Increase customer trust
This happens when they see you’re committed to making things right.
“Get it in writing."
We’ve all seen the advice. In every case, it generally means to protect yourself in case something happens down the road. Well, the same advice is true for disputes.
Disputes emerge for businesses all the time. The key isn’t avoiding them — it’s having a plan in place for when they arise. According to Rapid Ruling, this is especially true for the following industries:
Moving industry: The FTC requires an alternative dispute resolution (ADR) clause for moving companies.
Finance industry: Investment and contract disputes often create the need for arbitration.
Real estate industry: Dispute resolution comes in handy for construction issues and landlord-tenant disputes.
Construction industry/contractors: Alternative dispute resolution can help address defects or contract disputes.
But the reality is that any industry with large amounts of money exchanged for services should have a plan. BBB’s dispute resolution services are that plan. But how do you put that plan into action?
By telling customers it’s there.
BBB Mediation and Arbitration are free services offered to BBB Accredited Businesses. The cost savings alone are worth mentioning, but there’s even more value to be found when you promote these services in your business contracts.
When you show customers they’re covered – no matter what happens in a transaction – you gain their trust. To ensure they know you’ve got their best interests in mind, here’s how to make BBB a part of your dispute resolution policy.
The benefits of having a dispute resolution backup plan
Being proactive doesn’t mean you’re anticipating more disputes; it means your business is prepared. Knowing there’s a policy in place gives you peace of mind but the positives add up even further:
Alternatives can cost thousands of dollars
Accredited Businesses can access these services in their benefits package (and don’t require legal counsel).
Avoid prolonged legal battles
Find a resolution through Alternative Dispute Resolution (ADR) services.
Boost your reputation
Customers will spread the word that you worked to resolve an issue quickly and amicably.
What customers need to know
We broke down the differences between mediation and arbitration on our article below. When informing customers about these options, here’s a quick recap:
Mediation
This process is voluntary. A neutral third party will work to guide the conversation, helping clarify any misunderstandings and find a mutually acceptable solution.
Arbitration
An arbitration clause makes participation mandatory and allows a binding decision even if one party does not participate. Otherwise, arbitration is voluntary. A neutral third party hears the dispute and makes a final, enforceable decision. It may suit more complex disputes.
Adding a dispute resolution clause to your contracts
As mentioned earlier, dispute resolution is a great benefit for both you and your customers. The key is in letting them know this option is available to them if the need arises. Doing so is as easy as incorporating a clause into your contracts.
When doing so, keep in mind that BBB requires the consumer to initial the ADR clause in order for it to be considered fully enforceable. Arbitration is still possible if the clause isn't initialed, but both parties would need to agree to arbitrate.
The International Association of Better Business Bureaus (IABBB) has sample contract verbiage for businesses who want to add an ADR clause to their contract. This is included in the dropdown.
Below are examples both of a clause that meets the approved policy, and a clause that does not meet the policy, with appropriate explanations.
It doesn't take a great deal of extra language or space to meet all the requirements of the approved BBB policy, as the following example attests:
Bear in mind that this is just one example of a BBB clause that meets all the minimum requirements of the BBB policy. A number of businesses (with the advice of their attorneys) are drafting agreements that are much more specific about the types of disputes to be covered under the agreement, the scope of the arbitrator's authority, and many other issues. In some cases, the arbitration agreement may be included in the basic contract (as in the above example); in other cases, the arbitration agreement may be a separate document. The policy is reasonably broad, to allow businesses, BBBs, and their respective legal counsel significant flexibility in implementing the policy, provided the basic principles are met.
An example that meets the approved policy:
AGREEMENT TO ARBITRATE. You and we agree to submit any dispute arising under this agreement, with the exception of disputes alleging criminal or statutory violations, to binding arbitration in accordance with the BBB Rules of Binding Arbitration (Pre-Dispute). A volunteer BBB arbitrator will render a decision that the arbitrator considers to be fair; in doing so, the arbitrator is not required to apply legal principles. The arbitrator's decision will be final and binding on both you and us, and judgment on the decision may be entered in any court having jurisdiction. All administrative fees for the arbitration will be paid by the business. Further information about BBB arbitration may be obtained by contacting the BBB of (BUREAU CITY) at (BBB PHONE NUMBER/ WEBSITE). This Agreement to Arbitrate affects important legal rights. Neither of us will be able to go to court for disputes that must be arbitrated. NEITHER OF US WILL BE COMMITTED BY THE TERMS OF THIS AGREEMENT TO ARBITRATE UNLESS YOU SIGN BELOW, IN WHICH EVENT WE WILL BOTH BE COMMITTED:
Accepted:__________________________ Date:_________________ (Signature/Initials of Customer)
An example that does NOT meet the approved policy:
Arbitration. Any controversy or claim arising out of this contract, or any breach thereof, shall be submitted to arbitration under the rules of the Better Business Bureau and the Federal Arbitration Act.
