Using the AAA’s Rules to Defeat Arbitration Requirements

The new American Arbitration Association (AAA) consumer arbitration rules went into effect in May 2025. The AAA consumer arbitration rules offer multiple opportunities for consumers to avoid an arbitration requirement and to bring an individual or even a class case in court. That the AAA rules allow this has a significant practical impact on consumer litigation.  The AAA is the predominant arbitration provider in consumer disputes, and, as described below, in much consumer litigation, consumers can opt for the AAA consumer arbitration rules. This article examines opportunities when utilizing those rules.

As discussed in detail below, an arbitration requirement may not be enforceable under the AAA rules if: (1) the business fails to register its arbitration clause with the AAA; (2) the clause does not meet the AAA’s Consumer Due Process Protocol; (3) the business balks at paying its sizeable share of the AAA’s fees and costs; or (4) the business engaged in improper conduct in the past or in the current AAA arbitration.  Furthermore, the consumer can always sue in small claims court and not be forced into arbitration.

The AAA’s Consumer Arbitration Rules Offer Special Rights to Consumers

Special opportunities to avoid an arbitration requirement are offered by the AAA’s consumer arbitration rules, not its more generally applicable commercial rules. All citations in this article are to the new rules unless specified otherwise. Additionally, throughout this article, the rules are referenced in short form. For example, AAA Consumer Arbitration Rule R-1 is cited as Rule R-1.

The AAA’s consumer arbitration rules apply even if the arbitration provision specifies the AAA’s commercial rules or no rules at all.  Rule R-1(a) specifies that the consumer rules apply to any consumer agreement and Rule R-1(b) defines a consumer agreement as an agreement between a consumer and a business where the business has a standardized, systematic application of arbitration clauses and the terms of the purchase of standardized, consumable goods or services are non-negotiable or primarily non-negotiable in most or all its terms, conditions, features, or choices. The product or service must be for personal or household use. 

Old Rule R-1 (but not new Rule R-1) provided examples of agreements that do and do not meet the definition of a consumer agreement. It is unclear why the AAA deleted the examples in new Rule R-1, and it is thus unclear whether those examples still apply.

Some of the listed examples of consumer agreements in old Rule R-1 were agreements for cell phone service, residential rentals, consumer credit, home services, manufactured home purchases, insurance, and private school enrollment.  The old rules indicated that home construction and remodeling contracts, real estate purchases, and condominium or homeowner association by-laws were not viewed as consumer agreements.  For a reprint of old Rule R-1, see NCLC’s Consumer and Worker Arbitration Provisions Appx. C.1. 

The AAA consumer rules will apply whenever the contract specifies the AAA as the provider or indicates that the AAA’s rules apply.  If the AAA is one of multiple providers listed, the consumer can opt for the AAA’s rules simply by filing the arbitration with the AAA.  If no rules or provider are listed, then the consumer should be able to opt for the AAA’s rules by filing the arbitration with the AAA.

If a different provider or rules are found in the arbitration provision, then the AAA rules will not apply unless the parties agree that they will apply. If another provider other than the AAA or JAMS is listed, review the arbitration provider’s rules to determine if the rules are so one-sided as to make the arbitration requirement unconscionable and unenforceable. See Heckman v. Live Nation Ent., Inc., 120 F.4th 670, 685 (9th Cir. 2024); NCLC’s Consumer and Worker Arbitration Provisions §§ 8.7.8, 10.7.4.4. 

The AAA’s Consumer Rules May Eliminate Arbitration Requirement After Any of Four Business Missteps

The consumer arbitration rules allow the AAA to decline an arbitration demand, stop an ongoing arbitration, and even decline to administer future arbitrations with a business if the business makes any of four missteps.  Moreover, Rule R-10(b) provides that, if the AAA declines or ceases an arbitration based on those business missteps, the consumer can bring the case in the appropriate court instead of arbitration. 

Courts generally accept this AAA rule as grounds to refuse enforcement of an arbitration request. See Bedgood v. Wyndham Vacation Resorts, Inc., 88 F.4th 1355 (11th Cir. 2023).  The parties agreed to be bound by the AAA rules, so the business has agreed the consumer can go to court if the AAA declines to administer the arbitration.

Moreover, even apart from Rule R-10, courts on a number of different grounds will on their own refuse to enforce an arbitration provision after the AAA declines to administer the arbitration. See NCLC’s Consumer and Worker Arbitration Provisions §§ 6.4, 9.4.

The four business missteps that can lead to the AAA refusing to administer the arbitration are:

1. The business fails to submit the applicable arbitration provision to the AAA Consumer Clause Registry or fails to pay the applicable registration fees. See Rule R-12(f) and the discussion infra. See also Merritt Island Woodwerx, L.L.C. v. Space Coast Credit Union, 2025 WL 1450492 (11th Cir. May 21, 2025); Bedgood v. Wyndham Vacation Resorts, Inc., 88 F.4th 1355 (11th Cir. 2023).
2. The arbitration provision fails to comply with the AAA’s Consumer Due Process Protocol. See Rule R-10(a)(iii) and the discussion infra. See also Rule R-1(c).
3. The business fails to pay the AAA required fees and costs. See Rule R-10(a)(ii) and the discussion infra.
4. The business engages in misconduct in the arbitration or a prior arbitration or even a prior court case. See Rule R-10(a)(i) and the discussion infra.

