Hearings Preview: The AAA Wants Fairness and Due Process Addressed Before Reinstating Debt Collection Arb (Web)

American Arbitration Association Senior Vice President Richard W. Naimark will ask Congress this afternoon to examine arbitration fairness before the association resumes administering consumer debt collection matters.

Yesterday, the association announced that it would not administer consumer debt collection arbitration until "standards or safeguards are established."  Details here.

Today, Naimark plans to tell the Domestic Policy Subcommittee of the House Oversight and Government Reform Committee “that a series of important fairness and due process concerns must be addressed and resolved before [the association] will proceed with the administration of any future debt collection arbitrations.”

In fact, Naimark will explain that the nation’s largest provider currently isn’t doing that work.  “While the AAA has not administered significant numbers of debt collection arbitrations relative to some other organizations, the AAA did process consumer debt collection arbitrations in a single high volume program,” notes Naimark in an advance copy of his testimony, adding, “However, the AAA’s administration of that program ended in June of this year and consequently at this time the AAA is not administering any debt collection programs.”

 But Naimark also plans to tell the subcommittee that the association won’t reinstate consumer debt collection to its workload until several issues “critical to the administration of debt collection” are examined, and improved.  The issues include:

ù    Notice--Since consumers often don’t show up for arbitrations, the association will ask Congress to improve procedures.  Suggestions include a “tiered method of communication” escalating to service of process from a regular mailed notice; sending “duplicate initiating letters” by different mail methods, including overnight delivery; and restating the communications “so that the arbitration process will appear less forbidding and more accessible.
ù    Arbitrator Neutrality–To counter charges of an appearance of bias for repeat-player neutrals and providers, the testimony proposes limiting the number of cases an arbitrator may hear from one party, and attempt to “eliminate the ability of businesses to disqualify arbitrators solely because of prior adverse rulings.”
ù    Pleading and evidentiary standards–Implement supplemental requirements that specify the consumer debt arbitration documentation and supporting evidence, and provide specialized arbitrator training in the area.

Naimark also will propose to the subcommittee changes in dealing with respondents’ defenses or counterclaims that would boost neutrals’ compensation in complicated cases.  

He also will ask the subcommittee to create a consumer debt protocol committee.  The advance testimony states, “We believe that a platform of fair-play standards and safeguards can be arrived at by consensus and collaboration,” citing the association’s Consumer Due Process Protocol. [Naimark will discuss at length the protocol’s “meaningful and important impact on the AAA’s administration of consumer arbitrations.”]

–Russ Bleemer, Editor, Alternatives