AAA Ends Arbitration Program Amid Scrutiny
The American Automobile Assn. said it will no longer arbitrate new-car warranty disputes, ending a program that has come under regulatory scrutiny in two states, including California, over how consumers are treated.
AAA’s program, known as AutoSolve, arbitrates disputes between consumers and manufacturers over who should pay to fix or replace cars under warranty. Manufacturers hire AutoSolve to handle these disputes, hoping to avoid costly, time-consuming lawsuits. AutoSolve currently performs arbitration chores for Toyota, Lexus, Hyundai, Subaru and Porsche.
AAA said it is getting out of the arbitration business because the program offers little direct benefit to Auto Club members. AutoSolve director Joel Kean said 1% of the 4,000 cases arbitrated each year coincidentally involve Auto Club members.
Kean said the decision to eliminate AutoSolve was unrelated to any state regulatory actions. He said AAA will continue to resolve disputes between members and AAA-approved garages.
The timing coincides with an investigation by the Florida attorney general’s office into allegations that Toyota “unduly influenced” the arbitration process. A spokesman for the office said the investigation stemmed in part from consumer complaints, but he declined to discuss specific allegations.
Kean said he and other staff members had been interviewed by investigators but had not been informed about the nature of the probe. He said he didn’t think AutoSolve was a target. A spokeswoman for Toyota said the company hadn’t been officially notified of any probe and that it had done nothing to warrant an investigation.
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In California, the Department of Consumer Affairs recently asked AutoSolve to open its arbitration hearings, permitting consumers and car dealers to testify. Currently, arbitrators make decisions based on written evidence submitted by the arguing parties.
California regulators made the request after a survey of AutoSolve participants showed 80% of them believed the program was unfair. A similar percentage said they did not get the relief requested, ranging from repairs to cash compensation to a new car.
AutoSolve had maintained that participants were dissatisfied because most people with legitimate complaints are appeased before the dispute ever reaches arbitration. However, California regulators maintained that face-to-face hearings would improve the way consumers felt about the process.
Program auditors hired by Toyota found other problems. Frank McLaughlin, retired director of the Center for Business and Public Policy at the University of Maryland, said a 1992 audit of the California program showed that many Toyota dealers didn’t tell dissatisfied car buyers that arbitration was an option.
That forced consumers who chose to fight Toyota to go to court, defeating the overall purpose of the program.
AutoSolve director Kean said the program will end when its auto manufacturer clients find new arbitrators, probably within six months.
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Good Help Is Hard to Find: GTE’s “personal secretary” message service went on the electronic equivalent of a strike recently, failing to take messages for thousands of people on Los Angeles’ Westside.
GTE said about 3,000 people in the Marina del Rey area missed some messages over several days due to a software glitch. It turns out that MCI’s long-distance software was incompatible with GTE’s equipment, so people using MCI long-distance service couldn’t leave messages for GTE’s “personal secretary” customers.
Meanwhile, an additional 2,000 people in West Los Angeles missed messages for up to three weeks because their electronic message center was oversubscribed.
People attempting to leave messages for GTE customers waited more than four rings for the overloaded system to answer their calls. As a result, many people hung up.
Among those affected was David Peevers, a free-lance writer and photographer who said he lost potential business during the three weeks his “personal secretary” wasn’t working. GTE said it had corrected both problems by Tuesday. Its actions included expanding the capacity of its West Los Angeles message center by converting to digital technology.
People affected by the problems will get a month of service free, which works out to $6.95 for residential customers.
