New AAA Consumer Arbitration Rules Go Into Effect September 1

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The American Arbitration Association (AAA) has released a set of stand-alone rules that apply to arbitrations involving consumer disputes. The rules go into effect September 1, 2014. To date, the AAA has been administering consumer arbitrations under its Consumer-Related Disputes Supplementary Procedures and its Commercial Arbitration Rules.

Beginning September 1, 2014, all companies must register their consumer arbitration clauses with the AAA before the AAA will administer a consumer arbitration. The AAA will maintain a publicly accessible online Consumer Clause Registry (Registry) consisting of consumer arbitration clauses that have been submitted for review and that have been determined by the AAA to substantially and materially comply with the AAA's Consumer Due Process Protocol guidelines.

Arbitration clauses may be submitted at the time of a consumer arbitration and need not be submitted in advance of September 1. The AAA will charge a fee for the review of arbitration clauses, as well as an annual fee for maintaining a clause in the Registry. Companies that make substantial changes to registered clauses will be required to have their clauses reviewed again (for an additional fee). The AAA reviews the arbitration clause primarily for terms that deviate substantially from the guidelines. If the AAA identifies any issues, it will notify the submitting company and ask the business either to delete the offending clause or to revise it. Revised clauses will undergo a further review process.

The Consumer Due Process Protocol guidelines, established by the AAA's National Consumer Disputes Advisory Committee in 1998, provide for the following:

  • There is a fundamentally fair ADR process;
  • A statement is made at the time of contracting regarding whether participation in the ADR program is mandatory or optional, and there are reasonable means by which consumers may obtain additional information regarding the program;
  • The ADR program uses independent or impartial neutrals and is independently administered;
  • Neutrals are qualified and competent, and standards are maintained to govern the qualifications and conduct of neutrals;
  • Parties retain the right to seek relief in small claims court for disputes or claims within the AAA's jurisdiction;
  • ADR programs are provided at reasonable cost to consumers, and the payment of fees is administered by an independent ADR institution;
  • Proceedings are conducted at a location that is reasonably convenient to the parties;
  • Proceedings occur within a reasonable amount of time, including ADR rules established to govern the ADR process;
  • Parties have the right to be represented by a spokesperson of their own choosing;
  • Consumers provide knowing, informed consent to arbitration agreements;
  • Arbitration hearings are fundamentally fair, which includes adequate notice of hearings and an opportunity to be heard and to present evidence to impartial decision-makers;
  • Binding arbitration allows for arbitrator-supervised exchange of information prior to arbitration;
  • The arbitrator is empowered to grant relief that would be available in court under law or in equity; and
  • Arbitration awards are subject to review under applicable law, and a written explanation of the award is provided at the timely request of either party.

For more information on the review process and Registry, see here. The AAA has published a guide (available here) highlighting some of the more significant changes and clarifications. Notably, under the AAA's new Consumer Arbitration Rules, consumers will pay a filing fee of $200 and companies will be responsible for any remaining administrative fees, including arbitrator fees.

 

Topics:  American Arbitration Association, Arbitration, Final Rules

Published In: Alternative Dispute Resolution (ADR) Updates, Civil Procedure Updates, Consumer Protection Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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