In response to the suit filed by Minnesota Attorney General Lori Swanson, first the National Arbitration Forum (NAF) and now the American Arbitration Association (AAA) are pulling out – at least partially – of the consumer arbitration business. There’s coverage by the Wall Street Journal, NPR, the AP, and Business Week.
According to the consent decree, NAF agrees to the "complete divestiture… of any business related to the arbitration of consumer disputes" including "any arbitration involving a dispute between a business entity and a private individual." According to the document, NAF will continue to arbitrate internet domain names disputes, personal injury protection claims, and cargo disputes. None of these areas were covered in Minnesota’s lawsuit.
In response to a letter from Swanson, AAA acknowledged "legitimate concerns" about consumer debt-collection arbitration, and said that until such concerns were addressed, AAA "has implemented a moratorium on the administration of any consumer debt collection arbitration programs." Even though AAA didn’t go as far as NAF in ceasing all consumer arbitration, this is still very good news.
The New York Times, July 15, 2014, Arbitration Clauses Let American Apparel Hide Misconduct
The Nation, July 8, 2014, How Consumers Are Getting Screwed by Court-Enforced Arbitration
American Banker, May 13, 2014, Mandatory Arbitration Offers Bargain-Basement Justice
Consumer Reports, May 9, 2014, Ban the use of forced-arbitration clauses in consumer and employment contracts
Reuters, April 24, 2014, Schwab drops ban on clients filing class-action lawsuits
The New York Times, April 18, 2014, How Payday Lenders Prey Upon the Poor — and the Courts Don’t Help