A recent “victory” for the New York Times strikes a blow to consumers. By bullying Hyundai into abandoning arbitration to resolve warranty disputes, it robbed consumers of a fair and efficient alternative to costly, time-consuming, and economically inefficient litigation.
No real support is offered for the claim that consumers don’t get a fair shake in arbitration proceedings. Instead, critics of the procedure assert that arbitration may limit a consumer’s legal rights, may make it harder for a consumer to obtain a refund where a car turns out to be a lemon, and note that the companies hire the arbitration provider and that consumers may have to pay a fee to initiate proceedings.
Proponents of the process correctly point out that it saves all concerned time and money in resolving disputes without diminishing the quality of justice dispensed.
For its part, Congress places a high value on arbitration, finding it to be an effective and efficient alternative to litigation, and encourages its use, as shown by its enactment of the Federal Arbitration Act. 9 U.S.C. § 1, et seq.
The criticisms of arbitration in the consumer-product warranty context ring hollow. Arbitration panels apply the same laws and award the same remedies as do judges in courthouses; and top-quality alternative dispute resolution firms, like the one Hyundai used, the American Arbitration Association, have consumer specific rules in place to ensure fairness. And experience shows that, as a practical matter, arbitration panels are just as likely, if not more likely, to find in favor of a consumer as is a judge or jury.
So the New York Times may feel good about bullying Hyundai into changing its policy, but all it has really accomplished is to take away from aggrieved consumers an equally fair but far more efficient avenue for resolving consumer-product warranty disputes and left the rest of us to continue to bear the substantially higher transactional costs inherent in the litigation process.