Notably, based on any of these missteps, not only will the AAA decline or cease to administer an arbitration, but it can decline to administer future arbitrations with that business involving different consumers, thus allowing other consumers or even a class of consumers to avoid an arbitration requirement in litigation with that business.  See Merritt Island Woodwerx, L.L.C. v. Space Coast Credit Union, 2025 WL 1450492 (11th Cir. May 21, 2025) (class action can remain in court after the business failed to register an arbitration provision in a prior individual action); Bedgood v. Wyndham Vacation Resorts, Inc., 88 F.4th 1355 (11th Cir. 2023) (similar).

Failure to Register Arbitration Provision Can Have Dire Consequences for a Business

As described above, one of the grounds that can cause the AAA to refuse to administer an arbitration, allowing the consumer to go to court, is the business’s failure to register the arbitration provision with the AAA’s public registry and pay all registration fees. The AAA Consumer Clause Registry is public and searchable so consumers can determine if a business has registered its arbitration provision.

It is not enough that a business has registered an arbitration provision; it must register the provision applicable to the consumer. Therefore, the business will have to separately submit each of its arbitration provisions and any amendment to any of those provisions. Companies typically should submit multiple arbitration provisions and pay multiple registration fees. See Rule R-12(c).

The registration fee is $600 to register each provision initially and there is a registry fee of $600 for each subsequent calendar year to maintain the clause on the registry and for the AAA to administer future disputes involving that clause. If the AAA receives a demand for consumer arbitration arising from an arbitration clause that has not been previously registered, the business will incur an additional $300 fee for the AAA to conduct an immediate review of the clause (for a total fee of $900).  

If no fees are paid or no provision is submitted to the registry, then the AAA should decline to administer an arbitration, allowing the consumer to sue in court. See Rule R-12(f); Merritt Island Woodwerx, L.L.C. v. Space Coast Credit Union, 2025 WL 1450492 (11th Cir. May 21, 2025); Bedgood v. Wyndham Vacation Resorts, Inc., 88 F.4th 1355 (11th Cir. 2023).

The Eleventh Circuit issued a highly instructive decision in May 2025 in Merritt Island Woodwerx. In Merritt Island Woodwerx, the credit union had not registered the arbitration provision with the AAA and did not immediately register it after a credit union member filed for AAA arbitration under that arbitration provision.  Almost a month later, the AAA informed the parties it was declining to administer the arbitration because the credit union had not registered the arbitration clause or paid the registration fee.  Over a month after that, credit union members filed a class action in court. Only then did the credit union register the arbitration provision and pay the registration fee. (The AAA eventually found the provision met its Consumer Due Process Protocols.) 

The credit union asked the court to stay the class action pending arbitration. The court responded and the Eleventh Circuit affirmed that the business’s delay in registering meant that the class action could remain in court. The Eleventh Circuit found: 

[P]ost-filing conduct cannot cure the prior noncompliance. Any rule to the contrary would result in gamesmanship by companies attempting to remedy an arbitration roadblock that they knowingly caused were they to draw a judge they didn’t like or wanted to waste counterparty resources spent on litigation. This is especially true in the arbitration context, where the parties “trade[ ] the procedures and opportunity for review of the courtroom for the simplicity, informality, and expedition of arbitration.” Id. *6.

Perhaps even more significantly, the Eleventh Circuit ruled that the class could avoid the arbitration requirement based on the credit union’s actions in the prior individual case.  The Eleventh Circuit found that it would be futile for the class to proceed to arbitration because there was an actual AAA rejection letter refusing to administer the same arbitration agreement.

Interestingly, the Eleventh Circuit did not even mention the AAA rule allowing the consumer to stay in court if the AAA declined to administer the arbitration.  Instead, it relied on the arbitration provision itself that stated that, if the AAA was not available, the consumer could select an alternative venue, which the Eleventh Circuit found to include a court. The Eleventh Circuit also noted that the credit union was in default and thus could not rely on Federal Arbitration Act (FAA) § 3 to enforce the arbitration since FAA § 3 allows a party to seek a stay of litigation if the “applicant for the stay is not in default in proceeding with such arbitration.”  See also Bedgood v. Wyndham Vacation Resorts, Inc., 88 F.4th 1355 (11th Cir. 2023).

The AAA’s Consumer Due Process Protocol Can Throw Out an Arbitration Provision

After a business submits its arbitration provision to the AAA’s registry and pays the registration fees, the AAA administratively determines if the provision meets the AAA’s Consumer Due Process Protocol.  Rule R-12(b). See also Hernandez v. MicroBilt Corp., 88 F.4th 215, 218 (3d Cir. 2023) (this determination is made administratively and not by an arbitrator).  If the provision does not meet the due process protocol, the business must agree to sever any offending provision.  If it does not sever the provision, the AAA will not administer the arbitration.  Rule R-12(f). If arbitration administration is declined, the consumer can proceed to court and avoid arbitration.  Rule R-10(a)(iii).

