National News

AAA Announces Moratorium on Consumer Debt Collection Arbitration Cases

July 27, 2009 -- The American Arbitration Association today announced its decision not to accept new consumer debt collection arbitration cases effective immediately.

The decision was made after evaluation of a recently concluded program in this area showed weaknesses in the consumer debt collection arbitration process. The AAA is calling for reform that will address such weaknesses, beginning with a dialogue involving various groups with interest in the matter.

The Association said the following matters are included in the moratorium:

• Consumer debt collections programs or bulk filings
• Individual case filings in which:
• The company is the filing party and,
• The consumer has not agreed to arbitrate at the time of the dispute and,
• The case involves a credit card bill or,
• The case involves a telecom bill or,
• The case involves a consumer finance matter.

The AAA will continue to administer all demands for arbitration filed by consumers against businesses and all other types of consumer arbitrations, according to Richard Naimark, AAA senior vice president. "This policy will be in effect until such time as the AAA determines that adequate and broadly acceptable due process protocols specific to these cases are in place. It is our intention to engage in earnest dialogue with a diversity of interest groups on what constitutes a proper protocol framework for these matters," he said.

The Association emphasized that while the Consumer Due Process Protocol effectively ensures a fair process for most consumer arbitrations, the categories of cases listed above require additional protections, due to, among other things, a high rate of non-participation by consumers. The Consumer Due Process Protocol is a set of principles for a fundamentally fair ADR process created in 1998 by representatives of the bar, government agencies, and consumer and other nonprofit organizations, including the AAA.

Last week, the AAA recommended the creation of a national policy committee that will address problems in consumer debt collection arbitration during its testimony before the Domestic Policy Subcommittee of the House Oversight and Government Reform Committee. In its recommendations, the AAA identified the areas that need attention from the national policy committee: consumer notification, arbitrator neutrality, pleading and evidentiary standards, respondents' defenses and counterclaims, and arbitrator training and recruitment.

For more information about the AAA's position on debt collection arbitration, go to http://www.adr.org/sp.asp?id=36427