Very interesting article in MoJo about a legal practice used by Daimler Chrysler Financial Services to force its "... customers to waive their rights to access the legal system as a condition of buying a car."
DaimlerChrysler Financial Forces Army Reservist to Fight Car Rip-Off From Iraq
On Monday, I posted a story about one of the new hazards of buying a used car, namely the now-common practice by car dealers of forcing customers to waive their rights to access the legal system as a condition of buying a car. The idea is that if the dealership rips you off, you have to submit to private, binding arbitration, conducted by an arbitration firm hired by the dealership instead of filing a lawsuit. The rules in arbitration are a lot different than the regular courts, in ways that create hardships for consumers. Those hardships are a lot worse if you happen to be deployed to Iraq.
Today I heard a story from a Rhode Island consumer attorney named John Longo, who told me about a client of his who had a small dispute with a Jeep dealer over the title of a car he bought with a friend. The Jeep was financed through Daimler Chrysler Financial Services, and the sales contract and financing agreements included a mandatory arbitration clause forcing the car buyer to waive his constitutional right to go to court. So, after having to run up some legal bills fighting the car dealer over $220, Longo's client filed a claim against both the dealer and the financing company with their pre-selected arbitrator from the American Arbitration Association.
Long story short, the customer got deployed to Iraq while the case was moving forward. Longo filed a request for a stay, to postpone the case until his client came back to the States. If the case had been in a regular court, Longo says a judge would have granted the stay automatically under the federal Service Members Civil Relief Act. Instead, though, Daimler Chrysler and the dealership objected and want to proceed without Longo's client present, which they can do because in arbitration, a plaintiff is not even guaranteed a live hearing. It's also unclear whether the federal relief act applies to arbitration.
It sucks on a few different levels.
It struck me first how such a supposedly grand old American institution could take such a crappy approach to a member of our military who has been shipped off to Iraq.
But it also struck me that they would also screw around with his legal "constitutional right to go to court" to challenge this company in a legal dispute.
It's a laugh, too. American cars have gotten this image of being crap. Now they'll have this image of being unscrupulous.
As this story comes out more and more, if D-C doesn't look at changing such a stupid legal practice, they'll have the affect of turning even more people away from American autos.