An arbitration provision being conducted under the AAA’s consumer arbitration rules will likely mean that there will be compliance with many of the due process protocol’s requirements. But the due process protocol imposes additional best practices for compliance, including:

• The arbitration provision should disclose the small claims court option discussed later in this article. See Principle 5.
• The arbitration provision should not specify an inconvenient venue.  Principle 7.
• The arbitration provision should establish procedures for arbitrator-supervised exchange of information prior to arbitration, bearing in mind the expedited nature of arbitration. Principle 13.
• The arbitrator should be empowered to grant whatever relief would be available in court under law or in equity. Principle 14.
• The arbitration provision should not seek to vary the statutory standards for court review of an arbitration award. Principle 15.

Defendant’s Failure to Pay the AAA’s Fees and Costs May Void an Arbitration Requirement 

Under the AAA consumer arbitration fee schedule, businesses must pay almost all the hefty cost of a consumer arbitration.  The consumer’s total obligation is only a $225 filing fee—unless the arbitration provision itself specifies the business pays all costs, and then the consumer’s total obligation is $0.  California and New Jersey consumers can obtain a fee waiver of the $225 if their gross monthly income is less than 300% of the federal poverty level.

The business on the other hand has a significant financial obligation pursuant to the AAA consumer arbitration fee schedule:

• Costs related to the business registering its arbitration provision with the AAA (as discussed above);
• $375 filing fee;
• $1,400 for case management;
• $500 hearing fee, presumably for each telephone, virtual, or in-person hearing;
• $300 per hour paid to the arbitrator for all time incurred on the case, including but not limited to study, hearing, and travel time;
• All the arbitrator’s expenses, including travel, any AAA expenses, and costs relating to proof and witnesses produced at the direction of the arbitrator;
• Any hearing room rental fee.

The total cost to the business is likely to exceed $5,000 and can easily approach $10,000 or more. 

An arbitration provision’s $600 or $900 registration fee and the $375 filing fee must be paid prior to appointment of an arbitrator, and the $1,400 case management fee must be paid at the time the arbitrator is presented to the parties. Failure to pay these fees should result in the AAA declining to administer the arbitration.  Failure to pay other costs due later may result in the AAA ceasing the proceeding or more likely refusing to administer future arbitrations with that business. Rule R-10(a)(ii).

It is not uncommon for businesses, when they realize their costs to participate in the arbitration, to refuse to pay their obligation or participate in the arbitration.  This may not only allow the consumer to litigate the dispute in court but may prevent the business from enforcing its AAA arbitration requirement in future litigation involving other consumers.

Present or Past Bad Conduct Can Nix an Arbitration Requirement

The AAA will stop an ongoing arbitration if a business or its attorney fails to comply with AAA’s Standards of Conduct for Parties and Representatives.  If there was non-compliance in the past, the AAA may refuse to administer any future arbitration involving the same business or attorney. See Rule R-10(a)(i).  If either happens, the consumer can file the case in court.  See Rule R-10(b).

Some of the prohibited conduct listed in the standards of conduct include: 

• Harassing, threatening, or intimidating conduct toward AAA employees or the arbitrator;
• Using vulgar, profane, or otherwise inappropriate language;
• Not directing case-related communications to their assigned case management staff, but trying to contact other AAA officials or members of AAA’s Board of Directors;
• Having previously been declared to be a vexatious litigant or similar equivalent in any state or federal court or by an arbitrator in a prior arbitration.

Small Claims Court Is Always an Option Instead of Arbitration

AAA consumer rules allow consumers to avoid arbitration by filing cases in small claims court, if the case is within that court’s jurisdiction. “Small claims court” is not defined. 

The consumer can file the case directly with a small claims court (Rule R-9(a)) or the consumer can file the complaint with the AAA and move the case to small claims court later (Rule R-9(b)).  Opting to file the case in arbitration first will allow the consumer to determine if the business will register the arbitration provision and if the provision complies with the due process protocol. The consumer will have to pay the $225 filing fee, but this is refundable if the consumer opts for a small claims court venue prior to the arbitrator’s appointment.  See AAA consumer arbitration fee schedule.

There is reason to wait to opt for small claims court until at some point after the arbitrator is appointed, even if this means forfeiting the $225 filing fee. After the arbitrator is appointed, the consumer can decide if the arbitrator will be a fair judge of the dispute and can opt for small claims court if that venue seems preferable.  Moreover, it should be clear shortly after the arbitrator is appointed whether the business intends to pay all the fees required of it.  It will already have to pay $1,900 plus any fees to register the arbitration provision. 

If the business is not going to fulfill its financial responsibilities, the AAA will dismiss the case and the consumer should be able to file the matter in any court with proper jurisdiction, not just small claims court. If the defendant is going to comply with its arbitration responsibilities, the consumer can opt at that point for the small claims court option.