continues until both sides are happy. If they're haggling with the company rather than another individual, the company can set automatic rules (i.e., we'll automatically agree to proposed refunds less than $50). For more complicated cases, Modria offers the same kind of mediation and arbitration that a court would. Each side uploads its evidence to the platform, and a mediator or arbitrator leads a discussion in a shared chatroom. Another version of the process, which Rule began testing at eBay umbrella sites, involves a jury. Details of the dispute are sent to other users of the service, who vote on an outcome.

Sites generally pay a monthly fee to use Modria, though in the case of divorce disputes each individual pays a fee for the mediation. The startup staffs its sessions by partnering with the same organizations that handle face-to-face mediation and arbitration. The process also plays by the same legal rules. It’s just more efficient.

"What this is about, fundamentally, is the courts can’t handle Internet disputes—there are too many of them, they’re too low value," Rule says. Solving conflicts digitally avoids clogging up physical small claims courts, and it’s becoming an increasingly mainstream solution.

ICANN, for instance, handles disputes over domain names without in-person meetings. The United Nations is working on an online system to handle disputes over cross-border electronic commerce transactions. Wikipedia solves battles over its content online .

Meanwhile, almost every large online marketplace already has its own version of an online conflict resolution system. But Rule doesn’t want to build just one company’s court. As he points out, "In the real world, we don’t have Walmart court and Sears court, there’s just one court."

[Image: Flickr user James Cridland]

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