Mandatory arbitration is an invaluable tool that many dealers, including me, use to settle disputes related to auto sales.
The consumer and dealer resolve their issues through an appointed, unbiased arbitrator without the expenses, delays and complications of the court system. If a consumer rejects the mandatory-arbitration clause in a sales contract, the dealer may choose a different style of agreement, or the consumer may choose to do business with another dealer.
In countless situations, arbitration has saved me and my customers time, money and courtroom-induced headaches. Undoubtedly, many other dealers have enjoyed the same benefits. But now, auto dealers' right to include binding-arbitration provisions in sale and lease contracts is under attack from Congress.
The Automobile Arbitration Fairness Act of 2008 (H.R. 5312) seeks to ban predispute arbitration agreements from the auto sales and leasing process. On July 15, the bill passed from the House Subcommittee on Commercial and Administrative Law to the House Judiciary Committee. If it becomes law, it will ban mandatory-arbitration provisions in sales and lease agreements between dealers and consumers. Neither party will benefit.
That would be particularly devastating to auto dealers, who rely on mandatory arbitration as an effective, affordable and efficient means to resolve disputes.
Consumers want a quick and simple settlement when a dispute centers on their day-to-day transportation. Dealers and small-business owners can all agree that this legislation is the most potentially harmful issue facing dealers in the U.S. Congress.