Couple looking over lemon law claim with lawyer.

Lemon Law Arbitration

By: Sepehr Daghighian, Esq.

CCA’s expert lemon law attorneys are often asked, “Should I arbitrate my lemon law claim instead of hiring a lawyer?”  While California’s lemon law arbitration system claims certain advantages to consumers, the system suffers from numerous serious disadvantages, which make it perilous to the unsuspecting and unprepared consumer.  For example, a recent study by the non-profit organization Public Citizen found a stunning bias against consumers in consumer arbitration.  In Public Citizen’s study of 19,000 consumer arbitrations conducted by the National Arbitration Forum, over 94% of the decisions were in favor of the corporation that paid them and against the consumer

Arbitration can be risky for the unprepared and unwary.  Therefore, before initiating your own lemon law claim against a behemoth automaker, we strongly suggest you consult with an expert lemon law attorney: (833) LEMON-FIRM.  

What is Lemon Law Arbitration? 

Arbitration, generally, is a process by which parties submit their dispute for resolution to a neutral third-party, rather than through the court system.  California’s Department of Consumer Affairs offers a certified arbitration program for lemon law claims under the auspices of the Better Business Bureau Auto-Line Program (“BBB”), the Consumer Arbitration Program (“CAP-Motors”), and the California Dispute Settlement Program (“CDSP”).  

Is Lemon Law Arbitration Mandatory?

Consumers that look to their warranty guides or their automakers customer service for assistance with a defective vehicle are often directed to the automaker to one or more of the arbitration programs.  However, arbitration is not mandatory.  The fact that arbitration is strongly recommended by automakers tells you a great deal about whether or not arbitration is in your best interests or in the automakers’ best interests.  

Is Arbitration More Favorable to the Consumer?

While our attorneys have successfully litigated cases in both court and arbitration, like most lemon law attorneys, we typically do not recommend arbitration to our clients for a number of reasons.  The automakers typically push arbitration for consumers by touting that: (1) the consumer won’t need to hire an attorney; (2) arbitration comes at no cost to the consumer, and (3) the arbitration’s results are only binding on the manufacturer.  However, on close examination, each of these supposed benefits appears illusory.  

First, while it is correct that the consumer does not need to hire counsel, there remains the question of whether or not going into litigation against a multi-billion-dollar corporation without a lawyer is a good idea.  But, ask yourself a few questions: Do you think Ford, General Motors, or Toyota will use their bevvy of well-trained and well-paid lawyers against you? Do you have the decades of training and technical know-how that the automakers have?    While one certainly may initiate legal or arbitration proceedings without the benefit of counsel, it is definitely not a good idea.  In all likelihood, you will be severely outmatched by the automaker’s lawyers, who know the law well and know how to skew it in their favor.  

Next, comes the issue of cost.  While it is correct that California’s certified arbitration programs come at no cost to the consumer (because they are paid for by the automakers), in truth, most lemon law plaintiffs do not pay for their lawyers or legal costs either.  CCA’s attorneys, for instance, have litigations hundreds of lemon law cases on behalf of California consumers and never sent their clients a bill. Thus, the automakers second promised benefit of cost-savings is likewise illusory.  

Finally, automakers tout arbitration as beneficial because the results are only binding on the automakers, as if the consumer has nothing to lose by trying their hand at arbitration.  However, in most cases, the outcome of the arbitration is admissible in Court. Therefore, the automakers can use the outcome of the arbitration (which was obtained while the consumer wasn’t represented by counsel and they were) against the consumer later in court proceedings.  The automakers promise that the consumer “has nothing to lose” is, therefore, also false.  

I Have a Lemon… What Should I do?  

If the corporations’ 94% success rate in the study by the non-profit organization Public Citizen is any indication, you should steer clear of lemon law arbitration.  Usually, your best first move is to consult with an expert lemon law attorney.   At CCA, our consultations and all of our services come at no cost to our clients and we will work with you to determine the best course of action.  Therefore, we invite you to call us today for a free consultation: (833) LEMON-FIRM.  

CCA services consumers throughout the State of California and persons that purchased their vehicles in California, only