Breakout Session # 106 Jo DeMars, President Amy Koltz, Process & Compliance Manger

2. ADR: Face-to-Face or Cyberspace Breakout Session #106 Jo DeMars, President Amy Koltz, Process & Compliance Manger DeMars & Associates, Ltd. Wednesday, April 15, 2008 3:20 – 4:20 PM

3. Agenda • Introduction • History of Consumer Warranty Dispute Resolution Programs • Traditional Dispute Resolution Forums • Online Dispute Resolution • Recommendations

4. About DeMars & Associates, Ltd. • Founded in 1988 • Headquarters in Waukesha, WI • Activities: Training, public policy forums, • consulting, and dispute resolution program • design and management • We provide services to the following • industries: •  Automotive  Homebuilding •  e-Commerce  Recreational Vehicles

5. Client List Professional Warranty Service Corporation Residential Warranty Corporation 2-10 Home Buyers Warranty Quality Builders Warranty Bonded Builders Warranty Group Thor Industries, Inc. National RV Holdings, Inc. Monaco Coach Corporation Winnebago Industries Coachmen Recreational Vehicle Company Freightliner Custom Chassis Workhorse Custom Chassis eBay Motors PayPal Big Dog Motorcycles Metropolitan Builders Association

6. Agenda • Introduction • History of Consumer Warranty Dispute Resolution Programs • Traditional Dispute Resolution Forums • Online Dispute Resolution • Recommendations

7. How in the World Did We Get Lemon Laws?

8. How in the World Did We Get Lemon Laws? President John F. Kennedy The Consumer Bill of Rights • Informed • Safe • Choice • Heard • Redress

9. How in the World Did We Get Lemon Laws? • Federal Consumer Protection Agencies: • Consumer Product Safety Commission • White House Office of Consumer Affairs • Department of Consumer Education • Legislation: • Fair Credit Reporting Act • Magnusson-Moss Warranty Act

10. How in the World Did We Get Lemon Laws? • Results: • Increased awareness • Increased willingness to complain • Increased expectations

11. Which Came First: Arbitration Programs or Lemon Laws?

13. Which Came First: Arbitration Programs or Lemon Laws? • Ralph Nader, Unsafe at Any Speed • Magnuson-Moss Warranty Act • Federal Trade Commission Part 703 • Alternative Dispute Resolution Programs • Individual State Replace/Repurchase Statutes • Certification

14. Magnuson-Moss Warranty Act 16 CFR Part 703 Minimum Requirements • Free to consumers • Funded & staffed to ensure fair & expeditious resolution of disputes • Funded & staffed to ensure mechanism members are insulated from warrantor—to avoid influence. • funds committed in advance • personnel decisions based solely on merit • no conflicting duties

15. Magnuson-Moss Warranty Act 16 CFR Part 703 Decisions • Mechanism has a maximum of 40 days from notification of dispute to render a decision. • Two permissible delays: • Consumer did not provide required information • Consumer has not sought relief directly from the warrantor

16. Magnuson-Moss Warranty Act 16 CFR Part 703 Effect of Decisions • Decisions are technically not binding on any party to the dispute. • However, the warrantor is required to act in good faith and comply. • Decisions are admissible in court.

17. What Is A Lemon Law?

18. Components Of Lemon Laws • Notify manufacturer • Substantial nonconformity • Number of repair attempts • Number of days out of service • Affects use, value, or safety • Time period

19. Song-Beverly Consumer Warranty Act California Civil Code §§ 1790 et seq Contains the “Tanner Consumer Protection Act” (§ 1793.22) The California Lemon Law

20. California Lemon Law Presumption • Customer is entitled to a • buy back: • 4 repair attempts • for the same nonconformity, or • 30 days out of service • for any nonconformity, or • 2 repair attempts • for a nonconformity that results • in a condition likely to cause • death or serious injury & the • mfr. has been informed of • need for repair. 4 repair attempts/ 30 days out of svc.

21. Agenda • Introduction • History of Consumer Warranty Dispute Resolution Programs • Traditional Dispute Resolution Forums • Online Dispute Resolution • Recommendations

22. Traditional Dispute Resolution Forums MEDIATION ARBITRATION & LITIGATION

23. Mediation Dispute Resolution Forums Mediation is a process in which a neutral, third-party (the Mediator) assists the parties to a dispute in reaching a mutually acceptable settlement. The mediation process is informal, voluntary and the mediator may not impose a settlement on the parties.

