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Nation’s Largest Arbitration Firm Pulls out of Consumer Disputes

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Last night, citing Sunday’s settlement between Minnesota’s attorney general and the National Arbitration Forum (NAF), the American Arbitration Association (AAA) announced that it will no longer participate in debt collection arbitration disputes. The group, which is the largest provider of arbitration services in the country, said that it is alarmed by the NAF suit and will seek the establishment of “some standards or safeguards.”

While last night’s announcement was a positive step, it does little to protect consumers from abusive arbitration clauses that are slipped into the fine print of everything from cell phone contracts to nursing home agreements. Unlike NAF’s settlement, AAA is not banned from resuming its work with debt collection disputes, and may still continue nursing home, employment or any other consumer forced arbitrations.

Today, the House Oversight and Government Reform’s Subcommittee on Domestic Policy will hold a hearing on forced arbitration, and there are currently two bills under consideration that would curb this abusive practice. The Arbitration Fairness Act (S. 931 / H.R. 1020) would ensure that any decision to enter into arbitration by a consumer is voluntary, and not forced on them by the fine print of a contract and the Fairness in Nursing Home Arbitration Act (S. 512 / H.R. 1237) would eliminate forced arbitration clauses in nursing home contracts.

In a statement released this morning, AAJ VP of Public Affairs Linda Lipsen said “For years, consumers have seen first-hand how corporations and private Wall Street forums take advantage of everyday people via forced arbitration clauses…[and] it has become clear that Congress must step in to protect consumers.” She went on to note that these groups have always “had ‘guidelines’ they either didn’t follow or outright abused.” And that “[u]ntil Congress acts, corporations…[continue] to use one-sided forced arbitration as a weapon against consumers and a shield to avoid accountability.

4 Comments

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  1. Mike Bryant says:
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    Wonder if the US chamber is still thinking that there is no fire with the smoke. Good article, thanks for the information. Nice to see consumers getting some rights and protections back.

  2. scammed says:
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    Why only debt collection? Almost every consumer contract has MBA.
    If this is a start then it is a good one but we have a way to go.

  3. JORDAN FOGAL says:
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    Dear Attoney General Swanson:

    First, thank you so much for all your efforts on behalf of your consumers. In your efforts you have helped victims in all 50 states. I am faxing you some of the headlines of articles, there are sixty or so on the Internet if you google my name, but I ask you please go to my web sight. My written testimony to the congressional committee on arbitration and AAA is 26 pages long. I have been though arbitration with AAA twice over the same matter. How many times can you be forced into that abyss?

    I want to help you and your constituents and the people of this county. People like us that have been preyed upon by big business telling us it was a good thing and stabbing us in the back. I have personally met with Mr. Richard Namark VP of AAA. He knows exactly what he and AAA are doing. He knows what is going on and does not care. I handed him over 15 horrible cases with pictures and ask him to read them on his way back to New York City. They are like stepford people. They have no feelings. There is no empathy for the human suffering they have caused. They learn how to get you, calmly and swiftly like a great white shark. Quietly consumers are picked off one by one. There is not even a danger sign warning us the waters are infested.

    Again thank you, most sincerely. I hope I can be of help.

    Jordan Fogal

    Please fax her a thank you note @ 651 282 2155

  4. Cheryl Whitcomb says:
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    Thanks for the timely and important information. The comment about the US Chamber is spot on. It’s encouraging to see outcomes that benefit so many consumers. Keep it coming!