A substantial defect means that the defect would be covered by the automobile's warranty. If a car requires repair for an item covered by warranty, it is done at no cost to the consumer. After a consumer invokes the lemon law, the parties arbitrate the matter in an attempt to resolve it. Some statutes provide for a state-run arbitration process. Others provide for arbitration provided by private groups such as the Better Business Bureau, or even a manufacturer-sponsored panel.
Arbitration is an informal trial with a panel or individual deciding the matter.
Each side tells its story. Mechanics might testify on behalf of either side. Lawyers are not required but may increase a consumer's likelihood of prevailing or settling prior to the arbitration hearing. According to one report, fewer than 10 percent of the cases handled by a manufacturer-sponsored panel are decided in the consumer's favor. Consumers tend to fare slightly better in cases handled by the Better Business Bureau, and fare best of all under state-run arbitration procedures.