Devoted Audi owner Deborah Wyatt was set to buy her third car from Flow Automotive in Charlottesville in August—until she was presented with a separate arbitration agreement after signing the sales contract.
Arbitration agreements, which are more often part of banking or credit card terms, are usually designed to block your ability to sue in the event of a problem. As soon as Wyatt, who happens to be a lawyer, saw the title at the top she refused to sign. “The finance man made a face rather indicating he thought it was going to be required, but I felt certain it couldn’t legally be, since it wasn’t part of the contract,” Wyatt says. “It had never before been mentioned.”
The salesman let Wyatt drive the new car home, even though it wasn’t yet officially hers. When she returned the next day, again the arbitration agreement was presented.
She ripped it in half, gave back the car, and had to ask for a ride home.
“If it isn’t part of a purchaser’s agreement, it isn’t legal to then require a purchaser to basically waive the right to go to court,” says Wyatt, who has experience as a consumers’ rights attorney.
Most arbitration clauses prevent people from joining a class action lawsuit, instead requiring them to bring an individual claim against the company and to settle it outside of court with an arbitrator. Consumer agencies say this favors businesses rather than the consumer, because companies know that people almost never spend the time or money to pursue relief individually, especially when the amounts at stake are small.
Local consumer protection attorney Edward Wayland says most of his cases that involve car sales are disagreements over warranty terms. If a car dealer does insist on arbitration terms, Wayland says, “I think it would create big problems for consumers,” who could not sue, appeal, or join class-action suits, depending on the terms.
Remar Sutton, president of the Consumer Task Force for Automotive Issues, has urged consumers not to buy vehicles from any seller requiring a mandatory binding arbitration agreement. Why would consumers need to be able to sue an auto dealer? In a piece on autoissues.org, Sutton gives such examples as a dealership that buys wrecked vehicles then sells them without disclosing damage, one that forges your credit statement to give you a loan you could never afford, or even a dealership that trades in your old car but does not pay off the loan on the old car, which leaves you open to a suit from a financing company.
Flow Automotive manager Shawn Ayers didn’t wish to answer questions about the mandatory arbitration agreement, and referred a reporter to Flow Automotive Companies, based in Winston-Salem, North Carolina. Several calls to the headquarters office were not answered. However, a call to a different Flow Automotive dealership in Statesville, North Carolina, confirmed that other Flows are using the arbitration agreement, which is separate from the sales contract.
At Umansky Toyota in Charlottesville, a finance department employee says the arbitration wording only applies to leased vehicles, and is not part of sales contracts.
Wyatt says that, by not including the arbitration agreement in the purchase contract, Flow possibly was violating the part of the Virginia Consumer Protection Act that says you can’t add terms to a contract. But she thinks signing to allow arbitration in a vehicle sale, whether in the purchase agreement or not, is a bad idea.
Savvy consumer Wyatt didn’t give up. She purchased the Audi she wanted from Audi Richmond, which did not require an arbitration agreement. In fact, she spoke with Audi USA, “which assured me there was no such Audi requirement” for arbitration. She called other Audi dealers to see if they would require this, and Roanoke didn’t either.
Despite the clause for concern, Wyatt is not done with Flow Charlottesville. She says she will continue to get her new Audi repaired there because she likes the service department.