Arbitration is how a buyer disputes a car that isn't what the auction said it was. It compares the seller's condition report, light and announcements against what a post-sale inspection finds. If there's an undisclosed problem that qualifies under the auction's rules, and you file within the time limit, the auction can award repair costs, a price adjustment, or a cancelled sale. Each auction sets its own rules. Many base them on the National Auto Auction Association (NAAA) Arbitration Guidelines, updated June 1, 2026.
Educational information only. This article is not legal or financial advice. Auction policies change; read each auction's current terms before you bid.
In this article
- The rules of engagement
- The light system
- What's usually arbitrable
- What's usually not arbitrable
- NAAA vs Manheim vs ACV
- How to file a claim
- Frequently asked questions
The rules of engagement
From experience (Garrett Eddings, professional opinion): Arbitration is purely based on the callouts on the condition report, or the auction's announcements, versus what's found in the post-sale inspection. Every auction has its own specific set of rules. The biggest thing, no matter who you're buying from, is to know the rules of engagement before you bid. NAAA guidelines on arbitration should apply at any NAAA auction, but verify that the auction you're going to is an NAAA member and follows NAAA guidelines. Their website has an abundance of resources.
Disclosure is the whole game. Under the NAAA guidelines, a problem the seller disclosed is generally not arbitrable. ACV's policy says the same: "if an issue is disclosed in any manner, it will not be eligible for any reparations." Read every announcement before you bid.
The light system
The NAAA guidelines define four lights, and the light is "a binding representation of vehicle condition."
| Light | Meaning | What it means for you |
|---|---|---|
| Green: Ride & Drive | "Vehicle is guaranteed by seller in accordance with these guidelines" | Full arbitration rights under the auction's rules |
| Yellow: Limited Guarantee | Seller announces specific conditions that limit the guarantee | Announced items aren't arbitrable; everything else still is |
| Red: Limited As-Is | "Vehicle is not guaranteed and only qualifies for arbitration given certain conditions" | Very limited rights. Price it like it's yours the moment you win |
| Blue: Title Attached/Absent | The title isn't present at the sale | Ask how long the seller has to deliver the title, and what happens if it doesn't arrive |
Local auction policy decides which vehicles automatically sell under the red light, based on price, model year or mileage. Vehicles more than 20 model years old sell as-is by default.
What's usually arbitrable
Under the 2026 NAAA guidelines:
- Mechanical defects that weren't disclosed and cost at least $800 to repair on vehicles under $50,000, or 2% of the price at $50,000 and up. You get one mechanical claim per purchase, which can include several qualifying defects.
- Structural or frame damage that wasn't disclosed, measured against the Used Vehicle Measurement Standard (within plus or minus 8 mm at control points).
- Odometer and mileage misrepresentation.
- Title problems: undisclosed liens or brands such as salvage. The seller's title guarantee runs four years, with liability reduced 2% per month after the sale.
- Flood damage on a branded title where key components such as wiring, engine, transmission or seating were damaged.
What's usually not arbitrable
- Anything disclosed on the condition report or announced in the lane
- Wear items such as tires, brake pads and fluids
- Oil leaks that aren't actively dripping and visible
- Conditions inherent to the model
- Claims based only on a vehicle history report or a condition grade
- Accessories on vehicles more than four model years old
- Repairs you made before the auction approved the claim, or a car you resold before the claim was settled (ACV)
NAAA vs Manheim vs ACV
| NAAA Guidelines (2026) | Manheim | ACV Auctions | |
|---|---|---|---|
| Basis | Recommended guidelines. NAAA doesn't enforce them; each auction adopts them through its own terms | Publishes the NAAA Arbitration Guidelines on its marketplace policy site | Its own Vehicle Condition Arbitration Policy. Claims must also meet NAAA guidelines |
| Time limit | In-lane: sale day or 7 calendar days, depending on the item. Online: at least 7 days. Sale day is Day 1 | Per NAAA and Manheim's own policies. Post-Sale Inspection guarantee: 7 or 14 days | 10 calendar days from purchase, or 4 days after ACV transport delivery if that's later. Can extend by 10 or 20 days |
| Mileage limit | Set by local auction policy | 200 miles from sale for arbitration after a Post-Sale Inspection | Claim barred if the odometer rose 150 miles or more |
| Mechanical threshold | $800 repair cost (under $50,000) | Per NAAA | Per NAAA eligibility |
| Outcomes | Set by auction management, whose decision is binding | Negotiate, accept as-is or cancel after a failed PSI | Payment at ACV's wholesale repair rates, cancellation (ACV's discretion), or no action. Payments capped at 25% of price for cars sold at $5,000 or less |
| Paid protection | n/a | Post-Sale Inspection, DealShield 360 | Purchase Protection+, Extended Assurance |
How to file a claim
- Inspect right away, or order a post-sale inspection before you take the car.
- File through the auction before the window closes. The NAAA guidelines say a late claim "will be denied."
- Document everything: photos, video, a shop diagnosis and repair estimates. ACV can ask for evidence within two calendar days and will close the case if you don't provide it.
- Don't repair or resell the car until the claim is resolved.
- Accept the decision. Under both NAAA guidelines and ACV policy, the auction's decision is binding on buyer and seller.
Frequently asked questions
What can you arbitrate at a car auction?
Undisclosed problems that meet the auction's rules: under NAAA guidelines, mechanical defects costing $800 or more to repair, frame damage, odometer misrepresentation, title problems and certain flood damage. Disclosed items and wear items aren't arbitrable.
How long do you have to file an arbitration claim?
It depends on the auction. NAAA guidelines set sale day or 7 days for in-lane purchases and at least 7 days online. ACV allows 10 calendar days from purchase.
What does a red light mean at a car auction?
Limited As-Is. The car isn't guaranteed and qualifies for arbitration only in narrow situations, such as certain title issues.
Do all auctions follow NAAA guidelines?
No. The guidelines are recommendations that each auction can adopt in whole or in part. Confirm the auction is an NAAA member and read its own arbitration policy.
Related questions
- Best car auction sites for new California dealers
- Is it worth buying cars at auction?
- What do Copart sale terms mean?
- Back to the California Dealer License FAQ
Next step: Auction day checklist · ACV insider guide
Resources
- NAAA Arbitration Guidelines 2026 (PDF) (PDF opens in new window)
- NAAA Arbitration Guidelines Appendix I, June 1, 2026 (PDF) (PDF opens in new window)
- Manheim: NAAA arbitration policy (Opens in new window)
- Manheim: Post-Sale Inspection policy (Opens in new window)
- ACV: Vehicle Condition Arbitration Policy (Opens in new window)
- ACV: How the arbitration window works (Opens in new window)
Sources: NAAA Arbitration Guidelines, effective June 1, 2026 · Manheim and ACV policy pages (linked above; checked Oct 16, 2026). Verified 2026-10-16.
This article is for educational purposes only and is not legal or financial advice. California Dealer Academy isn't affiliated with NAAA or any auction named. Each auction's own terms control. The instructor note reflects one instructor's professional experience and opinion.