What is Lemon Law Arbitration? (And Why You Shouldn’t Do It)

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When you notice the car you recently purchased is showing signs of faultiness, the logical first move might be to contact the dealership you bought it from. If the vehicle is still covered under warranty, the dealer might advise you to reach out to the manufacturer for repairs.

Now, if the manufacturer isn’t able to repair the defect within a reasonable number of repair attempts, it’s possible they sold you a lemon. In this case, they might encourage you to seek out lemon law arbitration, instead of taking them to court. Is it in your best interest to take the advice of the manufacturer, or is it in the manufacturer’s best interest?

There is one major type of lemon law arbitration pushed by the auto manufacturer:

1. The BBB Auto Line

Choosing this route means you will be going up against a panel of arbitrators sponsored by the manufacturer. These arbitrators review your situation and can subsequently order repairs, as well as initiate partial or full refunds.

Lemon law arbitration is a very cheap option for the manufacturer to resolve your complaint with the automaker out of court. Most statistics on these arbitrations evidence a majority of consumers lose their claim or are awarded an additional repair visit. Very few ever receive a buy-back or replacement vehicle.

Sounds like a good deal right?


In the situation that you purchased a defective vehicle, you want to hold the manufacturer responsible and recoup every last penny. Here is why arbitration can compromise that outcome.

2. Manufacturer-Sponsored Arbitrators Are Not Always Neutral Parties

Imagine you are playing a game of basketball, except all the referees are on the other team’s side. As the name implies, manufacturer-sponsored arbitration is run by the manufacturer, for the manufacturer.

When they are trying to convince you this is the best option, the manufacturer will likely tell you something along the lines that they use a neutral third-party company to run the program. In most cases, these companies are reliant on the auto manufacturer to stay in business. Moreover, some of these “independent” arbitration companies are created by the manufacturers themselves. This leaves a very clear tilt against the consumer. An arbitration firm in Minnesota was actually caught for this unfair practice in 2009.

With this in mind, manufacturer-sponsored arbitrations will often times not work in your favor. It’s best to avoid this option altogether and opt for a trustworthy lemon law attorney – who will be on your side.

3. The Arbitrator’s Decision Can Be Used Against You

The (somewhat) good news is you can still take the manufacturer to court if they ruled against you in arbitration. However, anything the arbitrator decides can be brought up in court and be used as evidence against you as substantive evidence.

You won’t get the chance in court to ask why there wasn’t a third-party inspection of the vehicle. You won’t even get the opportunity to ask why the arbitrator decided against you! Essentially, agreeing to a manufacturer-sponsored arbitration is like hand-delivering evidence against you to the courts.

4. You Aren’t Required to do Arbitration in California

As lemon law lawyers in San Diego, we get asked this question all the time.

No matter what the manufacturer or anyone else says to encourage you, YOU ARE NOT REQUIRED TO DO ARBITRATION IN CALIFORNIA.

Most consumers don’t have a whole lot of experience (if any) with lemon law. Manufacturers prey on this. It’s not uncommon that they will tell you arbitration is a quick and easy process to avoid legal and court fees. Now, if you win a lemon case, the manufacturer is required by law to pay for ALL legal expenses. This involves the cost of hiring a lemon law attorney, processing fees, and everything else involved with the courts.

Over to You

One of the biggest mistakes consumers make in the lemon law process is at the very beginning. Many people assume that the manufacturer is the first place to go when signs of a lemon arise, of which might steer you to believe arbitration is the best option.

Now, the most important thing to know about arbitration is no one will be in your corner. When this is the case, getting the justice you deserve is MUCH harder – in some instances, it’s nearly impossible.
The moral of the story is you need to seek out a specialized lemon law lawyer before agreeing to anything from the manufacturer. Failing to do so and going with arbitration can potentially shut a number of doors that would be wide open if you had first consulted a lemon attorney.

Keep in mind, being as how the manufacturer is responsible to reimburse you for ALL legal expenses, most lemon attorneys will not ask you for any money out of pocket to carry out a case.

If you believe you have a lemon, please get in touch with us ASAP!

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