The problem:
A consumer purchases a new car and experiences multiple service interruptions, which require taking the vehicle back for warranty repair. Even though the concerns are all addressed, and at no cost to the customer, the consumer begins to lose confidence in the vehicle and grows increasingly concerned about the long-term dependability of the car.

They talk to the dealer, who is sympathetic - but points out they have done everything they are required to do under the terms of the warranty. Since the car is currently repaired, there is nothing the dealer can do. Still, the consumer is not confident the car will not break down again. He retains the services of an attorney to force them to take the car back.

The solution:
When the documents are filed, the attorney is notified that the consumer can utilize an arbitration program at no cost to the consumer, without prejudice. The case will be heard within forty days by a panel of independent, trained arbitrators, and the consumer can either accept or reject the decision. But if the consumer accepts the decision, the dealer and manufacturer will be bound by the arbitrators’ decision.

After talking it over, the consumer decides to submit the case to arbitration. The date for the hearing is set, the consumer is mailed a copy of the file with documents from him/herself, the dealer and the manufacturer. The consumer is told to send any additional or rebuttal information to the arbitrators. The case is decided the following week. The arbitrators direct the manufacturer to replace or repurchase the consumer's car because it has had an unreasonable number of repairs. Further, the arbitrators decide the customer had some good use from the vehicle and determine a charge for that use.

The customer decides to accept the decision. Within a few days, the customer receives a worksheet detailing the calculations of the replacement and of the repurchase. In looking over the information, the customer discovers the replacement will put him/her in a better position financially than the repurchase option. The customer decides to order a new vehicle, but a different model from the manufacturer. Case closed.

Consumers win in warranty arbitration because the process is quick and costs them nothing. The case is heard by trained independent neutrals to protect the integrity of the process and provide assurance of independence and fairness. While not all consumers receive the resolution they request, the consumer can be assured that the arbitrators review all of the facts and come to a decision they believe is fair to all parties.

Manufacturers win in warranty arbitration. The efficiency of the process eliminates the delays associated with traditional judge and jury decisions. The cost of litigation greatly exceeds the cost of arbitration. The presence of an arbitration process signals to the customer that the manufacturer is committed to taking care of the customer. They believe the way they handled the case was correct, but to be certain, they will put the matter before a third party and agree in advance to be bound by the decision.

Besides the fact that arbitration can save time and money, it also can save customers. As seen in the case history, the manufacturer was given one more opportunity to recover the customer.