by Brian Wolfman
As explained in this article by Christopher Jensen, Hyundai is trying to “help” its customers by forcing them to arbitrate disputes over warranty coverage. That’s awfully nice of the company. Once a dispute occurs, customers might be terribly confused over whether they should aribtrate, engage in some other form of informal resolution, or sue in court, so Hyundai is assisting car buyers by making the decision for them now. Please.
Here are excerpts from Jensen’s piece:
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.
Let’s get real. The company actually hopes that few people see the notice (which is likely) and that almost no one makes the effort to opt out before they face a warranty-related problem (which is very likely).
As I have noted before (go here, for instance), arbitration opt-out programs are a joke. They are public-relations moves that seek to conceal the company’s true purpose: taking away customers’ access to the courts.
Let’s examine what is going on here. Hyundai is offering an opt-out to all of its customers, without asking anything in return. What consumer wouldn’t opt out if he or she knew what that meant and opting out was easy? It’s not as if Hyundai would decline a consumer’s offer to arbitrate down the road, when a dispute arose, if the consumer were to opt out now. 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.
Hyundai says that car owners can still go to court with personal-injury cases — that is, they can still bring cases involving injuries from defects in Hyundai cars. True. Until Hyundai tries to take that away too.
UPDATE (12/6/2013 – 10 pm): After adverse publicity, Hyundai has dropped its mandatory arbitration policy for warranty claims.