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Binding Arbitration Experience?
Old 11-22-2013, 07:52 AM   #1
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Binding Arbitration Experience?

Most of the common services that we pay for on an extended basis, involve a binding arbitration clause, where disputes are to be settled.
Has anyone here had experience with this?
The one time that we had a problem, it involved a $1400 dispute. Since it was some time ago, I've forgotten the details, but remember that the cost to pursue the claim, would have likely cost more than any benefit derived. So, "chickened out".

Would appreciate any experiences, or insight into the subject? Any way around this? After exhausting the telephone calls and letters trying for a normal resolution, any suggestions for avoiding attorney fees?

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Old 11-22-2013, 03:21 PM   #2
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I think the answer to this question is highly dependent on the specific situation you are dealing with. In the past I have filed complaints with the Better Business Bureau when I couldn't get a company to respond to me. Some companies had someone who cared enough to not want a bad wrap by the BBB that they took the time to respond and resolve my problem.

Others apparently could care less, as they never even responded to the BBB complaint. The key is to try and figure out where in the company you might be able to find someone who cares and is empowered to resolve the problem. I've been pretty successful over the years in doing so, but I'm also very pushy when I am not getting satisfaction with a company. I don't believe in throwing good money after bad, but I have plenty of time to be really annoying.

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Old 11-22-2013, 03:45 PM   #3
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I have had some success with the BBB as well as my state's office of the attorney general (where a consumer protection law may have been violated).

An acquaintance was able to get one of the local news channels involved to assist with a dispute.
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Old 11-22-2013, 05:03 PM   #4
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I've been involved in some significant binding arbitration proceedings over the years. In many cases they are not unlike court cases albeit without a jury or a judge. Many businesses use them as opposed to court proceedings to eliminate the "wild judge or wild jury" outcome as in many cases the arbitrator is familiar with the specific industry, etc that the two parties in the dispute are involved in. In many of the cases I was involved in the simple existence of an arbitrator let to a settlement between the two parties and the arbitrator never actually ruled.

Don't know that I would go down that route for a relatively routine matter with a local business not delivering what was promised. BBB or small claims courts might be a better avenue IMHO.
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Old 11-22-2013, 08:08 PM   #5
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Who picks the arbiter?
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Old 11-22-2013, 10:24 PM   #6
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If your relationship with the business is governed by a contract or agreement (credit card is an example, real estate listing agreement is another) the arbitration process may be defined in the agreement. It has been my experience most of the arbitration groups used by businesses tend to favor the business over the consumer. For example the industry arbitration service mandated by almost all interstate household moving contracts has a record of ruling for the moving company in over 98% of the cases brought before it. With respect to interstate household moves the governing federal statute does not permit the consumer to sue in state court. The federal agency responsible for governing the industry will receive complaints but will take no action.

The only recourse for the consumer other than the industry controlled arbitration panel, and it's 2% chance of success, is to sue in federal court which is much more costly than state court. The cost of taking a case through trial in federal court is about $50,000. The law governing the industry does not allow the plaintiff to recover attorney fees if the plaintiff wins. Plus, with rare exceptions, putative damages are not awarded. Therefore if you have a $20,000 damage claim, and the moving company offers $3000 to settle, your choices are taking the offer, going to arbitration with almost no chance of success, or spending $50,000 to win a $20,000 judgment. Can you guess how much influence the industry had with Congress when the law was written? By the way, even if you buy the "full value" insurance on your move the law is the same. If the company denies a very legitimate claim your only recourse is arbitration or a federal lawsuit.

Over the years I've had some success in disputes with businesses by writing a carefully crafted, non threatening, letter directly to the owner, president or CEO. I outline the facts succinctly and appeal to his or her sense of fair play. In about 2/3 of the times I've tried this approach I've received a response and been able to reach a reasonable outcome.

Unfortunately in today's world there are fewer people with integrity running businesses. At either the corporate or small business level many firms will not back their products or admit costly mistakes. They will lose a customer rather than do the right thing. Their ability to get away with this behavior is facilitated by industry lobbying groups that influence Congress and state legislatures to write laws that make it difficult or too expensive for the individual consumer to seek recourse.

