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Binding arbitration program launched by BBB's Chicago office

November 22, 2010
Attorneys for the Better Business Bureau and the Chicago Automobile Trade Association rolled out details Wednesday of a new binding arbitration agreement that will help dealers and customers resolve their disputes without protracted and costly lawsuits. "Simply put, the BBB has created a forum that is fair, equitable, inexpensive and quick," said Irv Capitel, senior counselor of the BBB-Chicago's alternative dispute resolution division. "We want to see disputes settled smoothly and quickly. Lawsuits are antagonistic." "Disputes" eligible for BBB mediation involve the purchase, lease, servicing or repair of a new or used vehicle; and any service contracts purchased or provided at closing, except for disputes alleging criminal violation. Dennis O'Keefe, the CATA's general counsel, said some dealers already employ binding arbitration agreements with their customers. "The one thing that's lacking with those individual dealer agreements," O'Keefe said, "is credibility." Some arbitration processes can be expensive, he added. The BBB of Chicago and Northern Illinois, the bureau office that would hear any arbitration hearings, covers 19 northern counties in the state. Capitel said he is in talks with the BBB of Northwest Indiana to institute a similar program there. The BBB-authored agreement, which is included with this newsletter, is simple to read, to overcome charges the customer didn't understand what he agreed to, and is brief, on a single page. Copies can be downloaded from the CATA Web site, From the splash page, click on the box that reads "New! Dealer Forms." Surveys, Capitel said, show 99 percent of people are aware of the BBB and consider it a reliable not-forprofit agency with no real interest in the bottom line. Capitel would not dictate how dealerships present the BBB arbitration agreement to their customers, but he suggested they make the risk management tool one of the first forms for signature at closing. Capitel also said customers could be encouraged to sign the agreement based on several savings to them, compared to a lawsuit: • time used to prepare court documents • time used to prepare Depositions • time spent in court • attorneys' fees and other Costs "The key word under the BBB arbitration is resolution of the dispute," said Capitel. "Someone wins, someone loses, and everyone gets on with their lives." For deals negotiated in a language other than English, the arbitration agreement must be translated. Capitel said he can review agreements that dealers translate, to check for accuracy. He can be reached at 312-245-2539. Under the agreement, if a customer demands arbitration, he must pay $100 to the BBB to cover the arbiter's expenses. The dealer, in turn, must pay $900, or $700 if the dealer is a BBB member. Most hearings can be concluded in two hours, Capitel said. Charging a fee to both parties can deflect frivolous claims, he added. However, the one-page pact does not foresee every potential argument, and Capitel said he expects there will be challenges to the new agreement. But he said judges are coming to understand and support arbitration agreements. "They'll say, 'You have an agreement, we're enforcing it, and you need to go to the forum to arbitrate your disagreement,' " Capitel said. Nevertheless, a customer who signs the agreement still could sue the dealer. Capitel said: "A customer who insists on going to court will do that. This is not an insurance policy against suits. But your attorney will argue to stay or dismiss any court case by calling on the judge to enforce the agreement." The agreement does not limit punitive damages against a dealer found at fault by BBB arbiters. If it did, customers could argue they surrendered their rights by signing the agreement, something that is forbidden under the state's Consumer Fraud Act.