Consumer Law

Ten Practice Implications of NAF Withdrawal from Consumer Arbitrations

By Jon Sheldon

The Minnesota consent order requiring the National Arbitration Forum (NAF) to cease by July 24 all new consumer arbitrations has ten dramatic practice implications, detailed in NCLC REPORTS, Deceptive Practices & Warranties Edition (July/August 2009).

1. Arbitration clauses naming NAF as the sole forum may now be unenforceable

2. If a court decides instead to select the arbitrator, then the court will have to determine the arbitration rules and make sure the cost of arbitration to the consumer is no more expensive than what NAF arbitration was advertised to cost

3. New life for class arbitrations (no longer under NAF rules) and class actions (corporations may even prefer court actions rather than class arb before court-appointed arbitrator)

4. Bank of America has dropped its arbitration requirement for all consumer transactions (auto, credit cards, banking)

5. Companies will not be able to amend many of their arb agreements to substitute AAA.

6. Collection via arbitration is dead for the foreseeable future

7. There is now a powerful defense to confirmation of existing awards

8. Consumers may be able to unwind even confirmed NAF arb awards

9. Private parties, AGs, or state courts may be able to vacate NAF arb awards on a class basis

10. There will be many reasons for attorneys with individual clients to monitor new class actions against NAF, Mann Bracken, and Creditors

These 10 implications are developed in a current issue of NCLC REPORTS (released bi-monthly in four different editions--24 issues a year).  Ordinarily appearing only in print, we have posted this issue on our website because of the dramatic nature of these developments.

For 28 years, NCLC attorneys have put significant effort into making NCLC REPORTS a unique resource, not just listing new developments, but suggesting novel ideas and examining the practice implications of new developments and how they relate to existing statutes, regulations, and cases. Those subscribing to NCLC manuals in particular are recommended to subscribe to NCLC REPORTS to keep current between annual updates.  (NCLC has just released 9 new updates for our manual series, including revisions to Cost of Credit,Credit Discrimination, and Consumer Banking and Payments Law, as well as an important new supplement to the Foreclosures treatise.

Every two months the following 4 NCLC REPORTS editions are released:

Bankruptcy & Foreclosures Ed.:  consumer bankruptcy, foreclosures, mortgage servicing

Debt Collection & Repo Ed.:  FDCPA, debt harassment, collection lawsuits, repossessions

Consumer Credit & Usury Ed.:  consumer credit and predatory mortgages

Deceptive Practices & Warranties Ed.:  UDAP, warranties, class actions, arbitration, other general topics

Readers can subscribe to individual editions or all four.  Back issues (and all NCLC publications) can be electronically searched for hits in context at www.consumerlaw.org/keyword.

Full post as published by CL&P Blog on August 28, 2009 (boomark / email).