On Friday, Hyundai announced that it would reverse the company’s
policy on settling
warranty disputes. The previous policy required Hyundai owners to resolve warranty disputes
through binding arbitration unless they notified Hyundai of their intent
to opt out of this arrangement within 90 days of purchasing their vehicle.
The policy was outlined in a supplement to the owner’s handbook.
A New York Times article outlining the company’s arbitration clause
prompted the change in Hyundai’s policy.
Hyundai made the decision to remove the arbitration clause after an article
discussing the requirement was published in the New York Time’s
Automobiles section. A representative from Hyundai’s product public
relations group explained that the company made the decision because it
didn’t want consumers to be misled and to think the Hyundai doesn’t
stand behind their warranty.
Requiring owners to resolve disputes through binding arbitration greatly
limited their options for seeking recourse.
Under the old policy, Hyundai owners who failed to opt out of the arbitration
arrangement may have been barred from joining class action lawsuits or
faced difficulty when trying to get a refund if their vehicle turned out
to be a lemon. They would also be exempt from other methods of resolving
their disputes such as, nonbinding arbitration and filing an action in
small claims court.
Owners were also required to pay towards the cost of arbitration proceedings.
In addition, the old policy required owners to participate in arbitration
administered by the American Arbitration Association. Although the association
was hired by Hyundai, owners were responsible for paying up to $275 towards
the cost of the proceedings.
The arbitration clause did not encompass all types of disputes regarding
The arbitration clause did not preclude owners from filing product liability
or personal injury lawsuits. Hyundai also claims that the arbitration
clause allowed owners to take advantage of state lemon laws. However,
the arbitration clause required owners to resolve their warranty disputes
using binding arbitration when the outcome could result in a full or partial
refund of the purchase price, which would be the result in a
lemon law case.
Automobile dealers commonly require purchasers to agree to an arbitration
clause as part of the sales contract. However, according to consumer advocates,
Hyundai’s strategy of placing the arbitration clause in an owner’s
manual was aggressive.
If you have purchased a vehicle and you believe that your vehicle’s
condition does not meet the manufacturer’s or dealer’s warranty,
you should contact an attorney immediately. An attorney can review the
facts of your case to determine whether you have a product liability or