DALEVILLE, Ind. -- A couple's effort to recoup their money through arbitration shows why it's important to read the fine print before you sign a contract with a business.
Joe and Paula Rench paid nearly $10,000 to have foam insulation installed around their house, where they've lived for more than 25 years.
"What they do is drill holes through your exterior walls and inject the foam into the walls," Paula Rench said.
The Rench's told CBS4 Problem Solvers they were not satisfied with the work, so they hired an attorney. That's when they found out that the contract they signed with USA Insulation included mandated arbitration in its terms and conditions, meaning the couple could not sue in court and had to submit to a private arbitration process.
"We decided to do the arbitration. We contacted them, filed the case there," Rench said.
The couple did get a $750 award from the arbitrator, who said the "crawl space had no insulation value" and "the attic installation needed some additional work." That was in August, but five months later the award still had not been paid.
"They had 15 days to send us that money after the arbitrator made their final decision and we’ve never seen anything," Rench said.
On top of that, fees for the arbitration process cost the couple $650, so they only recouped about $100 in the end.
CBS4 Problem Solvers took the Rench's paperwork to Michael Bishop, an attorney who also serves as an arbitrator. He was not involved in their case.
"I think generally speaking most people don’t understand (arbitration) and don’t really know how it works," Bishop said.
Bishop said that if you go through arbitration and a company doesn't pay, your only option is to take your award and file a case in court to try to collect it. That process could've cost the Rench's the rest of the $100 they were recouping.
"It can have the opposite effect of what arbitration was intended to do, which was to save cost. It can cost a consumer more than anticipated," Bishop said.
Luckily for the Rench's, after CBS4 Problem Solvers reached out to USA Insulation the company's attorney said he had a check ready to mail them.
Bishop suggested that you read the fine print in any contract, because arbitration clauses have become more common in consumer sales. He said that some companies will remove the clause if you negotiate with them.
According to Bishop, the Rench's case is not necessarily indicative of all arbitration experiences, but you should decide if you're willing to forego your ability to file a lawsuit or small claims case when you sign a contract with mandated arbitration. He said the process can save you money because you don't have to hire an attorney, but if you don't get a result you like there is no way to get it overturned.
"They’re not like judges, there’s no obligation to apply any particular law and then when the arbitrator’s result is done it’s not appeal-able," Bishop said.
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