NAF BOWS OUT OF CONSUMER ARBITRATION; AAA SUSPENDS DEBT COLLECTION ARBITRATION
The National Arbitration Forum (NAF) announced on July 19 that it voluntarily will cease to administer consumer arbitration disputes as of July 24, 2009 as part of a settlement agreement with the Minnesota Attorney General. The Attorney General filed suit against NAF on July 14, 2009 generally alleging that NAF misrepresented its neutrality and concealed its ties to the collection industry in violation of state consumer fraud, deceptive trade practices and false advertising laws. A NAF press release explains that legal costs, the economic climate and legislative uncertainty regarding arbitration also prompted NAF to exit the consumer arbitration arena.
The American Arbitration Association (AAA) announced on July 23 that it will not administer any consumer debt collection programs until fairness standards are established. The AAA told a House subcommittee that the process needs major reform and recommended a establishing a national policy committee to address areas of concern, including consumer notification, arbitrator neutrality, pleading and evidentiary standards, respondents’ defenses and counterclaims and arbitrator training and recruitment. The AAA specifically denied reports that the decision to impose a moratorium on consumer debt arbitration was at the behest of any outside entity.