Alerts

AAA Changes Arbitration Rules for Websites that Sell to Consumers

12.05.14

The American Arbitration Association changed its Consumer Arbitration Rules effective Sept. 1, 2014 and now requires AAA pre-approval and annual renewal for Terms of Service that obligate consumers to arbitrate disputes. Under the new process the AAA requires compliance with the Consumer Due Process Protocol and AAA Consumer Arbitration Rules within at least 30 days of advanced notice of changes to the arbitration Terms of Service and can refuse to arbitrate a dispute that the AAA does not approve.

Therefore, if your business sells consumer products and you want to arbitrate with the AAA, you must comply with these new Consumer Arbitration Rules or run the risk that the AAA will not agree.

According to the AAA, “contracts that typically meet the criteria for application of these Rules, if the contract is for personal or household goods or services and has an arbitration provision, include, but are not limited to the following:”

  • Credit card agreements
  • Telecommunications (cell phone, ISP, cable TV) agreements
  • Leases (residential, automobile)
  • Automobile and manufactured home purchase contracts
  • Finance agreements (car loans, mortgages, bank accounts)
  • Home inspection contracts
  • Pest control services
  • Moving and storage contracts
  • Warranties (home, automobile, product)
  • Legal funding
  • Health and fitness club membership agreements
  • Travel services
  • Insurance policies
  • Private school enrollment agreements

The AAA nonrefundable fees are the Terms of Service arbitration:

…clause review and Registry fee submitted to the AAA at any time within the 2014 calendar year is $650, which represents the cost of reviewing the clause and maintaining that clause on the Registry through 2015. A yearly Registry fee of $500 will be charged to maintain each clause on the Registry for each calendar year thereafter.

For businesses submitting a clause at any time within the 2015 calendar year, the cost of reviewing the clause and maintaining that clause on the Registry is $500. A yearly Registry fee of $500 will be charged to maintain each clause on the Registry for each calendar year thereafter.

If the AAA receives a demand for consumer arbitration from an arbitration clause that was not previously submitted to the AAA for review and placement on the Registry, the business will incur an additional $250 fee to conduct an expedited review of the clause.

Any subsequent changes, additions, deletions, or amendments to currently registered arbitration agreement must be resubmitted for review and a review fee of $500 will assessed at that time.

To learn about the impact of the AAA Consumer Arbitration Rules and how they may impact your business, please contact Partner Peter S. Vogel (pvogel@gardere.com or 214-999.4422).

The publications contained in this site do not constitute legal advice. Legal advice can only be given with knowledge of the client's specific facts. By putting these publications on our website we do not intend to create a lawyer-client relationship with the user. Materials may not reflect the most current legal developments, verdicts or settlements. This information should in no way be taken as an indication of future results.

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