One of the largest U.S. administrators of consumer arbitrations, the National Arbitration Forum ("NAF"), recently announced that it will stop administering consumer arbitration disputes as part of a settlement agreement with the Minnesota Attorney General's Office. As of July 24, 2009, the NAF will stop accepting any new consumer arbitrations for the following types of disputes: (i) debts in credit-card, (ii) healthcare, (iii) telecommunications, (iv) utilities, (v) mortgages, and (vi) consumer leases.

Additionally, the Minnesota Attorney General made a formal request to the American Arbitration Association ("AAA") to stop accepting "credit card and other consumer debt claims based on pre-dispute mandatory arbitration clauses." The AAA has agreed to do so for "credit cards and other consumer debt claims," but for the time being will presumably continue to accept other consumer arbitrations.

The actions of the NAF and AAA are the latest blows to pre-dispute consumer arbitration provisions, which have recently faced an increasing number of challenges from various state Attorneys General and consumer advocate groups. Many businesses list the NAF and AAA as the neutral arbitration entity in mandatory arbitration provisions in online web site terms of use and other consumer contracts. Including an arbitration provision in a consumer agreement like a web site terms of use is clearly not favored by the Attorneys General and consumer advocacy groups and it appears that the "consumer debt" context is just the beginning of their plight to eliminate a company's ability to include arbitration provisions in all consumer contracting contexts. Given the uncertainty associated with this area, companies should consider including a fall-back provision addressing an appropriate dispute resolution process in the event the identified arbitration company does not accept a given consumer dispute.