Found a page apparently intended for Ford's dispute arbitrators. It's an internal page, not aimed at the consumer. Page posted below. Does anyone know anything more about this?
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Vol. 9, No. 2
July, 2000


The Dispute Dispatch
is a periodic publication
for members of the Dispute
Settlement Boards
nationally, and others
interested in the process.

Jim Brown, editor



Center for Consumer Affairs
University of Wisconsin-Milwaukee
161 W. Wisconsin Ave., Ste 6000
Milwaukee, WI 53203-2602
414-227-3250






Phone Links for Policy Advice
Arbitrators or administrators with policy questions have always been encouraged to contact Jim Brown by phone at the Center for Consumer Affairs at 414-227-3250, by facsimile at 414-227-3267, or by email at jbrown@uwm.edu.

In order to improve my availability, the Center has recently established a toll-free number which Board members and administrators can call to reach me. This number is in addition to the regular Center phone numbers. According to the telecommunications advisors for the University, calls can be placed without toll charges from anywhere in the United States and the system will forward the call to me (or, at least, to a voice mail system). As such, Board members and administrators should feel free to contact me whenever policy issues or questions arise on which you feel you may benefit from contacting me.

The toll-free number is 1-877-455-5259. [The local number is 414-750-4781.]

I look forward to hearing from you. Used Vehicles - Mileage Offset Considerations

DSB application forms contain a specific question indicating whether the vehicle was acquired 'new' or 'used' by the applying consumer. When it appears the vehicle has been acquired used (or as a 'demonstrator' model), Board members should be aware of various equitable considerations which may apply when a 'refund/replace' decision is ultimately awarded by the Board. Specifically, Board members should be aware of competing equities when they determine what, if any, amount of mileage offset it might be appropriate to include in the award.

In many instances, Board members awarding a 'refund/replacement' decision will determine that in fairness the consumer should be assessed some amount for the miles he or she has received from the use of the vehicle - the so-called 'mileage offset.' In some states (for example, AR, CA, and WI), state certification requirements will limit the amount of any mileage offset to the number of miles on the vehicle at the date of the first repair attempt for the problem or condition which is leading the Board to direct Ford to buy it back from the consumer.

If, however, the first repair attempt for that condition occurred before the consumer actually acquired the vehicle, imposing such a limit on the mileage offset could lead to a situation where the consumer would be unduly or unfairly benefitted.

Consider the following example. A consumer purchases a used vehicle with 20,000 miles on it. At 30,000 miles (and still under the original new motor vehicle warranty), the vehicle is bought back pursuant to a DSB decision. The refund or replacement amount would then be calculated from the actual price which the consumer paid for the used vehicle. [By comparison, with a new vehicle, a replacement award would be calculated from the Manufacturer's Suggested Retail Price ('MSRP') and a refund award from the actual purchase price paid by the consumer.]

Assume further that the problem with the vehicle leading to the Board's repurchase decision - for example, a recurring transmission problem - was first subject to repair at 8,000 miles, i.e., when the vehicle was in the possession of the original owner. If the Board decision were to impose a mileage offset of 8,000 miles - the first repair attempt mileage - this offset is meaningful only as against the vehicle's MSRP. And, if the original MSRP is used, the consumer buying the vehicle used thus obtains the benefit of 12,000 miles of usage [20,000 at acquisition less 8,000] in effect twice.

That is to say, one can reasonably presume that the consumer buying the vehicle used at 20,000 pays a price lower than would be paid were the vehicle acquired new. Thus, they obtain the 'benefit' of the mileage on the vehicle between 8,000 and 20,000 miles initially in the form of a lower purchase price paid for the used vehicle. If the Board limits the mileage offset to the first repair attempt mileage of 8,000, the consumer would then in effect obtain the benefit of those miles a second time.

Accordingly, when directing Ford to buyback a used vehicle, Boards should assess any mileage offset they choose to award from the mileage on the vehicle when acquired used by the consumer whose case is before the Board. Or, put another way, they should not impose a mileage offset on the consumer which would take the vehicle back before its mileage when the consumer actually acquired it. "Dealer of Choice" Decisions

Frequently, Boards will encounter cases where it is obvious that relations between a particular consumer and a particular dealer have broken down. For whatever reasons, they don't like each other; and that is impeding the likelihood of reaching a resolution to the warranty service dispute.

