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As director of Online Dispute Resolution for eBay and PayPal from 2003 to 2011, Colin Rule has seen many changes and challenges in the conflict resolution space. He is now CEO of the new online problem resolution company, Modria Inc. We asked Rule about his time at eBay, what he thought about some of eBay's recent changes, and what's in store for his new company, and the future of dispute resolution.

AuctionBytes: What did you learn in resolving disputes on eBay for the last seven years?

Colin Rule: I learned a couple interesting lessons I didn't know before coming to eBay. First, buyers trade off convenience and outcome. We discovered buyers would rather lose a dispute quickly, say within a week, than win a dispute and have it take a month. The added headache of worrying about the matter is more painful to them than the injustice over losing $50-$75.

Second, disputes are an incredible loyalty opportunity. We compared hundreds of thousands of user accounts and discovered that users who filed disputes used PayPal more after the dispute than users who never filed a dispute in the first place. And that was regardless of outcome - even users who lost their dispute were more loyal.

Why is that? It's because users who never have a problem barely register who they bought the item from, but users who do have a problem definitely focus on who sold it to them and how the resolution experience went. So in many respects, transaction problems are major opportunities for merchants.

AuctionBytes: From your experience at eBay, what do you think are the most common reasons for online disputes? And did you see certain types of things, say, that sellers were doing wrong consistently, that they could adjust to obviate for future disputes?

Colin Rule: By volume, the number one reason is buyer payment - Unpaid Items (UPIs). But those are relatively easily resolved. When I first joined, UPIs were a major crisis, but once we built the systems they became more of a manageable annoyance. Item Non-Receipt (INR) and Item Not as Described (SNAD) are lower in volume, but they're much more serious because the buyer is out the money. Feedback and VeRO (intellectual property rights) issues were lower volume than those.

Over time I shifted the vast majority of my energy to INR and SNAD. That's the trickiest type of problem to solve, and it never gets easy. Good sellers know how to avoid them: clear listings, lots of pictures, lots of communication, understanding, flexibility, and generosity. But I worked with many sellers who had razor thin margins who would fight to the death with their buyers.

Yes, buyers can be unreasonable - and recent changes on eBay have given buyers even more carte blanche to be unreasonable - but the simple fact is selling online these days requires sellers to bite the bullet and take care of their buyers. Be clear up front, be responsive, swallow your pride once in a while, and you'll be much better off in the long run.

AuctionBytes: Can you comment at all on eBay's feedback system (positives/negatives, detailed seller rating stars, etc.) - do you think it is pretty effective overall (or not, and why), and what do you think of the change a few years ago whereby sellers could no longer leave negative feedback for buyers - was that a good move, or not, and how?

Colin Rule: From my personal perspective, I think it was a bad move. I know all the reasons why they did it - no other site on the Internet, or store in the U.S. even, rates buyers on their performance. Buyers would get retaliatory negs and they were gone. The feedback team knew they needed to solve that problem, so they made the change.

But for me, the bi-directional nature of eBay was what makes eBay so special. Community requires interdependence. It's not just the buyer is always right - that works short-term, but it weakens the ties long-term.

eBay always blurred the lines between seller and buyer, and the feedback system was part of that. Once the accountability only went one way, a big part of what incented buyers to be reasonable went away, and with it some of the interdependence was gone. That made dispute resolution more difficult, because the buyers had no skin in the game. But all that said, I admit it's a difficult question, and I absolutely understand the rationale for the change.

I would like to see the feedback resolution services at ebaycourt.com (only live in India at this time) be made available worldwide . I think it'd be more fair for sellers, especially in a one-way feedback world.

AuctionBytes: Can you tell us more about Modria - what kind of online dispute resolution services will it provide, and how?

Colin Rule: Modria stands for "modular online dispute resolution implementation assistance." We're looking to help businesses design great problem resolution systems, working out issues quickly and effectively.

In addition to standard online dispute resolution (ODR) - approaches like negotiation, mediation, and arbitration - we're building automated systems to help with problem diagnosis, self-help, and even crowd-sourced expert evaluation and appeals, like ebaycourt.com.

Outside of ecommerce, we're looking at privacy disputes, reputation disputes, public disputes, and a variety of other kinds of disputes as well. More information is at odr.info.

AuctionBytes: Will there be an offline component to Modria's services as well, and if so can you tell us about it?

Colin Rule: Technology can be used in lots of ways to help resolve face-to-face disputes as well, especially now that we have such advanced mobile and portable tools to work with, like iPads and Android tablets.

My background is in public dispute resolution, and I plan to devote some energy in that space - tackling eDemocracy and public engagement challenges (see edeliberation.com for more details). There's been great work using ODR for insurance matters and workplace issues. The UN is also working on building global resolution systems for cross-border disputes and I'm very involved with that effort (details at novojustice.com). So I've got a lot of lines in the water!

AuctionBytes: Why did you decide to start Modria; how did the idea come to mind? Was it an organic offshoot of your role at eBay, and if so how?

Colin Rule: Before I came to eBay I ran one of the first online dispute resolution service providers, onlineresolution.com - that was how eBay found me. I never interviewed. Rob Chesnut called me in 2003 and asked me to come consult; that was how it started. I also wrote the book Online Dispute Resolution for Business in 2003, so I think he found me on Google when he typed in "online dispute resolution."

I always said when there was no more ODR at eBay I'd go back to running my own company, so I guess this was the plan all along. But I do hope to keep working with eBay and PayPal from the outside, via ebaycourt.com and paypal-court.com.

AuctionBytes: The modria.com website says "Coming soon." Do you have a launch date or anticipated date? What is happening now with the company - are you in hiring mode, getting pieces in place, etc?

Colin Rule: We're currently working with several launch partners, and negotiating some IP - so we'll launch publicly when that is ready. The modria.com site is already done; I'm hoping to get it live over the summer.

We'll be hosting a variety of services at communitycourt.com, resolutioncenter.com, and adrmarketplace.com. I think we're aiming toward completing a seed funding round by mid-August, then we'll start hiring. We've already got an office in downtown San Jose.

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About the author:

Julia Wilkinson is the author of "The eBay Price Guide" (No Starch Press, 2006) and "eBay Top 100 Simplified Tips & Tricks" (Wiley, 2004-6). Her free "Yard Salers" newsletter is at available at YardSalers.net where you will also find her latest ebook, Flip It Again.

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