A recent survey done by the National Association of Consumer Advocates (NACA) shows that consumer lemon law rights are being stifled as companies try to increase the use of arbitration clauses. Out of 350 consumer attorneys surveyed, 84% said that there is an increase in instances where consumer claims could not be settled or a class action law suits could not be pursued due to an arbitration clause. Approximately 90% of the attorneys surveyed said that they have turned away cases because the underlying contract had an arbitration clause included in it.

Forced arbitration clauses are fast becoming a favorite weapon for businesses as a way of distancing themselves from liability. Clauses are often mislabeled and buried in mountains of paper work, making it easy for the unsuspecting consumer to miss it. Individuals almost always lose to businesses in arbitration. Arbitration is seen as a disadvantage to consumers because:

1. It creates an uneven playing field in the favor of the automobile manufacturer. A consumer without legal representation will find it difficult to battle an automobile manufacturer that has experience in dealing with lemon law claims.
2. There is limited recourse for the consumer once a decision is made. The outcome of an arbitration claim can often affect decisions made in future lawsuits.
3. Businesses are repeated users of an arbitrator, so there is an incentive for an arbitrator to rule in favor of the business if he expects future retentions.
4. There is a lack of transparency in the proceedings of the arbitration claim.

Consumer Groups Are Fighting Back

• The Consumer Financial Protection Bureau, created by Congress in the wake of the Wall Street meltdown, recently announced a public inquiry on forced arbitration.
• The National Association of Consumer Advocates (NACA) has launched a 50-state public education campaign aimed at teaching consumers about the dangers of forced arbitration.
• A Public Citizen coalition called Fair Arbitration NOW are petitioning lawmakers to pass an Arbitration Fairness Act.

In the meantime, it is important to recognize that automobile manufacturers will try to force arbitration. You should carefully read any contracts before signing and try to negotiate arbitration clauses out of the contract. If a company tries to force an arbitration clause on you, you may want to take your business elsewhere.