Victory!

In response to the suit filed by Minnesota Attorney General Lori Swanson, first the National Arbitration Forum (NAF) and now the American Arbitration Association (AAA) are pulling out – at least partially – of the consumer arbitration business. There’s coverage by the Wall Street Journal, NPR, the AP, and Business Week.

According to the consent decree, NAF agrees to the "complete divestiture… of any business related to the arbitration of consumer disputes" including "any arbitration involving a dispute between a business entity and a private individual." According to the document, NAF will continue to arbitrate internet domain names disputes, personal injury protection claims, and cargo disputes. None of these areas were covered in Minnesota’s lawsuit.

In response to a letter from Swanson, AAA acknowledged "legitimate concerns" about consumer debt-collection arbitration, and said that until such concerns were addressed, AAA "has implemented a moratorium on the administration of any consumer debt collection arbitration programs." Even though AAA didn’t go as far as NAF in ceasing all consumer arbitration, this is still very good news.