Arbitration: Good for the Manufacturer, Bad for the Consumer

What Is Arbitration?

Most states run lemon law arbitration programs designed to allow for ‘quick’ and ‘easy’ resolution of lemon law disputes between consumers and manufacturers.  Massachusetts runs a lemon law arbitration program, as does Connecticut, New Jersey, and, of course, New York.  Most of these programs state that they are designed to allow consumers to represent themselves, without the assistance of an attorney.  But, as with all things that appear to be too good to be true, these programs aren’t really all they are cracked up to be.

Just look at the New York Lemon Law Arbitration Program’s statistics available online.  The program screens applications — that is, to be accepted into the arbitration program, a consumer has to document 4 repairs or 30 days out of service for a vehicle, which are the New York Lemon Law requirements.  However, it turns out that only 50% of all cases admitted into the program turn out in favor of a consumer.  In contrast, virtually 100% of cases with 4 repairs/30 out-of-service days in which we represent consumers turn in the consumers’ favor.

Why Do States Use Arbitration?

How come? Well, there is an easy answer.  In my experience, most manufacturers will vigorously defend cases in arbitration, sending one or two lawyers to each hearing, usually accompanied by the dealer and dealership service representatives.  These folks know the law, know the facts, and can easily out-argue a consumer who shows up on his or her own.

It’s an unfortunate fact that the courts around the country are badly overloaded. The government, which has to fund the court system, loves the idea of arbitration because it saves money and court time. For this reason, state lemon laws often include a method for trying to resolve lemon law disputes informally. Quite sensibly, though, the Congress did not deprive consumers of access to the courts. Under Magnuson-Moss (the Federal consumer warranty law), the consumer is not required to accept the result of the informal dispute resolution process.

What’s Wrong with Arbitration?

The problem in any situation requiring arbitration is equality. At the risk of being trite, there ought to be a level playing field.  In California, the legislators who created our excellent Lemon Law understood this. In California, the Song-Beverly Act does not require the consumer to go to arbitration once all options that might correct the defective vehicle have been tried.

Manufacturers love arbitration. It’s just another step in the gauntlet of delays and deceptions meant to prevent the consumer’s access to the lemon law. The goal of the manufacturer is to make the consumer give up and go away. Any delay favors the manufacturer, who is not the one driving the defective vehicle. The motive is the oldest of them all…or perhaps the second oldest, money. Worst case for the manufacturer is a refund or a replacement. If the manufacturer has to pay the consumer, that is money the corporation cannot earn income from.

Why Is the Playing Field Not Level in Arbitration?

• The individual doesn’t have the resources or time to devote to the arbitration process.
• The consumer doesn’t have access to legal assistance.
• The consumer cannot afford to bring experts to the arbitration.
• The manufacturer can afford the expense, time and travel necessary to attend the arbitration.
• Consumers are unfamiliar with the law and with the arbitration process. This can lead to awards to the manufacturer even though the facts of the case are relatively clear.
• Even arbitrators are not always lawyers or are they familiar with the lemon law – probably because they are not required to follow that law when issuing their decisions.

What Are the Results of Arbitration?

What we see most often at the conclusion of arbitration is the award of another repair attempt to the manufacturer. Two or three months may have passed to accomplish this! The consumer attending the arbitration most often has already tried to get the vehicle repaired four, five, or even six times. This is not a resolution; this is a gift to the manufacturer.

If there is going to be any gift giving, let the manufacturer do it; they are the ones most in need of our goodwill. And choosing a lemon law lawyer to represent you is the best way to make sure this happens. So, if you want to be rid of your lemon car, the lesson is clear – avoid going without a lawyer to state-run arbitration at all costs

Get Some Answers

If you think you have a lemon car, lemon truck, lemon RV, or lemon motorcycle, you deserve to be compensated. Lemberg Law can help you get justice – at no cost to you! Complete our form for a no-obligation case evaluation, or call toll free 877-795-3666