In a NY Times story Christopher Jensen reports on a disturbing development. Hyundai has inserted a force arbitration clause in its warranty. Unless a buyer opts out within 90 days, any lemon law claims may only be brought in an arbitration forum.
Jensen quotes a Hyundai representative to the effect it is trying to "help" its customers by forcing them to arbitrate disputes over warranty coverage. Here's an excerpt from the NY Times article:
Owners of Hyundai vehicles who have not studied a supplement to their owner’s handbooks may be in for a surprise should their cars develop problems that result in a dispute over warranty coverage. The jolt would come in the form of a policy that requires some warranty disputes to be settled through binding arbitration — unless the owner notified Hyundai, within 90 days of purchasing the vehicle, of the decision to opt out of the arrangement. ... In the Hyundai arrangement, the binding arbitration is administered by the American Arbitration Association, which has been hired by Hyundai, to hear the case; its decision is not subject to appeal. ... Under Hyundai’s plan as outlined for 2013 models, an owner would pay up to $275 to help cover the cost of the arbitration proceeding. Hyundai says the policy helps consumers by making it simpler to resolve disputes without the expense of going to court.
The article goes on to note that
Giving owners 90 days to opt out is “fair” and “nothing is hidden” because the notice is included an “an easy-to-read brochure titled ‘Warranty Dispute Resolution,’ ” Jim Trainor, a Hyundai spokesman, wrote in an email.
The truth is Hyundai hopes that few people see the notice almost no one makes the effort to opt out before they face a warranty-related problem. Going to arbitration is almost always bad for consumers. The arbitrators typically don't care about consumer claims on the one hand and they often want to curry favor with the repeat player--Hyundai--so they get more business in the future. Arbitrators typically charge thousands of dollars for their services. There is no appeal if the arbitrator does not follow the law.
Opting out just gives Hyundai's customers the option of suing or arbitrating -- exactly what Hyundai (or any proponent of pre-dispute mandatory consumer arbitration) wants to take away from consumers.