Auto Owners Want to Have Their Say in Arbitration
Many owners of new Chryslers, Toyotas and Lexus automobiles who wind up in arbitration to resolve disputes over defects say they are treated unfairly and seldom get what they want, a new survey by the state Department of Consumer Affairs shows.
The department said the survey’s results demonstrate a need for those auto makers to permit consumers to testify at arbitration hearings. Representatives of Chrysler and the American Automobile Assn., which runs the arbitration program for Toyota and Lexus, said the survey is misleading and that their arbitration decisions are fair.
Auto makers have instituted arbitration boards to prevent costly lawsuits over defects or repairs covered by manufacturers’ warranties. Disputes usually involve the need for repairs and who should pay for them. In some cases, consumers ask for new cars.
Arbitration decisions are binding on manufacturers, who pay arbitration costs. Consumers have the right to appeal unfavorable decisions in court, although few do so.
The state certifies arbitration programs and monitors them to determine consumer satisfaction. The state said no program is currently in danger of losing its certification.
In announcing the survey results, the department praised the Better Business Bureau program for demonstrating “above-average consistency” and cited Ford’s program as “most improved.” The Better Business Bureau arbitrates disputes for General Motors. Ford and the Better Business Bureau permit consumers to testify in person.
“We think the question of fairness goes directly to the opportunity for an oral hearing . . . to give consumers their day in court,” said Peter Brightbill, chief of the department’s arbitration review program. “The survey numbers bear this out.”
Arbitrators for Chrysler, Toyota and Lexus make decisions based on written evidence only. AAA conducts hearings at its headquarters in Heathrow, Fla. Chrysler holds its hearings at three locations in California.
State law does not require auto makers to permit oral testimony from consumers and others involved in the dispute.
Brightbill said another reason for dissatisfaction with AAA decisions is that arbitrators rely heavily on written testimony from field investigators--mechanics who tend to have an “anything-can-be-fixed” attitude. Brightbill said consumers unhappy with dealer repair efforts “don’t see why they should go back to the dealer one more time.”
Representatives of Chrysler and AAA said the state’s survey is misleading because legitimate complaints are resolved before they get to arbitration. Citing Lexus’ consistently high customer satisfaction ratings on the annual J.D. Power survey, AAA program administrator Joel Kean said: “They didn’t get there by going to arbitration. . . . A lot of the complaints we get are frivolous.”
Chrysler attorney Alan Huss said arbitration cases in the last year were down by a third from 1991 because the auto maker put a greater effort into satisfying customers. “You are only looking at the people who had sharp disagreements with Chrysler,” he said.
Huss said Chrysler opposes oral testimony because it slows down the arbitration process.
AAA said it plans to give consumers more written details about decisions and is exploring the cost associated with accepting oral testimony. “We think our program is fair, but we think there are things we can do to improve perceptions,” Kean said.
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Slick Offer: “Enjoy the season and the savings,” says the letter from Foulger Ford of Duarte, enticing customers with a coupon for a $19.95 oil change.
People who insist on using the coupon will miss out on an even better deal. As the hot-air balloon sailing over the dealership proclaims, the “everyday price” for oil changes at Foulger Ford is only $9.95.
The dealership says it isn’t to blame for the confusion. A cashier told us the $19.95 discount coupons are mailed to Foulger customers directly from Ford, which is apparently unaware of dealership pricing.
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Be Prepared: People flipping through the owner’s manual for a Sony STR-D390 stereo receiver may understandably wonder whether they made the right choice. Included in Sony’s tips for new owners is this bit of advice: “Do not throw away the carton or packing material! It will be an ideal container when transporting the system for repair work, etc.”
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Add This to Geography: College students don’t know enough about credit cards, life insurance, auto loans and consumer loans to make smart decisions after graduation, a new survey shows.
Students answered half of the personal finance questions correctly, doing best on questions about auto insurance and worst on questions about life insurance. For example, fewer than a quarter of the students said the annual percentage rate (APR) was the best indicator of a loan’s cost.
The survey of 2,010 college juniors and seniors across the country was sponsored by the Consumer Federation of America and American Express. Students who flunked shouldn’t feel too bad about the results. Adults who were asked many of the same questions two years ago received the same scores.
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Credit Disrepair: The state has obtained a $300,000 judgment against Credit One Services, a defunct credit repair outfit that sold kits showing consumers how to illegally create a false identity to obtain a clean credit record.
John Lamb, attorney for the state Department of Consumer Affairs, said that despite the action, it isn’t likely the 3,600 consumers who purchased kits from Credit One will get full refunds. The company had only $30,000 when its assets were seized last year.
Credit One was the target of a series of law enforcement actions by the state and federal governments and the Los Angeles city attorney’s office. The company’s owners, John P. and Nancy Ruggeri, formerly of Ft. Bragg, Calif., have completed jail sentences resulting from their no-contest plea to criminal violations of California credit repair laws last April.
Arbitration Score Card
A survey of 1,248 Californians who went through arbitration in new-car warranty disputes in 1992 shows that more than half felt the process was unfair and that they did not get the results they sought.
Got at least Process Process partial Board fair unfair relief Ford 48.4% 51.6% 55.7% Better Business Bureau 43.9 56.1 47.0 Chrysler 36.9 63.1 45.1 AAA 19.7 80.3 19.9
Source: California Department of Consumer Affairs
