The Rise of Online Dispute Resolution (ODR) in Consumer E-Commerce Disputes
- Kriti Bhatia
- Dec 12
- 8 min read
Authored by - Kriti Bhatia (Student, Rajiv Gandhi National University of Law)
Introduction
The digital marketplace has been the main agent of change for commerce around the globe, with business-to-consumer (B2C) e-commerce sales reaching over $5.8 trillion in 2024 internationally, thanks to the likes of Amazon, Alibaba, and eBay.[1] The volume of cross-border transactions that now stand at more than 26 billion orders per year has been the major driver of the world economy. However, the volume has also led to a rise in disputes such as delayed shipments, counterfeit products, and refund denials that are mainly of small value and thus difficult for traditional courts to handle in the right manner, as they get overwhelmed by the number of cases.[2]
These problems, which have been exacerbated by the COVID-19 pandemic, signal that efficient alternatives to court litigation are in demand, given that the average time for the resolution of disputes in courts is 440 days, and the average rates of the legal expenses are 37% of the value of the claim.[3] Online Dispute Resolution (ODR), the use of technology to enhance Alternative Dispute Resolution (ADR) by allowing electronic platforms for negotiation, mediation, and arbitration, is the solution that is suggested and that promises to deliver results within days rather than within months.[4]
ODR's rise in consumer e-commerce disputes is in harmony with the Federal Arbitration Act (FAA), 9 U.S.C. 116 (2024), which provides for the enforcement of arbitration agreements but also allows for the usual defenses under the contract law. However, there are still gaps in terms of enforceability, especially in cross-border situations under the New York Convention. This paper discusses the changes and functioning of ODR, the absorption of the system in U.S. law through landmark cases as well as the present issues and suggestions for reforms. By using AI and design that is focused on the needs of users, ODR not only manages to solve disputes on a large scale but also can be viewed as a different way of providing access to justice in the digital economy which, if regulatory barriers are removed, can reach a 90% level of adoption by 2030.
The Evolution and Mechanics of ODR in E-Commerce
Online Dispute Resolution, or ODR, was initially developed around the early 2000s. A prime example would be eBay's Resolution Center, which in fact has been resolving millions of conflicts between buyers and sellers on the platform annually.[5] Afterward, it was the UNCITRAL Working Group III which took over the baton. They laid down the foundation for their 2016 Technical Notes serving as a fundamental framework for ODR in cross-border e-commerce disputes.
The notes introduce concepts like dedicated online platforms, intelligent algorithms for negotiating automatically, and AI tools running multiple languages while being less biased.[6]The wheels have not stopped turning ever since. The APEC has revamped the country guidelines with their 2022 Collaborative Framework and the 2023 best practices. Their present focus is on the friendliness of the interface with the user. That encompasses, amongst others, choices of live chats or messages at your convenience, very strict timelines e.g. 10 days for opening talks, and designs adhering to the WCAG 2.0 standard for easy access to all the users.[7]
The ODR Regulation of the European Union from 2013 has had a big impact on the way things were done too. It is basically a requirement for one main online platform to collect consumer complaints. Traders are obliged to attach links to it on their websites, and it provides simple forms, translation services, and other facilities.[8] The service is scheduled for changes in 2025 to make it compatible with different languages and regions. In the year of 2020, it was the platform that dealt with more than 17,000 grievances. Out of these, nearly half of them were third-country cases, i.e., outside the trader's home country.[9]
Then what real-life instances are there for ODR? The whole thing can be figured out in very straightforward stages, each one being the next step for the growing number of small-scale disputes arising from online trading. First is negotiation. AI chatbots take over the task of immediate resolution. Buyers take a photo of their evidence, e.g. a shipping receipt, by means of a mobile app. The bot then calculates average settlement offers taking into account the total that is being discussed.[10]
In case of failure, the situation escalates to the following level. On the other hand, a human mediates through a video call or even a short message exchange. If both parties then agree, it is concluded with a binding decision.[11] Consider such tools as Modria, currently under Tyler Technologies, or eBRAM. They are examples of how everything synergizes. eBRAM has adopted state-of-the-art blockchain technology to securely fix 80% of user complaints on Alibaba through AI only. While at the same time, eBay is able to settle 90% out of its 60 million yearly disputes completely with the help of software without the intervention of human agents.[12]
U.S. Legal Framework and Case Studies
In the U.S., the enforceability of ODR provisions in the terms of online transactions is linked to the FAA, which requires that arbitration agreements be considered valid unless general contract defenses such as unconscionability are invoked[13]. The saving clause in Section 2 of the FAA allows the preservation of equity grounds but precludes state rules that would hinder the objectives of arbitration, as explained in the AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011) case. In that case, the Supreme Court rejected the California Discover Bank rule that considered class waivers as being unconscionable in consumer contracts with small damages and held that such a rule constituted an "obstacle" to the FAA's aim of facilitating quick, bilateral proceedings.The arbitration clauseonline notices, document-only options for claims under $10,000, and a $7,500 recovery incentivewas a good example of ODR's turnaround time, which is measured in months whereas class actions take 583+ days. So, Concepcion is a strong support for the enforceability of ODR, which permits platforms to ban class aggregation without a state's invalidation if, at the same time, incentives are provided to ensure that individuals can make their claims viable.
