American Arbitration Association also agrees to stop arbitrating consumer collection cases

July 22, 2009 by Todd Murray · Leave a Comment 

And the dominoes keep falling. Last week, the National Arbitration Forum was sued by the Minnesota Attorney General. The suit alleged that the Forum had financial ties to a hedge fund that also owned one of the largest debt collection law firms in the country. That debt collection firm just happened to be NAF’s biggest customer. This allegation suggested a clear conflict of interest and rebutted the Forum’s longstanding claims of neutrality. Just days later, in a stipulated settlement, NAF agreed to completely stop arbitrating consumer disputes altogether. This was a huge victory for consumers. As my friend and fellow consumer attorney Sam Glover put it, the NAF agreeing to stop arbitrating consumer claims “is like McDonald’s agreeing to stop making hamburgers.” 

Today, as reported by the Wall Street Journal, the American Arbitration Association has also agreed to stop accepting consumer debt collection disputes. It is unclear whether this is a permanent pullout or whether its merely a PR move just before Congress is scheduled to discuss the Arbitration Fairness Act. Either way, it appears the tide is starting to turn against mandatory consumer arbitration.