Effective dispute settlement is regarded as one of the means of enhancing consumer confidence in cross-border purchases over the Internet. Yet, studies of online dispute resolution (ODR) show, on the whole, poor uptake of ODR by the public. This paper is based on a research project carried out by the authors (funded by the European Parliament) which explored why so few people resort to ODR and what are the implications of low uptake for consumer confidence in cross-border e-commerce. The authors expand the traditional definition of ODR and introduce a distinction between what they term 'hard' or traditional ODR processes and the more novel 'soft' ODR processes. The low uptake of 'hard' ODR is critically considered, as are the theoretical advantages and disadvantages of 'hard' and 'soft' ODR. Successful examples of one 'hard' and one 'soft' ODR mechanism are reviewed. The authors conclude with considering the implications for EU ODR policy in the short, medium and long term.