Joel N. Kreizman
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732-568-8363 jkreizman@sh-law.comAAA’s New Consumer Arbitration Rules Now in Effect: Have You Registered?
Author: Joel N. Kreizman|September 19, 2014
Consumer Arbitration
AAA’s New Consumer Arbitration Rules Now in Effect: Have You Registered?
Consumer Arbitration
The American Arbitration Association’s (AAA) new Rules took effect on September 1, 2014. New York and New Jersey businesses that include clauses in their consumer contracts providing for AAA administration should be aware that there are a number of key changes, including the requirement to register all agreements in a newly created online database.
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. Common examples include credit card agreements, automobile leases, cell phone contracts, and fitness club membership agreements.
The new rules apply specifically to consumer contracts and replace the AAA’s Consumer-Related Disputes Supplementary Procedures, which were previously used in conjunction with the Commercial Rules. The 55 new rules spell out the procedures in much greater detail, including hearing procedures, timelines, and resolution of disputes by documents.
The most significant change under the new rules is the creation of Consumer Clause Registry. According to the AAA, the online database “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.”
Under the new rules, the AAA will only accept a case for arbitration if the clause is first reviewed and approved by AAA. Rule 12 specifically states that any business that “provides for or intends to provide for” AAA administration 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.” If a business has not registered its consumer clause prior to the filing of a consumer case, the AAA will require that the business register its clause at that time and will conduct an expedited review.
Businesses will also incur new fees under the amended consumer rules. The AAA will charge a non-refundable $500 annual fee to conduct the review and maintain the Registry. For this year, however, a $650 fee will maintain the business in the Registry through 2015. Companies who do not submit their arbitration agreements until a case is filed will also incur an additional $250 fee for expedited review.
If you have any questions about the AAA’s new consumer rules or would like to discuss how they may impact your business, please contact me or the Scarinci Hollenbeck attorney with whom you work.
AAA’s New Consumer Arbitration Rules Now in Effect: Have You Registered?
Author: Joel N. Kreizman
The American Arbitration Association’s (AAA) new Rules took effect on September 1, 2014. New York and New Jersey businesses that include clauses in their consumer contracts providing for AAA administration should be aware that there are a number of key changes, including the requirement to register all agreements in a newly created online database.
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. Common examples include credit card agreements, automobile leases, cell phone contracts, and fitness club membership agreements.
The new rules apply specifically to consumer contracts and replace the AAA’s Consumer-Related Disputes Supplementary Procedures, which were previously used in conjunction with the Commercial Rules. The 55 new rules spell out the procedures in much greater detail, including hearing procedures, timelines, and resolution of disputes by documents.
The most significant change under the new rules is the creation of Consumer Clause Registry. According to the AAA, the online database “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.”
Under the new rules, the AAA will only accept a case for arbitration if the clause is first reviewed and approved by AAA. Rule 12 specifically states that any business that “provides for or intends to provide for” AAA administration 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.” If a business has not registered its consumer clause prior to the filing of a consumer case, the AAA will require that the business register its clause at that time and will conduct an expedited review.
Businesses will also incur new fees under the amended consumer rules. The AAA will charge a non-refundable $500 annual fee to conduct the review and maintain the Registry. For this year, however, a $650 fee will maintain the business in the Registry through 2015. Companies who do not submit their arbitration agreements until a case is filed will also incur an additional $250 fee for expedited review.
If you have any questions about the AAA’s new consumer rules or would like to discuss how they may impact your business, please contact me or the Scarinci Hollenbeck attorney with whom you work.