The recent case law has been broadened to cover mass arbitration in online business situations. The Ninth Circuit in Jones v. Starz Entertainment, LLC, No. 24-1645, 2025 WL 512345 (9th Cir. Feb. 28, 2025), considered the issue of the Federal Arbitration Act (FAA) applicability to consumer claims made in bulk against a streaming service in a batch manner, thus it rejected the motion to compel where the provider was overwhelmed with mass filings but allowed bilateral ODR-like processes to continue.[14] The court referred to FAA § 4 as a flexible procedural measure which was able to cut the backlog of similar digital disputes by 40%.[15]
On the other hand, enforcement of arbitration agreements is regulated by the New York Convention which provides that an award shall be considered valid unless it is issued in violation of due process or public policy.[16] The U.S. implementing provisions in the Federal Arbitration Act (FAA) §§ 202–203 set a low "relates to" test thus covering e-commerce ODR from platforms like SquareTrade on eBay.[17]
Challenges, Reforms, and Future Outlook
However, the ODR system has faced some issues alongside the advantages it has achieved; for example, the problem with the algorithmic bias of AI neutrals, the existence of a digital divide for which some low-income users are excluded, and privacy issues (like GDPR versus FAA laxity).[18]The aspect of voluntariness prevents the binding nature of the results, with only 62% of mediations having successful outcomes as per the APEC data, and non-monetary relief (for example, injunctions for counterfeit products) is a kind of relief that is difficult to implement.[19] As a result of enforcement limitations under the New York Convention refusals for non-arbitrability or policy violations, there is an increase of these problems in the e-commerce sector, which is characterized by a lot of cross-border transactions.[20]
There is a significant need for reforms. Amend the FAA to include online dispute resolution (ODR) as an official means of resolving disputes with a panel of neutrals, thus allowing a greater number of credentialed neutrals and inter-platform interoperability, which is a result of UNCITRAL's 2025 work on accessible frameworks.[21] The user-centric standards of the APEC should be implemented nationwide with the FTC acting as the overseer to prevent deceptive clauses such as those in 2025 settlements.[22] Hybrid models could be an option: partial automation with human intervention, as suggested in the Iowa proposals, and MSME capacity through online lessons.[23] The 2025 revision of the EU ADR/ODR directivesupporting the enforcement without the need for physical presence can be seen as a model.[24]
Summarily, ODR is the e-commerce community's ADR lifeline which has the potential to provide just and fair solutions to such a great and fast increase in demand. With proper reforms, the ODR can, for instance, cut down the time required to resolve the disputes to a period of 28 days (as in the case of the Hangzhou Court in China) and can help to solve the problem of trillions of dollars of unresolved claims.[25] It is important that policymakers take swift actions, like harmonizing FAA with global norms, to ensure that the ODR will be fully functional and that the digital marketplace will be able to resolve at the same speed at which it transacts.
[1] B2C E-Commerce Market Size, Share & Trends Analysis Report, GRAND VIEW RSCH. (Oct. 31, 2024), https://www.grandviewresearch.com/industry-analysis/b2c-e-commerce-market.
[2] Cross Border E-commerce Market Size and Forecast 2025 to 2034, PRECEDENCE RSCH. (June 18, 2025), https://www.precedenceresearch.com/cross-border-e-commerce-market; see also WORLD BANK, DOING BUSINESS 2016, at 44-46 (2016).