24. Dispute Resolution Forums Mediation 6 steps to a mediation: • introductory remarks by the mediator, • statement of the problem by the parties, • information gathering time, • identification of the problems, • bargaining and generating options, and • reaching an agreement.

25. Dispute Resolution Forums Mediation Benefits: • Opportunity for parties to vent & be heard by someone outside the dispute • Mediator does not impose a solution • Parties are more likely to uphold & find satisfaction in an agreement they craft

26. Dispute Resolution Forums Arbitration Arbitration is a process in which a neutral, third-party (the Arbitrator) makes a final decision based on written documents and/or oral presentations by the parties. The process is informal and may be mandatory or voluntary. The arbitrator’s decision may be binding, conditionally binding or non-binding.

27. Dispute Resolution Forums Arbitration 6 steps to an arbitration hearing: • Introductory remarks by the arbitrator, • opening statements by the parties, • complainant’s witness testimony, • respondent’s witness testimony, • closing statements by the parties, and • arbitrator renders decision after hearing.

28. Dispute Resolution Forums Arbitration Benefits: • Less costly than litigation • Less time consuming than litigation • Decision is final, no appeals process • Confidentiality of the process

29. Dispute Resolution Forums Litigation Best application: When your goal is setting a precedent or creating public policy. Court proceedings in small claims court or civil court.

30. Dispute Resolution Programs Example: Consumer Arbitration Program for Recreational Vehicles

31. Dispute Resolution Programs Automotive Consumer Steps for Escalating Dispute A Four Step Process DR Program - Arbitration DR Program - Mediation Notify Manufacturer - Conciliation Notify Dealer

33. Life of a Complaint Application Submitted by complaining party

34. Life of a Complaint Mediated Agreement Parties come to a mutually agreeable resolution with the assistance of a neutral, third-party.

35. Life of a Complaint Arbitrated Decision Arbitrator renders a decision based on the evidence that is final, definite and complete. Decision becomes binding when consumer accepts.

36. Life of a Complaint Acceptance Customer has 30 days to accept the arbitrator’s decision.

37. Life of a Complaint Action Performance Program Administration places a follow-up call to the customer to ensure the manufacturer has implemented the mediated agreement or arbitration award in the specified timeframe.

38. Agenda • Introduction • History of Consumer Warranty Dispute Resolution Programs • Traditional Dispute Resolution Forums • Online Dispute Resolution • Recommendations

39. Online Dispute ResolutionWhat is It? Online Dispute Resolution adapts electronic applications to well-known traditional alternative dispute resolution processes, such as negotiation, mediation and arbitration. ODR may use a chat room format, email, or any other electronic system for transferring information. Each system has advantages and disadvantages.

40. Designing the Appearance & Functionality of the Site Authenticating Users Handling Payment Gathering Data Communicating with the Parties Writing the Text Making the Site: User Friendly (pop ups) Visually Appealing Clear

41. Designing the Appearance & Functionality of the Site Some Considerations: How much can parties submit? Should attachments be allowed? Will a party be able to log in later to see the status of the claim? Should each party get the opportunity to rebut? How is payment handled? What is a reasonable number of attempts to contact the respondent? How do we transfer the outcome to interested non-party?

42. Designing the Process Flow

47. Agenda • Introduction • History of Consumer Warranty Dispute Resolution Programs • Traditional Dispute Resolution Forums • Online Dispute Resolution • Recommendations

48. Recommendations Considerations for Implementing Dispute Resolution Programs : • Business Environment • Legal Exposure • Customer Service Goals

49. Recommendations • Best application for Face to Face Mediation: When goal is maintaining/keeping relationship with the customer/client. Parties can craft an agreement incorporating solutions that are not available through court.

50. Recommendations • Best application for Face to Face Arbitration: When your goal is resolving the matter rather than salvaging the relationship. When review of the dispute necessitates a visual inspection or demonstration of product. Good when you just want a resolution and can live with whatever the arbitrator decides.