When including this language, make sure to include a separate signature line immediately below the arbitration clause or appear immediately above the signature line for the contract. This must be included for the consumer to acknowledge acceptance of the terms. Additionally, there must be a statement that the consumer will not be bound by the terms of the clause unless the consumer signs or initials in this acknowledgment.
The BBB believes that the arbitration of disputes fosters the interests of consumers and the responsible business community best when consumers voluntarily make an informed choice to enter an open and accessible arbitration process offered by an individual business under fair and impartial rules administered by an agency in which the public has confidence. In furtherance of this belief, the Board of Directors of the International Association of Better Business Bureaus has adopted the following policy for pre-dispute, binding arbitration clauses which name the BBB as an arbitration forum:
THE RIGHT TO BE INFORMED:
The BBB believes some information is so critical in making marketplace decisions that it must be provided at the point where purchasing decisions are made. Accordingly, pre-dispute binding arbitration clauses must be separated from other contract language by a box, highlighting or larger type face. In addition, pre-dispute binding arbitration clauses must clearly and simply do all of the following:
Identify the types of disputes that are covered by the arbitration clause, which may not include claims for criminal or statutory violations.
Identify the arbitration forum and provide a telephone number of the forum or other reasonable means that can be used to obtain additional information about the forum.
Clearly disclose the nature and amount of any fees consumers may have to pay in connection with the filing or administration of their case.
Identify the standard that will be used as the basis for the arbitrator’s decision (e.g. application of law or fairness).
Advise consumers that the clause affects important legal rights, and that the consumer will not be able to go to court for disputes covered by the clause if the consumer signs the arbitration clause.
REQUIREMENT THAT CONSUMER CLEARLY ACKNOWLEDGE ACCEPTANCE OF ARBITRATION CLAUSE:
In order to ensure that the consumer has knowingly chosen arbitration as the method of resolving disputes covered by the arbitration clause, binding arbitration clauses must either:
Contain a separate signature line, appearing immediately below the arbitration clause, for the consumer to sign or initial to acknowledge acceptance of the terms of the arbitration clause. There must also be a statement that the consumer will not be bound by the terms of the clause unless the consumer signs or initials on the signature line.
or
Appear prominently and immediately above the signature line for the contract.
BBB KNOWLEDGE AND CONSENT:
The names “Better Business Bureau” and “BBB” are registered trademarks owned by the International Association of Better Business Bureaus, Inc. To ensure the implementation of these protocols and to maintain the public’s confidence in the BBB system, any business or organization planning on using a pre-dispute binding arbitration clause which names the BBB must be submitted to the BBB 30 days prior to any introduction and use in consumer contracts for written BBB consent. In the absence of such submission and consent, the BBB may – at its sole discretion – decline to administer arbitrations submitted under the clause
Would a dispute resolution clause be a red flag for customers?
Fair question. Some businesses might feel that adopting dispute resolution clauses could trigger an alarm in customers’ minds. Consider, though, that customers like knowing you’re looking out for them.
Just like warranties, money-back guarantees or free trials, dispute resolution clauses reaffirm a commitment to resolving issues fairly. If something isn’t right, you want to make it right. When customers see this proactive approach to handling disputes, it builds trust and benefits everyone involved.
Far from being a red flag, a dispute resolution clause is a promise of integrity.
Final thoughts
Disputes happen across multiple industries. If your business doesn’t issue contracts, these tips could be applied to your website, your store policies, or even your receipts and invoices. When you empower customers with this information, it takes the guesswork out of having to look up what to do in the event of a dispute. More information on how BBB can help your organization can be found here.
To be clear, having a dispute resolution plan should work in conjunction with a business insurance plan, especially to protect against financial loss due to bodily injury, property damage, medical expenses, libel, slander, defending lawsuits, and settlement bonds or judgments. For more information on finding the right insurance plan for your business, please visit our resource here.
To learn more about how BBB can help protect your business so it’s set up for long-term success, reach out to our team today:
BBB Great West + Pacific
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