AAA Launches New Consumer Arbitration Rules on Sept. 1, 2014

The American Arbitration Association (“AAA”) is launching its new Consumer Arbitration Rules (“Consumer Rules”), effective Sept. 1, 2014. This is the AAA’s first stand-alone set of rules developed specifically for consumer arbitration. The new Consumer Rules will replace the Consumer-Related Disputes Supplementary Procedures, which were previously used in conjunction with the Commercial Rules. This Alert summarizes the key aspects of the new Consumer Rules.

The Consumer Clause Registry

The most important provision of the new Consumer Rules is the requirement that a business providing for AAA administration in a consumer contract must register its arbitration agreement with the newly created Consumer Clause Registry (“Registry”). The Registry will be a publicly available online database of preapproved arbitration agreements. It will contain the name and address of the business, the consumer arbitration clause, and additional documents that may be related to the clause. According to the AAA, “the Registry was created to provide more access to information about the AAA’s consumer arbitration services” and will “contain a list of businesses that have submitted their consumer arbitration clauses with the AAA and where upon review the AAA has determined that the clause substantially and materially complies with the due process standards of the Consumer Due Process Protocol.”

In order to comply with this registration requirement, a business designating the AAA’s rules in a consumer arbitration agreement must submit a copy of the arbitration agreement to the AAA. Once the AAA deems the clause compliant with the Consumer Rules and the Due Process Protocol, the clause will be included in the Consumer Clause Registry. The cost of review and registration will be $500 annually; for clauses submitted to the AAA during 2014, the fee is $650, which covers the cost of appearing on the Registry through 2015. Any “subsequent changes, additions, deletions, or amendments” to the agreement must be resubmitted with a new fee.

The AAA will only administer an arbitration if the clause is first reviewed and approved by AAA. If a business has not registered its consumer arbitration clause prior to the filing of a consumer case, the AAA will require the business to register its clause at that time, and will conduct an expedited review. There will be an additional $250 fee for the expedited review. Additionally, the AAA may decline to administer a case if a business does not comply with the Due Process Protocol and/or registration and fee requirement. If the AAA so declines, the parties may submit their dispute to the appropriate court.

Other Procedural Changes in the Consumer Arbitration Rules

In addition to the Registry, the new Consumer Rules contain a few minor procedural changes. For example:

• A dispute will be resolved by documents only if the claim does not exceed $25,000, unless either party requests a hearing. Previously, the rules provided for disputes under $10,000 to be resolved by a documents-only submission.
• A Respondent’s Answer will be due within 14 days after AAA notifies the parties that the Claimant’s Demand was received. Previously, the rules required the Answer within 10 days. 
• An arbitrator’s award must be issued no later than 30 calendar days after the date the hearing is closed. Previously, the award had to be issued within 14 calendar days. 
• The new Consumer Rules are also silent on any emergency relief. Previously, though the Consumer Supplementary Procedures were silent on this issue, the Commercial Rules provided a procedure for emergency relief.

We recommend that businesses involved in consumer-related disputes consider the new Consumer Rules when determining whether to designate the AAA rules in their consumer arbitration agreements. The new Consumer Rules may be viewed at https://www.adr.org/aaa/ShowProperty?nodeId=/UCM/ADRSTAGE2021425&revision=latestreleased

Contacts

If you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following Morgan Lewis lawyers:

Burke-Timothy
DiCicco-Susan
Hershman-Jordan
Rissier-J