In early February, the American Arbitration Association (AAA) announced proposed changes to its Consumer Arbitration Rules. As part of those changes, AAA is seeking comments on the proposed revisions, with the comment period set to close February 28, 2025.

These changes follow close on the heels of AAA’s Mass Arbitration Supplementary Rules and Fee Schedule, which were announced last year. With these proposed changes, AAA continues to evolve its consumer arbitration rules in an attempt to modernize and clarify existing processes.

The proposal includes revisions to most of the existing Consumer Arbitration Rules. Businesses, particularly those that select AAA as their arbitration provider for consumer agreements, should review these proposed amendments with an eye towards the potential impact on current arbitration strategies. Given the limited comment period, businesses are encouraged to work with counsel to evaluate the proposed revisions, provide comments, and consider developing arbitration strategies that align with these changes.

Below, we provide a summary of key proposed changes.

Rule 4: Filing requirements and procedures

AAA’s proposed rules would change the filing requirements and procedures. Within proposed Rule 4, subsection (e) would provide AAA “the discretion, subject to the final determination of an arbitrator once appointed, to administer multiple claims filed by the same party arising out of the same contract as a single case,” or to “require that multiple claims filed by the same party arising out of separate contracts be filed and administered as individual cases.”

This proposed change could reduce filing fees and costs for arbitrations involving multiple claims submitted by the same party, but would not impact typical mass arbitration scenarios, where numerous claimants file similar or identical claims.

Rule 5: Answers and counterclaims

AAA’s proposed amendment to Rule 5 provides new guidance on which arbitration provision controls when the parties disagree, which has been an issue in several mass arbitration cases. Often, mass arbitration claimants argue for a prior arbitration agreement calling for individual arbitration controls, while respondent businesses argue a later version incorporating mass arbitration provisions should govern the arbitration.

In proposed Rule 5, AAA provides that the claim will be administered according to the arbitration provision submitted by the initiating party, subject to a final determination by the arbitrator. This rule could have significant impacts for practitioners, as the provisions may differ with respect to arbitrability determinations, fees, and conditions precedent to filing arbitration – all issues that would now be deferred to an appointed arbitrator after filing fees are paid.

Rule 9: Small claims option for the parties

Both AAA’s existing and proposed rules provide a pathway for claims to be heard in small claims court, even where the parties disagree as to whether the claim should remain in arbitration. Under the current rule, AAA can administratively close a case before an arbitrator is appointed if one party notifies AAA that it wants the case to proceed in small claims court. Under proposed Rule 9, subsection (c), that has changed.

While AAA can still make an initial administrative decision that the arbitration should be closed and proceed in small claims court, that determination is “subject to a final determination by the arbitrator.” This change would presumably require parties to pay filing fees and open an arbitration before being able to proceed in small claims court.

Rule 11: Mediation

The proposed rules also include a new rule regarding mediation. Under this proposed rule, AAA can refer the parties to mediation at any point in the arbitration process. The parties can also request mediation. The mediation does not toll deadlines in the underlying arbitration proceedings, but rather runs concurrently with the arbitration.

Rule 12: Business notification and publicly accessible consumer clause registry

AAA requires businesses who intend to use its services for consumer arbitrations to have the arbitration agreement reviewed to determine whether the agreement complies with AAA’s Consumer Due Process Protocol. Under both the current and proposed rules, businesses that call for AAA to administer consumer arbitrations can pay AAA to conduct an expedited review of their arbitration agreement. Once reviewed, AAA places the business on its AAA Consumer Clause Registry. Businesses are then required to pay AAA an annual fee to maintain their arbitration agreement on AAA’s registry. In a marked shift, the proposed rules would not allow businesses on the registry who fail to pay the annual renewal fee to request an expedited review (and pay the corresponding fee). Instead, AAA would simply decline to administer those arbitrations.

Conclusion

AAA’s proposed revisions to the Consumer Arbitration Rules were drafted in an effort to streamline and modernize the rules. However, as illustrated above, these revisions can have a significant impact on the cost and administration of an arbitration. Businesses are encouraged to consider these revisions and their consumer arbitration agreements as these revised rules come into effect.

For more information, please contact the authors.