Many car dealers, cellular telephone carriers, credit card companies, and other vendors now put Arbitration clauses in the contracts. Most consumers do not know what arbitration is. Here is some information to help you decide what to do.
What is Arbitration?
Arbitration is part of alternative dispute resolution. It is an informal process where the parties present their dispute to a neutral third party, usually a lawyer or retired judge for a decision. However, there is typically no right to appeal, and, the arbitration itself can cost thousands of dollars. By comparison, it typically costs less than $200.00 to file a lawsuit In St. Louis County and it can even be less than $50.00.
Most consumers reasonably assume that if there is a problem with a car, or, the dealer commits fraud or otherwise lies to them that they can file a lawsuit and go to court. That is not the case if you sign an arbitration agreement.
More and more car dealers are putting these in the sales contracts. In St. Louis, several of the big "family" dealerships (you know, the ones that seem to sell every different type of car and advertise everywhere) have arbitration clauses in their contracts. Odds are, the salesperson will not tell you about it until well after you have decided to buy the car and are finishing up all the paperwork and they will just tell you to sign it. One client recently told me that not only did the salesman tell him that an arbitration clause would benefit him (the consumer), but also that it was required by Missouri law! In case you did not know, that is simply not true.
Personally, I am very much against these types of clauses. You will almost always be giving up valuable rights. You have to ask yourself, why does the dealership want you to give up these rights? I suggest it is not to protect you but instead to protect them. Has anyone ever seen a car dealer (or any other business) insist on something that benefits the consumer?
Perhaps the best thing any of us can do is to just walk away from the deal and buy from a dealer who doesn't make us give up rights to buy a car from them. Then maybe we can get rid of pre-dispute arbitration clauses. Few things speak louder than your money.
Another option is to ask the dealer to simply eliminate the arbitration provision in the contract. If he or she will agree to do so, make sure that it is actually done. In most cases, a written contract will trump an oral statement. I have had a few clients who told me that car dealers had agreed to remove an arbitration provision. In the current economic climate, it seems much more likely for dealers to do that to sell their cars. However, make sure that the actual written documents show that there is no arbitration agreement. Spoken words are almost always not enough. Get it in writing!
Here is an informative web site I found : GiveMeBackMyRights.Com. Please note that I am not affiliated with that site in any way but found it rather informative so I wanted to share it with other consumers.