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

Lemon law arbitration is a route that tends to stack the cards against the consumer. The good news is you do not have to take this route if you’ve been sold a lemon.

When you notice the car you recently purchased is showing signs of a defect, the logical first move is 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.

If the manufacturer isn’t able to repair the defect within a reasonable number of repair attempts, you may have 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 vehicle arbitration pushed by the auto manufacturer:

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.

Sounds like a good deal right?


Lemon law arbitration in California is a very cheap option for the manufacturer to resolve your complaint with the automaker out of court. Most statistics on these arbitrations indicate a majority of consumers lose their claim – or are awarded an additional repair visit, but this is silly because the warranty already entitles the consumer to additional repairs. Very few ever receive a buy-back or replacement vehicle.

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 on a vehicle can compromise that outcome.

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 lemon law arbitration is run by the manufacturer, for the manufacturer. The BBB Auto Line is not even associated with the Better Business Bureau, it is just a name the manufacturers picked to trick the consumer into thinking it is the Better Business Bureau.

The manufacturer will likely tell you that vehicle arbitration is done with a neutral third-party company. 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. 

A vehicle arbitration firm in Minnesota was actually caught for this unfair practice in 2009.

Manufacturer-sponsored arbitration on a vehicle will oftentimes 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.

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 via lemon law arbitration in California. However, anything the arbitrator decides can be brought up in court and be used 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 lemon law arbitration is like hand-delivering evidence against you to the courts.

You Aren’t Required to do Lemon Law 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 LEMON LAW ARBITRATION IN CALIFORNIA.

Most consumers don’t have a whole lot of experience (if any) with lemon law. Manufacturers prey on this. They may tell you arbitration on a vehicle is a quick and easy process to avoid legal and court fees. This is NOT true. Keep in mind, 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 turn when lemon guidelines are met. There is a good chance they will steer you to believe arbitration on a vehicle is the best option.

The most important thing to know about lemon law arbitration in California is no one will be in your corner.

When this is the case, getting the justice you deserve is MUCH harder.

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 vehicle arbitration can potentially shut several doors that would be wide open if you had first consulted a lemon attorney.

The manufacturer is responsible to cover ALL your legal expenses. Moreover, most lemon attorneys work on a contingent fee agreement – they will not ask you for any money out of pocket to take the case.

If you believe you have a lemon, please get in touch with us ASAP! Call our office at 888-982-6915, send an email to info@clineapc.com, or fill out a free case evaluation.

Share this post
Table of Contents