Hyundai Drops Arbitration Clause
Following a critical piece in the New York Times on the arbitration clause found in its warranty statement, Hyundai drops the policy. The change came a week before the CFPB released its first report on the effect of arbitration agreements on consumers.
LOS ANGELES — On Dec. 6, Hyundai dropped a clause in its warranty that required some warranty disputes to be settled through binding arbitration. The change came a week before the Consumer Financial Protection Bureau (CFPB) issued its preliminary research on arbitration agreements, although Hyundai officials said the change was unrelated to the bureau’s release of its report.
Jim Trainor, company spokesperson, issued a statement to the New York Times that said, “We're dropping the arbitration clause because we don't want people to be misled and think we don't stand behind America's Best Warranty."
Trainor added that the company has “only used arbitration about 10 times since 2006, to protect the company from unscrupulous mills.”
The decision to eliminate the policy came after the New York Times published a story which claimed it would disqualify car buyers from joining class-action lawsuits and make it harder to receive a refund if they purchased a lemon. Car buyers were able to opt out of the arbitration agreement, but only if they notified the company within 90 days of purchasing the vehicle.
“Under Hyundai's plan as outlined for 2013 models, an owner would pay up to $275 to help cover the cost of the arbitration proceeding. Hyundai said the policy helps consumers by making it simpler to resolve disputes without the expense of going to court,” read the New York Times report. “Critics of binding arbitration said it limits consumer choices and puts final decisions in the hands of someone working on behalf of the automaker.”
On Dec. 12, the CFPB released its first report on arbitration agreements. It indicated that arbitration clauses were often confusing and that very few consumers use arbitration. The research focused on credit cards and bank cards. The auto industry has long anticipated the bureau would go after arbitration agreements in auto transactions.
Trainer told F&I and Showroom magazine that the removal of the arbitration clause from its warranty was in response to the New York Times’ article, and that the decision was unrelated to the CFPB’s report.
“The way you've characterized the situation you make it seem like we don't care about our customers,” Trainor told the Times. “Nothing could be further from the truth.”
More F&I

Amplify 2026 Billed as Turning Innovation Into Results
Reynolds and Reynolds says its annual retail summit will connect dealers with practical strategies, peer insight, and technology-driven ideas.
Read More →
Own Your Outcome: F&I in the Digital Customer Journey
Finance has historically been the last step in the car-buying process, but it doesn’t have to be. The customer’s journey starts long before they arrive at the dealership, and so should F&I’s involvement.
Read More →
Tariffs Could Raise Insurance Premiums
As U.S. import tariffs affect repair costs, consumers might find it more affordable to replace a damaged vehicle, according to recent Insurify tariff analysis.
Read More →
Smaller Loans, Longer Terms
The youngest generation of car buyers is more likely to finance less expensive vehicles, more than half of generation Z consumers borrowing less than $25,000.
Read More →
New Lifetime Battery F&I Product Meant to Drive Dealer Traffic
EFG Cos. offering is intended to create lifetime auto dealer engagement with customers.
Read More →
The Psychology Behind Menus That Increase Add-On Sales
There is a science to crafting a menu that gives customers confidence in the choices presented, and moving the process outside the F&I office can further boost results.
Read More →
Why Your F&I PVR Is Misleading You
Here’s a handy checklist of the numbers to track in 2026 instead.
Read More →
Auto Consumer Anxiety Presents Opportunity
A survey of U.S. drivers found the majority are concerned about finances and the economy, but those fears make many ready to buy vehicle-protection products.
Read More →
Humble and Hungry: 12 Rules for an F&I Life
Dustin Gingerich, with a decade in the F&I business under his belt, shares his thoughts on leadership, building trust with customers, and the importance of learning and innovation.
Read More →
Focus on the Opening
F&I managers must learn as much as possible about their customers, starting before they walk into their offices. The bulk of today’s consumers expect that, and good results will follow.
Read More →