FAIR Act Mean for Lemon Law Arbitrations and Consumers

man driving

In the fall of 2020, the House passed what’s known as the FAIR Act (Forced Arbitration Injustice Repeal Act) in a 225-185 vote in favor.

While this name might seem confusing, the most important thing you should know is that this is a huge win for consumers and employees.

FAIR Act for Lemon Law Arbitrations and Consumers

For a long time, arbitration has been a loophole in our legal system that infringed on American’s rights. Representative Rosa DeLauro (D-CT) said, “Arbitration is one of the central ways in which corporate America has rigged the system against middle-class families and working people.”

Forced arbitration impacts consumer transactions because it serves to block consumer access to the court system if they are ever the victim of poor manufacturing. Essentially, the arbitration loophole prevents buyers from being able to hold manufacturers accountable for selling products that are defective.

If you are confused about how the FAIR Act will impact your lemon law claim, read below to learn more about how a veteran lemon law attorney in California can help.

What Exactly Is Forced Arbitration?

To simplify, forced arbitration is when a consumer is not given the ability to dispute in a court of law. When it comes to lemon law, your only option in forced arbitration is to resolve the matter with the manufacturer directly.

This can be done either with a panel of arbitrators or one arbitrator. Unfortunately, forced arbitration clauses are more common than you would think, and oftentimes they are hidden in the fine print of your purchase order.

An example of forced arbitration hidden in the fine print can be seen in Tesla. Tesla specifically has a lemon law arbitration clause in purchase orders that states that consumers are not allowed to file a lemon law claim in court if the defects in their vehicles are not fixed within the first 60 days of ownership.

This means that after 60 days of owning your vehicle, your only choice to resolve a lemon law claim is in arbitration. The good news, in this case, is that you can opt-out of this clause within 30 days.

It may be clear by now, but manufacturers purposely place forced arbitration clauses in purchase orders in order to be unsuspected and very easy to miss. This is because forced arbitration clauses allow businesses to avoid being held legally accountable for their negligence and avoid compensating their consumers fairly.

Now that we understand forced arbitration, what is the FAIR act?

Senator Richard Blumenthal and Representative Hank Johnson first introduced the Forced Arbitration Injustice Repeal Act. The FAIR Act was intended to disallow businesses from writing mandatory arbitration clauses in their contracts and purchase orders.

When the bill was passed, employees and consumers who have previously signed documents that included a forced arbitration clause are immediately granted access to the court system. This means that the FAIR Act voided any forced arbitration clauses that already existed and banned them from being written in the future.

Why Is It That Manufacturers Prefer Arbitration?

Earlier in our article, we mentioned that manufacturers and businesses prefer arbitration over the court. You may be asking yourself why, because the answer isn’t obvious.

During forced arbitration, you are blocked from accessing the court system. It’s important to remember that the court system in the U.S. was made by and for the people.

While companies generally try and convince their customers that arbitration is much quicker and easier than handling your claim in court, arbitrators are much more likely to side with manufacturers. This is because consumers are not allowed to present their claim in front of a jury of their peers or hire an attorney who is familiar with lemon law.

Manufacturers know that they are more likely to prevail over the consumer in arbitration, which is why forced arbitration clauses are incredibly common.

What Can I Do to Avoid Arbitration?

Hopefully, by now, you understand that avoiding arbitration is in your best interest as a consumer. Specifically, when it comes to lemon law, you are not required to participate in the arbitration.

If you haven’t signed a forced arbitration clause but you decided to present your lemon law claim in front of arbitrators, you can still change your mind and present your claim in court.

So what can you actually do to avoid arbitration? The first step you should take is during the process of buying or leasing your car. You must look over your purchase order for anything that mentions arbitration.

Like we mentioned above with Tesla, there is often a period of time when you can opt-out of the forced arbitration clause.

Be very sure to opt-out during that time period. Another tip is once you’ve filed your lemon law claim, do not let yourself be convinced by the manufacturer’s lawyers to go the route of arbitration. They will tell you it’s quicker, easier, and cheaper, but they won’t tell you you’re more likely to lose.