Lemon Law Arbitration—
Get the Most From It!

If you have a lemon vehicle, you have a right to be compensated. Lemon law arbitration is one way to get your compensation without a court battle.

Most vehicle manufacturers in North America has set up an informal arbitration process that you can use after you file a lemon law complaint about your defective vehicle. In many states, the arbitration is binding on the manufacturer, but not on you, the consumer.

This means that if you do not like the outcome of the arbitration hearing, you are entitled to take your complaint to court. However, the manufacturer must abide by the ruling of the hearing. If you win, they must replace your vehicle or give you a refund of the purchase price and all associated costs.

What is Lemon Law Arbitration?

This arbitration puts the manufacturer, the lemon vehicle owner and a neutral third party mediator together to resolve the vehicle owner's complaint. In some states, this is a voluntary process. In others, the state requires arbitration before the complainant can take the manufacturer to court.

Where arbitration is voluntary, through the manufacturer's informal process, there is no cost to you, the complainant. If your state has mandatory lemon law arbitration, the cost could be $250 or more. This fee is returned if the arbitrator rules in your favor.

The Better Business Bureau also has an arbitration system that you can use.

Why Is Arbitration Considered a Solution?

Arbitration is a process for settling a lemon law dispute. If you agree to arbitration, you'll be going in expecting to be offered compensation. The manufacturer will be going in expecting to be given one more chance to repair the vehicle before having to give you a new one or refund your purchase price.

Unfortunately for you, if you win in a voluntary arbitration, the manufacturer will likely be given one final chance to repair your lemon. The good news is that, if the repair is not successful, the manufacturer will then have to replace the vehicle or refund your purchase, with no further arbitration or court case.

So, even though the solution may not be completely to your liking, you will at least know that the issue will be resolved, either by a successful repair of the vehicle (which isn't likely) or a replacement/refund.

If you use mandatory arbitration, the ruling in your favor means a replacement or refund, with no option for the manufacturer to attempt another repair.

Your Arbitration Hearing

You need to be prepared for your arbitration hearing. Make sure you take all pertinent information with you. This includes all work orders and receipts for time spent in the shop (especially if you're making the 30 day out-of-service complaint), all the times you have driven the vehicle in less than safe conditions, copies of all letters to the dealer and manufacturer, and notes about any phone calls you may have made.

Also bring a record of all scheduled maintenance on the vehicle as well. This will show that you have done your part in having the car serviced as recommended by the dealer and manufacturer. This will also show that the problem the vehicle is having is not due to anything you have or have not done.

You may also want to consider hiring a lemon law attorney, especially if you have to pay for the arbitration hearing. If you think you won't be able to keep your cool during the hearing, bring a lawyer, who will act on your behalf.

Lemon Law Arbitration Summary

Before you go to court, consider arbitration. The outcome is not binding on you, so if it's not to your liking, you can then take the manufacturer to court. But the chances are good that, if you're fully prepared, you'll win at the lemon law arbitration hearing, and receive the compensation that is your right under the law.