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Dealers warming to BBB's new binding arbitration agreement

November 22, 2010
Dealers have been receptive to the binding arbitration agreement introduced last month by the CATA and the Better Business Administration of Chicago and Northern Illinois. Irv Capitel, senior counsel of the BBB-Chicago's alternative dispute resolution division, said he thinks he knows why. "Court systems are set up where resolutions take forever," Capitel said. "With motions for re-hearings and motions to reopen, there can be 14 appeals before a case even reaches the appellate process." The BBB agreement, by contrast, offer resolutions that are "quick, inexpensive, fair and ethical," he said. "The arbitration forum eliminates the frustration on both sides and concludes matters when everything's still fresh. Decisions are reached within 60 days after notifying the BBB," said Capitel. "And when you talk about resolving things in 60 days, attorneys can't talk about charging $25,000 in fees." Dealers have increasingly embraced binding arbitration agreements with their customers; some won't sell a vehicle to a customer unless the buyer signs the pact. But few forums share the BBB's twin advantages: a reputable institution and modest fees. Under the agreement, if a customer demands arbitration over a dispute, 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. Copies of the agreement can be downloaded from the CATA Web site, From the splash page, click on the box that reads "New! Dealer Forms." The agreement currently appears in English only, but the CATA is arranging for its translation into Spanish, Polish, Korean and Russian. Those translated versions also will appear on the Web site. 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. The BBB retains independent arbiters who are expert in various industries, such as automotive, construction and insurance. As a public service organization, BBB arbitration rates are lower than nearly every competitor.