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Thinking of Filing in Small Claims Court? Take a Look at these Alternatives First

by Keylen Villagrana | Sep 27, 2021 7:24:10 PM

Disagreements happen. No matter how mindful you are with your customers, there are still misunderstandings. It’s just a part of doing business. Unfortunately, there are instances where both the consumer and the business have to take legal action – despite several attempts to resolve the issue.

Most individuals refrain from litigating because the cost of hiring an attorney outweighs the dollar amount in question. Plus, verdicts don’t usually arrive very quickly. Small claims court is often viewed as an attractive option for business owners to handle disputes faster and at a lower cost.

There are other alternatives available, though, and they’re just as effective and efficient.

What is Small Claims Court?

Small claims court is specifically designed to be simple enough for most individuals to easily file and pursue litigation– all without needing legal representation. Set up as a public forum, these civil cases dispute amounts of $10,000 or less (depending on the county and state). It’s perfect for disagreements involving smaller amounts of money, where the cost of hiring a lawyer would exceed the amount being pursued. Your case will depend on the quality of evidence and how well you can present it to a judge.

Common issues business owners choose to settle through small claims court include:

  • Breach of Contract Disputes
  • Collection of Owed Payments
  • Professional Negligence Claims (like bad car repair)
  • Property Damage Claims

At the Better Business Bureau, we see countless scenarios like the ones listed above go unresolved after entering our consumer complaint process.  This happens either due to a lack of knowledge on potential options or the consumer/business owner choosing to cut their losses with a lesson learned.

Most disputes BBB encounters occur as a result of miscommunication or lack thereof. BBB strives to mediate and clarify the issue at hand by facilitating conversations that help garner a resolution. While small claims court is a feasible option, mediation/arbitration may work best for you as a precursor or even alternative.

Furthermore, it is often very common for a court-ordered mediation to arise anyway. Why not start with a BBB mediation before pursuing small claims court?

Benefits of BBB Mediation and Arbitration

  • Cost-Effective à Mediation and Arbitration may often cost less than filing a small claims case. BBB Accredited Businesses receive one free arbitration a year and unlimited free mediation as an exclusive benefit.
  • Saves Time à Courts have substantial backlogs, and it may take months or well over a year before it goes to trial. BBB can schedule the session within a few weeks.
  • Less Intimidating à Requesting arbitration or mediation is a bit more informal than the courts, which can help both parties feel at ease.

What is Mediation?

It’s a confidential negotiation facilitated by a trained, neutral third-party mediator.

Often, people think of mediation as a time for compromise – that they’ll have to concede something. This is not necessarily the case. When disputing parties have a chance to listen to each other, they often find creative ways to resolve the dispute by collaborating, not compromising.

Participation in mediation is voluntary, and a solution is not imposed on the parties. One of the most significant benefits of mediation is that the parties work together to discuss their dispute, generate ideas for resolving it, and decide together what the solution will be. By finding their own solution to the dispute, the parties are more likely to follow through with the agreement. To learn more about our process, check out the BBB Rules of Mediation.

Why Should I Choose Mediation?

The Parties Decide → Both the business and the consumer have the opportunity to share their perspective and be heard. The parties generate options and agree on a solution – the mediator is not a part of the final agreement.

Restoring Relationships → In a setting where collaboration and mutual agreement are the goals, there is a better chance for two parties to understand one another’s perspectives. Often parties keep a positive relationship with one another.

No Pressure → Mediation is a voluntary process. A mediator will make every effort to facilitate an agreement, but you are under no obligation to make a final decision. It’s an opportunity to find resolution without the added stress of more formal, stringent processes typically associated with legal action.

The Mediator’s Role

When you enter mediation, BBB will select a mediator for your case. A mediator does not have personal or business ties to either party in the dispute that could interfere with the impartial nature of the mediation session. It is not the role of the mediator to judge, advise, counsel, or select a solution for the parties.

The Mediator

  • Summarizes, restates, and prioritizes
  • Assists in generating or clarifying options
  • Serves as a neutral facilitator
  • Evaluates options and possible consequences
  • Identifies areas of mutual interest
  • Enforces the ground rules

What is Arbitration?

Arbitration is a process in which a dispute is submitted to a neutral, trained, and certified BBB volunteer, who hears testimony, examines the evidence, and renders a written, legally binding decision. To learn more about our process, check out the Rules of BBB Arbitration.

Why Should I Choose Arbitration?

The Parties Are Heard → BBB arbitration procedures allow both parties to express positions, share and rebut testimony, ask questions, and present evidence.

Convenient Scheduling → BBB arbitration hearings are always scheduled with consideration for the convenience of participants. BBB offers arbitration by phone, making hearings more accessible to those who are unable to travel to the BBB office.

Privacy → BBB arbitration is conducted in private, and arbitration records are kept confidential by BBB. Court litigation is open to the public. Documents presented in court, unless sealed by the court, become public.

The Arbitrator’s Role

When you enter arbitration, BBB will select a volunteer arbitrator for your case. This arbitrator does not have personal or business ties to either party in the dispute that could interfere with the impartial nature of the arbitration process. It is the role of the arbitrator to review the evidence, listen to the parties, and render a decision.

The Arbitrator

  • Listens to both parties’ testimony
  • Examines the evidence presented
  • Serves as a neutral party
  • Evaluates options and possible consequences
  • Resolves the dispute with an award
  • Renders a written decision

BBB mediation and arbitration are available for all businesses. Still, only BBB Accredited Businesses are eligible to receive exclusive benefits, including unlimited free mediation, one free arbitration a year, and a clause to include in your contracts to help protect your business and your privacy.

For more information, reach out to info@thebbb.org.

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