Buyer Beware of Arbitration Clauses!
When buying your next car or truck, read your paperwork carefully. Some car dealers and financiers are inserting an “arbitration clause” in the fine print to take away legal rights if case they do something wrong to you. Currently, some Ford credit, Chrysler credit and other bank finance contracts include an arbitration clause. Likewise, many car dealers are doing it, too. Watch out!
An arbitration clause does not have to be in your contract, and an arbitration clause can take away your right to go to court without you even knowing it! Some arbitration clauses are written so “tight” that you could get mugged, robbed and beaten up on the car dealer’s lot, by their employee, and you couldn’t do much of anything about it at all!
If you already signed an arbitration agreement, don’t give up because you may still be able to get around it, but the best thing is never to sign one in the first place.
For a consumer’s view on the automobile arbitration process, click here.
Why is Binding Arbitration bad?
Arbitration is like playing cards with the deck stacked against you.
The person who is going to decide what the manufacturer or dealer should do for you, is chosen by them and often paid by the manufacturer or dealer. When their paycheck depends on repeat business from “big business,” fairness can oftentimes take a back seat to the interest of turning a profit.
Worse yet, some auto arbitration clauses require you to pay for the arbitration and if you lose they can make you pay for the car dealer’s legal fees too. That could cost you more than if you were able to simply file a lawsuit in the first place. Because there are consumer protection laws that make the defendants pay attorney fees, the court process can actually cost you much less than the binding arbitration clause. Click here to learn more.
What Can You Do?
Carefully read the front and back sides (including the fine print) of every document anyone asks you to sign ... don’t let anyone rush you. If you see an arbitration clause, don’t sign it! Just say “no.”
After all, if they are being honest in dealing with you, then why should they worry about having to explain themselves to a Jury in a Courtroom?
Just mark a big “X” over the binding arbitration clause or, better yet, tell the car dealer to “X” it out or you won’t buy. The fact is they want your money more than anything else and if that’s what it takes to sell you a car, then they will “X” out the arbitration clause. But if the dealer still wants you to sign an arbitration clause, then leave. Go to some other car dealer who doesn’t worry about having to be honest with you.
Crooks, thieves and dishonest car dealers are some of the people who hide what they are doing behind binding arbitration clauses to keep you from suing them. A binding arbitration clause does not protect you, but it certainly does help them rip you off and leave you helpless to do much of anything about it.
Protect your rights--do not sign anything with an arbitration clause in it.
What If I Already Signed an Arbitration Agreement?
You may still be able to pursue your legal rights in Court if any of the following exist:
- The rules of the Arbitration require confidentiality.
- The rules of the Arbitration do not allow you to file a class action.
- The rules of the Arbitration require the Arbitration Panel or single Arbitrator to issue a decision without stating the reason for it.
- The rules of the Arbitration require you to pay the costs of the Arbitration without telling you exactly what those costs will be.
There may also be other reasons why a car dealer cannot force you to go to arbitration.
Too many times, consumers are told by car dealers and manufacturers that they “must” go to arbitration when that simply is not true. If a car dealer or manufacturer has told you that, you should be suspicious. Consult an attorney to find out what your legal rights are. You probably have more legal rights than you think.
Want More Information?
- Fair Arbitration Now. A thorough explanation of what is wrong with forced binding arbitration and how you will lose your rights because of it.
- The Consumer Guide to Mandatory Arbitration Clauses. A thorough explanation from the Citizen Advocacy Center.
- Mandatory Arbitration - Taking Away Big Rights With Small Print. The problems with arbitration summarized by ATLA.
- The Costs of Arbitration - How Consumers Pay for Low Cost Justice. Public Citizen exposes the real cost to consumers of arbitration and how to protect yourself.
- Forced Arbitration - Consumers Need Permanent Relief. See what the National Consumer Law Center has to say about arbitration.
- Auto Dealers and Consumers Agree: Arbitration is Unfair. Read the arguments that car dealers made to Congress about why they should be protected from arbitration in their contracts with car manufacturers. This article shows you why consumer’s arguments against arbitration are just as valid.
- Auto Dealers Push to Arbitrate - Buyer Would Give Up Right to Lawsuit. Newspaper article reprinted by TLPJ.