American Arbitration Association launches new consumer rules

By: The VNN Team  //  US News

by Carol Thompson

Beginning Sept. 1, the American Arbitration Association’s new consumer rules went into effect.

The new rules will replace the Consumer-Related Dispute Supplementary Procedures which were previously used in conjunction with the commercial procedures.

The AAA defines a consumer agreement as “an agreement between an individual consumer and a business where the business has a standardized, systematic application of arbitration clauses with customers and where the terms and conditions of the purchase of standardized, consumable goods or services are non-negotiable or primarily non-negotiable in most or all of its terms, conditions, features, or choices. The product or service must be for personal or household use.”

Under the new consumer rules, documents-only disputes will be resolved 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, up from 10 days.
Included in the new rules is an increase in the time an arbitrator has to issue an award from the date a hearing has closed. The previous 14 calendar days has been replaced with 30 calendar days. The AAA may extend the time limit for the rendering of the award only in unusual and extreme circumstances.

Also beginning September 1, a business that provides for or intends to provide for the rules or another set of AAA rules in a consumer contract should notify the AAA of the existence of such a consumer contract or of its intention to do so at least 30 days before the planned effective date of the contract and provide the AAA a copy of the arbitration agreement.

Along with the filing fee, arbitrators serving on a case with an in-person or telephonic hearing will receive compensation at a rate of $1,500 per day and arbitrators serving on a case with a desk arbitration/documents-only hearing will receive compensation at a rate of $750 per case.

One of the significant changes 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. The Registry is an online database of preapproved arbitration agreements. It contains the name and address of the business, the consumer arbitration clause, and additional documents that may be related to the clause. The registry is available for public inspection at the AAA’s website. Users must agree to the Terms of Service before entering the registry. There are already several businesses registered, including online giant Amazon.

To register, 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.

It is not a free service. The AAA charges a review and registration fee of $500 annually. For clauses submitted to the AAA this year, the fee is $650, which covers the cost of appearing in the Registry through 2015. If a business has any “subsequent changes, additions, deletions, or amendments” to the agreement, the new agreement must be resubmitted along with the fee, as if it were a new listing.

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. AAA will conduct an expedited review for an additional fee of $250.

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 declines, the parties may file in the appropriate court.