Car Makers Win Most Cases in Arbitration

Car manufacturers win warranty disputes more frequently than consumers, a new survey of arbitration cases shows.

The state Department of Consumer Affairs said that of 3,000 California consumers surveyed, less than one-third won their disputes with manufacturers over who should pay for defects or repairs. More than half complained that arbitrators treated them unfairly.

The survey covered cases that came before boards run by Ford, Chrysler, Toyota or the Better Business Bureau last year.

Rachael Chavez, who monitors the programs for the state, said that while there is no evidence that arbitrators are biased, it appears that arbitrators need more training. She said consumers complained that arbitrators were unfamiliar with California law and failed to explain decisions adequately. The department is monitoring the programs closely, she said, and may seek legislation aimed at improving them.

As for the overall results, she said: “You would like to see them closely matched, but it’s hard to say results should be 50-50.”

During the last two years, auto makers have instituted arbitration boards to prevent disputes over defects or repairs from becoming costly lawsuits. Decisions are binding on manufacturers, who pay arbitration costs. Consumers have the right to appeal unfavorable decisions, though few do so.

According to the survey, consumers received the most favorable treatment from the Better Business Bureau, which arbitrates disputes for General Motors, Honda, Nissan and eight other auto makers. Nearly half said they were treated fairly.

Chrysler car owners fared the worst, losing eight out of every 10 cases. Not surprisingly, nearly 90% said arbitrators were unfair.

Chrysler spokesman Tom Jakobowski declined comment on arbitration results. He said, however, that Chrysler recently overhauled its arbitration program, replacing all arbitrators “to ensure no carry-over of bias against consumers.”

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Those cards and letters keep coming: Credit card issuers continue to shower plastic on cash-strapped Californians, new research shows, even though they are now further behind on card payments than residents of any other state.

SMR Research of Budd Lake, N.J., said California has the nation’s highest delinquency rate, about twice the national average. Nonetheless, three of every 20 credit card solicitations are aimed at Californians, primarily because they tend to spend more than consumers elsewhere.

SMR Research President Stuart Feldstein said the industry’s scramble to give Californians more credit cards doesn’t make sense. With the state’s economy in a slump, Californians are more likely than other Americans to get into trouble with new cards, he said.

Increasing the risk is the fact that card issuers are giving debt-burdened Californians substantial credit lines. Feldstein said new credit lines for Californians average $4,300, about 10% higher than the national average.

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Breaking the code: Los Angeles accountant Ernst Simon offers this advice to people who make calls to points in Riverside and San Bernardino counties after the 909 area code takes effect Nov. 14: Check your phone bill.

Simon wrote to tell us about a 90-year-old client who drove up her phone bill by 50% in June after a portion of Los Angeles County was assigned the 310 area code. Attempting to reach a relative assigned the new code, the woman dialed up Chicago (312) or Detroit (313) 27 times.

“I’m sure there are thousands of people who made similar calls in the Los Angeles area due to the change of area code,” Simon wrote. “I even discovered two on my private phone bill.”

Fortunately, it is an easy error to correct. Long-distance carriers will remove the charges if informed of the mistake.

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Personal pollution: A graduate student at UC Davis is peddling a computer program that lets people measure their friendliness to the environment. Here’s a tip for earning a good score: Forgo hamburgers, wear nothing and lie about having kids.

The software, called EnviroAccount, asks people to answer 115 questions about their consumption and lifestyle habits, such as how much electricity or water they use or what kind of car they drive. Negative points are assigned to people who eat beef (cattle graze on public lands), fly in jetliners (they use too much fuel) or wear anything but organic cotton or wool.

Inventor Don Lotter said it is hard for most families to score well because they must raise their score by one-third for every child. Nonetheless, he says, it is possible: A single parent who took the test did well because she has no car and devotes 2,000 hours annually to environmental causes.

Arbitration Programs: A Score Card

Here are results of a survey of 3,000 Californians who arbitrated disputes over new car warranties in 1991.

Manufacturer Consumer Board wins wins Compromise Better Business Bureau 48.3% 32.3% 19.4% Toyota 57.6% 28.5% 13.9% Ford 50.5% 38.4% 11.1% Chrysler 81.7% 7.3% 11.0% Average of all programs 52.4% 32.2% 15.4%

Source: Arbitration Review Program 1991 Consumer Satisfaction Survey, California Department of Consumer Affairs.