Modria raises $5M to resolve customer complaints in the cloud

“Fairness Engine for the Internet” Modria has raised $5 million in its first round of funding.

Modria’s software aims to resolve online disputes quickly and painlessly. It pinpoints customer problems and automates the process of addressing them. It also offers a cloud-based environment  for concerned parties to come together for mediation, negotiation, and arbitration before issues become overblown, costly affairs.

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Managing and resolving customer complaints can be expensive and time-consuming, but not addressing them efficiently can be harmful for businesses. Modria says it combines “deep knowledge of legal processes with a scalable and reliable toolset in the cloud.”

Its system handles grievances about products or services that are not delivered, are damaged, or that don’t arrive as described; it also handles complaints about poor customer service, billing dispute, refunds, unfair reviews, etc. The platform diagnoses customer problems, collects and organizes information about the issues, and suggests possible solutions. Then the “negotiation module” allows the parties to discuss the matter directly, using algorithmic tools to work out points of contention and get the parties to form an agreement. If they can’t agree, Modria’s mediation and arbitration modules find third parties to step in to find solutions.

Modria works with businesses and government agencies including eBay and PayPal, the Internet Bar Organization, and county governments and claims to have successfully settled more than 400 million customer issues to date. Cofounder Colin Rule published a book titled Online Dispute Resolution in 2003 and has worked directly with eBay and PayPal to resolve 60 million cases a year. In 2011, Rule established Modria as an independent company to reach a wider audience of clients. The company raised a $1.25 million seed round in November 2012 from EDVenture Holdings, Kapor Capital , Battery Ventures, and Advanced Technology Ventures. Foundry Group led this $5 million round.

Modria is based in San Jose, Calif. The company also announced today that it has added Scott Carr as president and CEO. Carr previously served as the president and CEO of supply chain analytics company YottaMark.