In principle, arbitration beats litigation as a way to settle disputes between dealers and customers. It's faster, it's cheaper, and it's more likely to lead to an outcome that will satisfy both parties.
So it's not surprising that a growing number of lawsuit-wary dealers seek to encourage and even require buyers to accept binding arbitration when disagreements arise. But if dealers expect consumers to renounce their right to sue when they think they've bought a lemon, arbitration needs to be fair and transparent at every stage.
Too often, plaintiffs' attorneys and consumer advocates assert, that's not the case. They relate horror stories of buyers giving up their day in court without even realizing it, thanks to murky language in sales contracts. They cite instances of dealers trying to deny buyers a choice of arbitrators and to impose excessive secrecy, and of arbitrators charging sky-high fees.
Trial attorneys have a self-interest in promoting litigation over arbitration. But courts have ruled in several recent cases that dealers failed to disclose adequately the arbitration clauses they inserted in sales documents.
It's worth noting that dealers persuaded Congress two years ago to prohibit automakers from including mandatory arbitration provisions in their franchise agreements. Why, critics ask, should dealers who won't accept arbitration when factories demand it be allowed to impose it on customers?
The best answer to that rhetorical question is the ability of dealers to show consumers that a fair and rational arbitration is in everyone's best interest - and that the deck isn't stacked.