Consumer Law

Arbitration Agreements Not Good For Indiana Consumers

By Robert Duff, Esq.

I just read a letter to the editor of a Henderson County, North Carolina newspaper on the dangers of arbitration agreements. Having seen the impact of mandatory arbitration agreements, I couldn't agree more with the writer's comments. Here is a reprint of the letter in its entirety:

Published Friday, September 28, 2007

Protect your right to go to court

To The Editor: Today a local automotive dealership refused to sell me a car because I refused to forfeit my constitutional right to a jury trial. I refused to sign their arbitration agreement.

Consumers, if you have a dispute with the dealership and you have signed this document, you are required to use an arbitration organization of their choice. You relinquish all rights to a trial by jury, all rights to participate in a class action suit and have very limited access to discovery.

I have never participated in a lawsuit and hopefully never will. I support voluntary arbitration, but this is mandatory. Search online for car dealership arbitration agreements. You won't find one positive comment for this practice.

Question the integrity of a dealership requiring this. Ironically, manufacturers once required dealerships to sign these. Dealerships lobbied for a law (H.R. 534/S 1020) preventing it.

Proponents argued "It is unfair for the stronger party in a contract to insist that the weaker party forfeit the right to access the courts as a condition of doing business."

Ask a dealership in advance if they require arbitration agreements. If they do, walk away. Protect your rights.

Susan Holder

Mills River

The newspaper's online edition is found at BlueRidgeNow.com.

Importantly, Ms. Holder doesn't mention one of the main drawbacks of arbitration: it can cost consumers hundreds or thousands of dollars to protect rights that could be vindicated in the court system for a filing fee of $133.

Since most people don't really think about the possibility of having to file a lawsuit at the time they purchase a car, I seriously doubt many consumers will follow Ms. Holder's advice. But that doesn't make it any less wise. If you have any problems down the road, and you signed an arbitration agreement or your purchase order contained one, I can guarantee you will wish you had.

Full post as published by Indiana Consumer Lawyer Blog on September 30, 2007 (boomark / email).