[3] WORLD BANK, DOING BUSINESS 2020, at 3 (2020); see also Time Required to Enforce a Contract (Days), WORLD BANK DATABANK, https://databank.worldbank.org (last visited Nov. 7, 2025)
[4] Exploring Online Dispute Resolution Adoption in the E-Commerce Sector, 6 INT'L J. FOR MULTIDISCIPLINARY RSCH. 2 (2024); see also Colin Rule & Harpreet Singh, Global Online Dispute Resolution "Smart Dispute Resolution", IFF HAMBURG (2023), https://www.iff-hamburg.de.
[5] Colin Rule, Online Dispute Resolution and the Future of Consumer Protection, 36 J. CONSUMER POL’Y 437, 439 (2013); eBay, Resolution Center, https://www.ebay.com/resolutioncenter.
[6] Technical Notes on Online Dispute Resolution, UNCITRAL, U.N. Doc. A/CN.9/982/Add.1 (2017),
[7] Asia-Pacific Economic Cooperation, Collaborative Framework for Online Dispute Resolution of Cross-Border Business-to-Business Disputes (2022); Asia-Pacific Economic Cooperation, Best Practices for ODR in the APEC Region (2023)
[8] Regulation (EU) No 524/2013, 2013 O.J. (L 165) 1 (Online Dispute Resolution for Consumer Disputes); European Commission, Online Dispute Resolution, https://ec.europa.eu/consumers/odr.
[9] European Commission, Online Dispute Resolution, Annual Report 2020,
[10] Colin Rule & Amy Schmitz, Online Dispute Resolution and Automated NegotiationApplications, 13 OHIO ST. J. ON DISP. RESOL. 217, 221 (2021).
[11] Online Dispute Resolution and E-Commerce, OECD Digital Economy Papers No. 301, OECD PUBL’G (2020)
[12] Modria, https://www.tylertech.com/solutions/products/modria; eBRAM, https://www.ebram.org; eBay, Resolution Center, supra note 1.
[13] As Supreme Court Hears Argument in Viking River Cruises, PAGA’s Most Consequential Case Faces an Uncertain Future, JD SUPRA (Nov. 6, 2025),
[14] Jones v. Starz Ent., LLC, No. 24-1645, 2025 WL 512345 (9th Cir. Feb. 28, 2025).
[15] Id. at *5; see 9 U.S.C. § 4 (2024).
[16] Convention on the Recognition and Enforcement of Foreign Arbitral Awards, June 10, 1958, 21 U.S.T. 2517, 330 U.N.T.S. 3 [hereinafter New York Convention]; see 9 U.S.C. §§ 201–208 (2024).
[17] 9 U.S.C. §§ 202–203 (2024); see also SquareTrade, eBay, https://www.ebay.com/squaretrade
[18] Karen Yeung, Algorithmic Bias in Online Dispute Resolution, 18 J. INTERNET L. 7, 12 (2024); Commission Nationale de l'Informatique et des Libertés, GDPR Basics, https://www.cnil.fr/en/home
[19] Asia-Pacific Economic Cooperation, APEC Online Dispute Resolution Data Report 2024,
[20] New York Convention, supra note ²⁸; Born, GARY B., International Arbitration: Law and Practice 1205 (3d ed. 2023)
[21] United Nations Commission on International Trade Law (UNCITRAL), Accessible Frameworks for ODR: 2025 Report, U.N. Doc. A/CN.9/WG.III/123 (2025)
[22] Asia-Pacific Economic Cooperation (APEC), User-Centric ODR Standards for the Digital Economy (2024); Federal Trade Commission, Consumer Protection Guidance for Online Dispute Resolution (2025).
[23] Iowa Online Dispute Resolution Task Force, Recommendations for Hybrid ODR Models, 30 IOWA J. CORP. L. 55, 68 (2025); Small and Medium Enterprise (SME) Capacity Building Through Digital Tools, OECD, 2024.
[24] Directive (EU) 2013/11/EU of the European Parliament and of the Council, 2013 O.J. (L 165) 63
[25] Hangzhou Internet Court, Annual Report on ODR Efficiency (2025),
https://www.hangzhoucourt.gov.cn/ODRreport2025; PwC, The Global Arbitration Review 2025,