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Resolving Consumer Disputes: Mediation and Arbitration
How frustrating! You buy a product and it breaks. You try to return it or
have the company fix it, but don't succeed. You talk with the salesperson,
speak with the manager, and write letters to the company, and still you're not
satisfied with the company's response.
Maybe it's time to try an alternative dispute resolution (ADR) program — an
option that businesses, private organizations, and government agencies use.
Dispute resolution programs can be quicker, cheaper, and less stressful than
going to court.
Mediation and Arbitration
The two most popular types of dispute resolution are
mediation and arbitration. In mediation, a neutral third party — a mediator —
helps you and the other party try to resolve the problem through facilitated
dialogue. However, it's up to you and the other party to reach an agreement.
Arbitration is less formal than court, though you and the other party may
appear at hearings, present evidence, or call and question each other's
witnesses. Unlike mediation, an arbitrator or panel makes a decision or award
once you've presented your case. The decision may be legally binding.
Finding a Dispute Resolution Program
The following organizations can help you locate programs
in your area:
 | your state attorney general or local consumer
protection agency; |
| small claims courts and court systems; |
| nonprofit dispute resolution organizations; |
| bar associations and law school clinics; |
| Better Business Bureaus; |
| the Conflict Resolution Education Network at 1527 New
Hampshire Avenue, NW, Washington, DC 20036; 202-667-9700. |
Choosing the Right Program
Contact and compare several ADR programs to find the one best suited to your needs.
| Is the program voluntary or mandatory? Many dispute resolution programs are
completely voluntary. Whether to use them is your decision. In some states,
however, a court may order you to try arbitration or mediation. Some companies
require consumers to arbitrate their disputes and waive their right to go to
court. Check your contract or product packaging for details.
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| What's required
and how long will it take? It varies. Mediation requires meetings; arbitration
uses hearings. Either may take place in person, by phone, or by video
conferencing. However, some programs resolve disputes based solely on written
statements — sometimes called "desktop" arbitrations. In some cases, you'll
begin with mediation, and if no decision is reached, you'll progress to
arbitration.
One of the benefits of ADR is that disputes are usually resolved
more quickly than a court proceeding.
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| Can I help select the mediator or arbitrator? Maybe. Many programs offer
lists of neutral third parties from which to choose. Be aware that your ADR
provider or your state may have ethics rules for third parties to assure
impartiality. For example, the third party cannot get personally involved in
the dispute or benefit from the resolution. Ask the the program administrator
for a copy of the rules.
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| How confidential is the program? Find out if the
program guarantees confidentiality. Mediation generally is confidential;
arbitration sometimes is. If confidentiality is important to you, make sure
you get the specifics before committing to the program.
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| How neutral is the
program? To get a sense of neutrality, ask who pays for it, and whether it is
administered by an independent agency.
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| What are the costs? Some programs are
free. Others charge a flat fee or a rate based on your ability to pay. Of
course, if you have an attorney or other representation, you also pay their
fees.
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| Is the decision binding — that is, must both parties accept it?
Mediation is nonbinding; arbitration may be binding on the company, both
parties, or neither. If the arbitrator's decision is nonbinding, you can
reject it and try other avenues, including small claims court in some areas.
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Preparing for an ADR Program
The program will progress more easily and effectively if
you are well prepared.
| Understand and follow the program's rules.
Make sure you meet all the preliminary requirements. For example, first try
to resolve the problem with the company.
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| File your claim promptly. The earlier you
submit your claim or written statement and have the meeting or hearing, the
less likely you are to forget important details.
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| Outline the important facts of the case.
You'll need to be able to tell when and where you bought the product or
service, what the specific problem is, and what you've done to try to
resolve the problem.
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| Document your claims. Make copies of receipts,
repair orders, warranties, cancelled checks, contracts, or any other
supporting documents.
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| Ask if you're allowed to have witnesses. If
so, make sure you know what they'll say or submit in writing.
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| Know what you want from the company. Decide
whether you want a refund, exchange, repair, or reimbursement on expenses
you've incurred, including repair costs. At the same time, be flexible. You
may have to compromise. |
Going to Court
If a dispute resolution program does not settle the
problem, you may want to sue. If the right to sue is important to you, check
contracts carefully — before you sign — to see if they waive your right to
sue. If you enter into an arbitration program that's binding on both parties,
you've given up your right to sue. Agreements to resolve disputes through
binding arbitration are generally enforceable, even if you did not sign a
contract and the agreement to arbitrate is on the product packaging. Time
constraints also can be a problem. Know the jurisdiction's time limitations on
filing a suit.
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