Lemon law arbitration is designed to speed up claims

While not required in every state, most states require that owners of defective vehicles submit to arbitration before they can file a lawsuit. What is arbitration, and how can it help the owners of auto lemons?

More below.

Lemon law arbitration is designed to save both time and money

Aside from our homes, our automobiles are the most expensive items we will purchase in the course of our lives. With costs often exceeding $20,000, we expect, with good reason, to receive a vehicle that will work safely and reliably for many years to come. More often than not, we get what we pay for and many vehicles last until we are tired of them or until they simply cannot be driven any more.

Unfortunately, on rare occasions, consumers will buy a vehicle that fails to live up to even the modest standards stated in the warranty that the manufacturer provides at the time of purchase. The manufacturer is supposed to clear up those problems themselves, but sometimes they refuse, for one reason or another. That is why each state now has a lemon law - to protect consumers from defective vehicles when the manufacturer will not cooperate or does not agree that there is a problem. In years past, invoking the lemon law usually meant that the consumer was forced to hire an attorney and file a suit in a court of law. This process is lengthy, contentious, and expensive. As an alternative to the unpleasantness of lawsuits, manufacturers and some states have introduced arbitration to handle lemon law cases.

Arbitration is a program where each side, the owner and the manufacturer (or their representatives) present their side of the story to one or more people who will make a decision based on the information presented in favor of one party or the other. Sometimes these panels are created by the manufacturer; most of them have arbitration programs in nearly every state. Some states, on the other hand, create their own arbitration panels that are independent of the manufacturer’s programs.

In each case, the person or persons who comprise the panel are supposed to be impartial, with no direct ties to the manufacturer. In some cases, members of the panel may be current or former auto mechanics or auto dealers. 

The charge for an arbitration hearing, if there is one, is a minimal fee, usually $20-50 for the owner. This is quite reasonable compared to the thousands of dollars an attorney might charge to handle a lemon law case. The system is designed so that the panel will produce a verdict fairly quickly and the owner can receive relief without any undue hardship in terms of time.

Most states hold the results of an arbitration hearing to be binding upon the manufacturer, but not on the owner. If the panel rules in favor of the owner, the manufacturer must provide a refund or replacement vehicle. On the other hand, if the decision comes in favor of the manufacturer, the owner retains his or her right to sue.

As a rule, arbitration works quite well and owners and auto companies are able to have their cases resolved in a timely manner.

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