What do you do when you think you bought a lemon and the manufacturer doesn’t seem to care? For new-car buyers, the Canadian Motor Vehicle Arbitration Plan is a effective way of resolving disputes without the cost of a lawyer — and it’s free.
Nobody wants to be stuck with a big repair bill for a car, especially when you think it should be covered by the vehicle’s new-car warranty. In the vast majority of cases, manufacturers cover claims without any problems. However, there are times where the manufacturers and consumers can’t agree on who should pay for repairs to a car.
The Canadian Motor Vehicle Arbitration Plan is a voluntary program that serves as the final say to a customer complaint. Most of the automotive makes that sell cars in Canada, with the exception of Suzuki, Mitsubishi and BMW, are members of the plan. The plan only covers new cars sold in Canada. It does not hear complaints from owners of vehicles imported privately into the country.
“For manufacturers, the plan costs an average of a dollar a car,” says Stephen Moody, general manager of the program. “There is no cost to consumers and it is an attractive alternative to costly legal fees.”
He says the organization arbitrates about 300 cases per year, down from a high of 700 just a few years ago. A drop, he attributes, to manufacturers working harder to resolve complaints before it gets to arbitration.
Arbitration is an attractive choice because of three main reasons:
n It is free to the consumer. There are no out-of-pocket expenses. A consumer can seek the advice of a lawyer (at their expense) or call witnesses to the hearing.
n It is fast — a resolution, on average, takes only 70 days. Hearing are set up 50 days after receiving completed application. The arbitrator’s decision will be delivered within 14 days of the hearing.
n It takes place locally. Arbitrators travel to the complainant’s hometown to settle the complaint.
A typical scenario will see a person filling out a complaint, detailing the problem and the manufacturer’s response. The manufacturer follows with their version of events and the steps it took to resolve the complaint.
If the two sides cannot agree, the arbitrator gets together with the two parties. The arbitrator listens to both sides and makes a binding decision based on the facts presented. Once the decision is made, there is no appeal.
“These days people are successful 50 per cent of the time,” says Moody. “It used to be higher, with more people winning against manufacturers. But these days the only reason a manufacturer will go all the way to arbitration is because they think they have a strong case and can win.”
He says the organization does not give advice nor judge the merits of the complaints.
“People have varying tolerances,” he says. “Some have a low tolerance for problems, complaining after only one or two instances. Others only reluctantly complain after a problem has repeated itself 15 or 20 times.”
Remedies the arbitrator can order are:
n Repair the vehicle;
n Buy back the vehicle;
n Reimburse for previous repairs;
n Reimburse up to $500 for diagnostic testing done prior to hearing;
n Reimburse for out-of-pocket expenses up to $500;
n Reimburse up to $100 to summon witnesses.
The arbitrator cannot order exemplary or punitive damages.
Eligible vehicles include the current of four previous model years — in 2013 it must be a 2010 or newer. The vehicle must have fewer than 160,000 kilometres on the odometer at thetime of hearing. The complainant must be the registered owner when the dispute arose.
Before the claim, people need to prove that they gave the dealer and manufacturer a reasonable amount of time to resolve the problem.
The program does not cover extended warranties. It does not take on disputes involving defects on tires or fuel-efficiency issues — unless the problem is caused by defective components.
The organization has been quietly operating for 19 years in Canada. The arbitrators are mostly lawyers working on contract. However, they do not dispense legal advice.
“Only half of the applications that come in proceed on to arbitration,” says Moody.
“While some have simply sold the vehicle, others didn’t need to proceed because they were able to settle the problem with the dealer and manufacturer with the threat of arbitration.”
© Copyright 2013