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When considering alternative approaches to address and resolve a dispute, a consumer shipper may consider filing a lawsuit, complaining to a consumer watch organization or to a government regulatory agency. Although potentially effective in the long run, those methods may take a great deal of time and could potentially be expensive.
In the interstate moving industry, the FMCSA requires that each moving company have in place a neutral arbitration program to help resolve disputes. Neutral arbitration can serve as a cost effective and quick alternative to traditional litigation. Additionally, neutral arbitration is more informal than court litigation and a consumer shipper may be able to navigate the arbitration process without hiring an attorney.
WHAT IS ARBITRATION?
Interstate moving companies must have in place a neutral arbitration program, administered through an independent arbitration service provider. The program must be designed to give neither the moving company nor the consumer shipper any special advantage. Arbitration may provide a faster and more cost-effective method of obtaining a final and binding resolution of a dispute that cannot be resolved through direct or assisted negotiations.
IS ARBITRATION MANDATORY?
Federal law governing interstate shipments of household goods under 49 CFR § 375.211 provides that an interstate moving company must have a program in place to provide shippers with an arbitration alternative to litigation. Arbitration is optional and not required under federal law. A moving company cannot require that a consumer shipper proceed through arbitration prior to litigation. Arbitration is available for all claims involving property loss, property damage, and disputes over charges for services.Moving companies must provide written notice of arbitration to shippers. A moving company must provide each potential consumer shipper with a written summary of the arbitration program prior to the order for service being issued. The written summary of the moving company’s arbitration program must include the following:
(1) Summary of the arbitration process
(2) The associated cost for each party involved in the arbitration
(3) The legal effects of an arbitration
The arbitrator selected by the parties must render a decision within 60 days of the receipt of the written notification of the dispute by the parties. In regard to the applicable costs associated with the arbitration, a moving company cannot require that a consumer shipper be responsible for more than 50% of the cost. If the arbitration alternative is chosen, then any decision made by the arbitrator may be binding if the dispute is for an amount less than $10,000. Additionally, an arbitration decision may not be appealed in a court of law.
HOW DOES THE ARBITRATION PROCESS BEGIN?
To initiate the arbitration process a consumer shipper simply has to inform the moving company of their intent to arbitrate. It is advised that a demand for arbitration be sent via certified mail to the moving company. Once the moving company has received the written demand for arbitration, they are required to send the proper forms and information from the neutral arbitration service they use. If a moving company fails to comply with the demand for arbitration, they can be sanctioned by the FMCSA with civil penalties.
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