Car Selling Scams: Mandatory Arbitration

Car Selling Scams: Mandatory Arbitration

When shopping for a used car a customer is probably to face a large number of car selling scams, and mandatory arbitration is among them. This newly designed scam in the arsenal of fraudulent auto dealers is used to protect them from responsibility when they cheat customers.

It`s a common practice among car dealerships across the country to add mandatory binding arbitration agreement which is also known as dispute resolution mechanism, to both new and used car purchase contracts. If a customer signs the contract it means that he gives his consent to settle any future dispute through arbitration and turns down his right to sue or appeal even if he has encountered car selling scams.

Mandatory arbitration allows auto dealers to get away with a number of car selling scams. For example, if a dealer sells previously wrecked or lemon vehicles to unsuspecting customers without disclosing it with this agreement the dealer doesn`t accept any accountability. When a salesperson at the dealership forges customer`s credit statement and oblige him to agree to a car loan he never can afford the customer can be sued by the finance company if the forgery is revealed, whereas the dealer remains unpunished. Another manifestation of car selling scams allowed by mandatory arbitration agreement is as follows: the dealer after trading in customer`s old car is not going to pay off the loan on it. As a result, the finance company sues the customer and obliges him to pay thousands in damages.

Customers are not always aware that they`ve given their consent to binding arbitration. A mandatory binding arbitration agreement is often tucked in a fine print, and dealers can mention it in passing at the last minute (if mentioned at all) when the customer is going to sign paperwork. At the same time, they don`t explain what the mandatory arbitration agreement is and what rights the customer is turning down when he signs it.

If the customer has already signed a mandatory binding arbitration agreement not much can be done. The only way to avoid this scam is to avoid dealerships that demand mandatory binding arbitration agreement.