The American Arbitration Association (AAA) announced yesterday that beginning September 1, 2014, it will implement and maintain a publicly available Consumer Clause Registry. This will affect any company that designates the AAA’s Consumer Rules in its arbitration clause or refers to the AAA in a consumer contract.

The AAA states on its website that 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.”

According to the AAA, “[b]y accessing the Registry, parties will be able to search businesses by name to determine if the AAA has reviewed their consumer arbitration clause and will administer their consumer arbitrations. 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.” In addition, the AAA said, “the Registry will include on-line access to the arbitration clause reviewed by the AAA and may also include other documents related to the arbitration clause.”

The registration requirement is part of an overhaul of the AAA’s Consumer Rules that will also take effect on September 1, 2014. The amended rules spell out in much greater detail than the current rules the procedures that will govern consumer arbitrations administered by the AAA.

Of immediate importance, however, is the registration requirement. Rule 12 of the amended Consumer Rules, which contains this requirement, states that beginning September 1, 2014, a 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” and provide a copy of the arbitration clause to the AAA.

Rule 12 states that the AAA will review the clause for material compliance with the Due Process Protocol and the amended Consumer Rules. If a business has not already submitted its arbitration clause for review at the time a consumer arbitration is commenced, the AAA will conduct an “expedited review.”

The AAA will also require fees to be paid as part of the registration process. For arbitration clauses submitted to the AAA during 2014, the fee is $650, which will maintain the clause on the Registry through 2015. A yearly fee of $500 will be charged to maintain each clause on the Registry for each year thereafter. If an expedited review of the clause is necessary, an additional $250 fee must be paid. Furthermore, “any subsequent changes, additions, deletions, or amendments” to a currently registered arbitration clause must be resubmitted to the AAA for review and a review fee of $500 will be assessed at that time.

The AAA states that it will decline to administer consumer arbitrations where the business does not comply with these procedures, in which case “the parties may choose to submit their dispute to the appropriate court.” It further states that its “review of a consumer arbitration clause and determination whether or not to administer arbitrations pursuant to that clause is only an administrative determination by the AAA and cannot be relied upon or construed as a legal opinion or advice regarding the enforceability of the arbitration clause.”

The AAA’s new registration requirement comes at a time when the Consumer Financial Protection Bureau (CFPB) has amassed a database of consumer credit card agreements and is in the midst of a study of consumer arbitration mandated by Section 1028 of the Dodd-Frank Act. The CFPB released preliminary results of the study in December 2013 and has stated that it hopes to complete the study this year. Section 1028 provides that the CFPB “by regulation, may prohibit or impose conditions or limitations on the use of” pre-dispute arbitration agreements in connection with consumer financial products or services if it finds doing so “is in the public interest and for the protection of consumers.”

Ballard Spahr’s Consumer Financial Services Group pioneered the use of pre-dispute arbitration provisions in consumer financial services agreements. It is nationally recognized for its guidance in structuring and documenting new consumer financial services products, its experience with the full range of federal and state consumer credit laws, and its skill in litigation defense and avoidance.

The CFS Group also produces CFPB Monitor, a blog that focuses exclusively on important Consumer Financial Protection Bureau developments. To subscribe to the blog, use the link provided to the right.

For more information, please contact CFS Practice Leader Alan S. Kaplinsky at 215.864.8544 or kaplinsky@ballardspahr.com, or Mark J. Levin at 215.864.8235 or levinmj@ballardspahr.com.


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