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.