Mandatory Arbitration Car Selling Scam

Mandatory Arbitration Car Selling Scam

Before buying a car, customers should be aware of car selling scams. Being able to recognize these scams will prevent them from losing thousands of dollars. The worst thing about some ploys is that they can sound reasonable at first.

What is Mandatory Arbitration?

Mandatory arbitration or conflict resolution is an option offered by the dealer to settle any problems through arbitration. It`s a common practice among car dealerships across the country. This is also known as  Dispute Resolution Mechanism,  and can be added to both new and used car purchase contracts.

What Does It Cover?

  • According to the agreement the dealer is the one to chose the arbiter. Whereas the customer is to pay the entire arbitration fee.
  • The customer can not appeal the decision of the arbiter. Meanwhile the dealer has right to do that.

Taking into consideration all the factors mentioned above, we can come into conclusion that mandatory arbitration is an unfair treat. And if a dealer forces the customer to sign an arbitration agreement, the customer faces the scam of Mandatory Arbitration.

What It is For?

Actually unethical dealers use this “reasonable” option to protect themselves from consequences when they cheat consumers. If a customer signs the contract it means that he gives his consent to settle any future dispute through arbitration. Meanwhile he turns down his right to sue or appeal even if he has encountered car selling scams. For example, if a dealer sells previously wrecked or lemon vehicles without disclosure, this agreement releases him from responsibility. In this case, the customer has no right to sue the dealer.

Customers often sign the mandatory binding arbitration agreement without realizing it. Actually dealers can mention it at the last minute before signing paperwork. Sometimes even they just not mention it at all. Accordingly, they manage to escape explaining what the mandatory arbitration agreement is.  And finally, what rights the customer is turning down when he signs it.

If the customer has already signed a mandatory binding arbitration agreement, he can do not much later on. The only way to avoid this scam is to avoid dealerships that demand mandatory binding arbitration agreement.