Consumer advocates have promoted arbitration as a relatively informal, inexpensive, and speedy alternative to litigation. If these attributes could be realized in practice, then the corresponding disadvantages of litigation could be overcome, improving relations between buyers and sellers of consumer products.
Consumer arbitration mechanisms are now well established in the automobile industry. This article uses government audit data and an original survey to assess whether the potential of consumer arbitration is being realized. For the majority of consumers, automobile industry arbitration has been relatively quick, inexpensive, and informal. For some, however, there have been long delays in the process and costs have been onerous. Finally, while the mechanisms may have been informal, consumers were often discouraged from attending hearings and were therefore unaware of the advantages.