I've experienced arbitration from both the consumer and business side. I'm not a fan of arbitration for the following reasons:

1) Many arbitration agreements require the person or organization with the complaint to agree up front to the ruling of the panel (ie binding arbitration) and sign away the right to sue. In essence there is no ability to appeal.

2) Arbitrators tend to side with business when a consumer brings a complaint. There are a variety of reasons for this which I won't cover here.

3). The process is too complex for most consumers to manage without qualified legal assistance. If you are going to be hiring an attorney anyway why not sue in court where a jury may be predisposed to favor the little guy.

4) if the consumer shares in the cost of paying for the time and work of the arbitration panel the cost may not be less than going through a court trial.

5). Arbitrators cannot legally enforce a ruling. If you win, and the defendant refuses to pay or perform, you may have to go to court to have a judge enforce the ruling. Getting a court order will cost additional time and money.

On the plus side arbitration can be a quicker process and is sometimes less costly than a lawsuit. Before agreeing to arbitration it is worth the cost of a consult with an attorney who has experience with arbitration.
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Old 11-23-2013, 08:57 AM   #7
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It seems every car dealer pushes one of these on you. I was able to decline it recently on one deal, but not on others (well, I didn't actually walk out the door, so maybe that would have done it).

What really bugs me is, I don't think most people read these things. One that I tried to decline had the dealer choosing the arbitrator, and I had to pay the first $100 (or something) to even bring it to arbitration. I understand wanting to avoid a costly court situation, but this just seems to be me waiving my rights for no benefit in return.

IIRC, the CarMax agreement wasn't soooo bad, so I didn't push it. But I'd prefer not to sign these, I guess I'll have to check with the manager before even beginning the deal next time.

The odds that I'd have to take them to court are extremely low, but why waive that right? Of course they tell me, 'everybody signs it'. Well, I'm not 'everybody'.

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Old 11-23-2013, 09:48 AM   #8
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Originally Posted by ERD50 View Post
The odds that I'd have to take them to court are extremely low, but why waive that right? Of course they tell me, 'everybody signs it'. Well, I'm not 'everybody'.

Yeah...I agree...
but how would you be able to sign on to Comcast or AT&T?

After digging in to the BBB a little bit, I'm concerned that there are other things at play besides altruism.
A single tiny example... Looking up "Herbalife" on the California BBB, shows them rated as A+ the top rating, with only a two complaints... both resolved satisfactorily. YMMV of course.

I had occasion to try Small Claims Court in Chicago... Filing suit required some reasonable charges, plus a charge for the sheriff to serve the summons. Along with the bill for that, I received a note that the company I was suing couldn't be found... It was only for $1700, so my better judgement came into play, and I buried the issue, until now. BTW... it was a company that was under contract with the state for $50million in highway work... once the work was completed, the "company", a shell... disappeared.

We have resolved to accept any and all rip offs, up to a total of $500... it's easier on the worry part of the brain, and especially the blood pressure.

BTW... something happened when we turned 75... all of a sudden we bcame targets of every kind of business imaginable. An average of 3 to 4 mail solicitations/day. Maybe that happens to everyone... I don't know, but if it does, then why is the post office broke?
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Old 11-23-2013, 10:58 AM   #9
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Not sure if it was defined as arbitration, but I did exercise the 'lemon law' on a new Ford Escape(2002?). The dispute process was very simple, after removing the original dealership from the issues.

There was investigation of all of our attempts to resolve the issue, and a physical inspection of the vehicle. I did get to explain the issue and was questioned about the attempts to fix the issue.

I got to sit in and listen to the experts talk. Even though we had put 5k miles on the vehicle, and could have been changed some fee for that, we were granted a refund of the full price, or a new Ford. Since the issue was a design flaw, we took our money.

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Old 11-23-2013, 04:57 PM   #10
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For disputes involving securities industry/brokers, Financial Industry Regulatory Authority (FINRA) arbitration or mediation can be cost-effective for smaller claims.

Arbitration & Mediation - FINRA

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