Quite naturally, then, Boards in entering decisions will be tempted to include as part of their awards, decision letter language instructing the consumer to take their vehicle to the "dealer of their choice" for performance of the Board's award.

This is generally not a desirable condition for Boards to include in their awards.

First of all, when the decision is for a replacement, a dealer "of the consumer's choice" would be compelled to perform the replacement transaction (as with all DSB replacement awards) on a non-profit, purely administrative basis. While this is fair to the consumer1, it is clearly unfair to this second dealer, who presumably has had no previous involvement with that particular consumer or with the transaction that has turned problematic due to warranty problems. The dealer would lose the potential profit it anticipated from selling that vehicle as part of its normal business operations.

Secondly, a 'further repairs' decision will similarly be unfair to the selected dealership in that it may be required to put its technicians to work on repairs for which it will be reimbursed only at warranty rates, rather than at more profitable retail rates. Further, the dealership would be required to do this for someone not one of their regular or previous customers. In either instance, the new dealership can hardly be blamed for resenting or resisting being involved in the performance of such a DSB decision.

When such situations arise, Boards can address what they perceive to be consumer-dealership relationship problems by directing their administrators to enter a notation on the decision-agenda summary on which the administrator takes down the Board's decision. This notation would ask that Ford assist in identifying a different dealership to perform the Board's decision. These decision-agenda summaries are reviewed in preparing the actual decision letters. Ford can then get another dealership involved on a requested and agreed-upon basis. This solution achieves the Board's intended result without creating the kinds of problems which a decision directing the consumer to select a different dealership may create. Owner Appreciation Certificates

A number of questions have arisen at recent training sessions regarding "Owner Appreciation Certificates" ('OAC') and their implications for DSB cases. An OAC is a document which, in effect, gives the consumer a credit in the amount of the certificate toward the acquisition of a new Ford-warranted vehicle. Typically, OACs are applied to the price negotiated between a consumer and a dealer to reduce the final price paid by the consumer for the replacement vehicle.

An OAC is a customer relations tool used most often by Ford regional offices to promote customer loyalty. In extending such an offer, Ford is in effect saying it is willing to commit some amount (the amount of the certificate) toward making a trade-in more attractive to the consumer. Its motivation in doing so is an attempt to retain that customer. The hope, from the Company's standpoint, is that the relationship is salvaged so as to enable future profitable transactions.

Boards should consider carefully what inferences they might draw from the fact that an OAC has been offered to the consumer. On the one hand, it may well reflect that Ford or the dealership recognize the problems the consumer has had with the vehicle. The argument would be that Ford or the dealership don't typically just 'give away' money without some reason. On the other hand, it may well reflect an entirely different sort of notion, namely, a desire from the perspective of maintaining a positive business/customer relationship with that particular customer. Or, it may reflect both notions. Importantly, from the standpoint of Ford and the dealership, in either instance, the customer accepting such an offer continues as a customer of Ford and of the dealership.

These offers are generally extended to consumers prior to their filing for review with the DSB, during the period when the consumer, the dealership, and perhaps the Ford regional office are still attempting to reach a mutually acceptable solution to the dispute. Once the consumer files for review with the DSB process, however, these OAC offers are no longer available to consumers, as a matter of Ford policy. Boards reviewing cases should presume that such an offer no longer exists. Thus, the Boards should further presume that the consumer no longer has the option to consider accepting such an offer in the event he or she declines to accept whatever award the Board may choose to grant.

While Boards will encounter cases in which OACs have previously been offered, the Boards themselves explicitly do not have the authority to award such a certificate. To do so would be to deal in attempts to provide customer satisfaction. This goal, while important to Ford and its dealers, of course, is foreign to the DSB process.

In effect, what an OAC accomplishes is a vehicle replacement: the customer accepting such an offer remains driving a Ford product. If the Board feels that a vehicle replacement is the fair resolution to a particular case, that is how is should structure its decision - following its normal procedures for awarding a replacement remedy, and assigning the financial terms to that award which it deems to be fair and consistent with DSB rules. To attempt to characterize what amounts to a replacement decision as an OAC offer confuses the process and the dispute-resolution function of the DSB.