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Author: Alice LaCour

Contracts between businesses and consumers frequently include provisions requiring arbitration of disputes. The major administrator of consumer versus business arbitrations—the American Arbitration Association (“AAA”)—has recently amended its rules for those arbitrations.

Some critics have argued that the AAA’s Consumer Rules are too friendly to corporate defendants. In a recent lawsuit, for example, a putative class of consumers alleges that the AAA has obtained more than 90% of the consumer arbitration market share and that consumers lose about 76% of the time they initiate arbitration with the AAA.[1]

Recent changes to the AAA Consumer Rules, however, may alter that dynamic. On May 1, 2025, the AAA published a revised set of Consumer Rules.[2] There are material changes to the scope of discovery, arbitrators’ authority to order sanctions, the process for filing dispositive motions, and procedures related to the final hearing. These changes present an opportunity for consumers and their attorneys. Businesses, meanwhile, should consult experienced counsel to assess whether to continue arbitrating disputes, whether to use the AAA, and whether to adjust their strategy in currently pending arbitrations.

Changes to Scope of Discovery (New Rule 22, Replacing Rule 20)

One of the most important changes is to the “Exchange of Information” rule, which is AAA’s version of the discovery process. In disputes between a consumer and business, the discovery burden on the business is likely to be much heavier than on the consumer. If a consumer sues a manufacturer over a defective lawnmower, for example, the consumer can expect to produce a limited set of documents, such as receipts for the mower, and to provide testimony about when the consumer purchased the mower, why, and how the consumer used it. A manufacturer, on the other hand, may have to collect and produce thousands of documents about the mower’s design, manufacturing, and marketing processes, and it may have to marshal facts or testimony from dozens of employees who participated in those processes.

For that reason, defendants usually benefit from narrower discovery in consumer disputes. The discovery process in the previous iteration of the AAA Consumer Rules, [3] contained in Rule 22, did not require any discovery. Instead, it provided that if “any party asks or if the arbitrator decides on his or her own,” then the arbitrator may require (1) “specific documents and other information to be shared between the consumer and business” and (2) that the “consumer and business identify the witnesses” they plan to have testify at the final hearing. Nothing in Rule 22—or the Consumer Rules generally—referenced standard discovery tools like interrogatories, depositions, requests for admission, or expert reports.

The old rules permitted discovery only if the arbitrator allowed it in light of the “fast and economical” nature of consumer arbitration.[4] Even then, the rule contemplated only an exchange of “specific documents and other information.” And while Rule 22 provided the arbitrator with discretion to permit additional discovery, it still placed a heavy burden on the party seeking it, allowing further discovery only if it was “needed” to provide a “fundamentally fair process.”

The AAA’s revisions to the Consumer Rules lighten the consumer’s burden—even if only slightly. The new rule governing the discovery process, Rule 20, still does not provide discovery as a right and still gives the arbitrator discretion to manage “any necessary exchange of information.” But there are three key differences that benefit consumers:

1. In stark contrast to the old Rule 22, Rule 20 states that the exchange of information can include “depositions, interrogatories, document production,” or “other means.”

2. While Rule 20 retains the prior goal of “achieving an efficient and economical resolution of the dispute,” it tempers that principle with a new goal of “promoting equality of treatment and safeguarding each party’s opportunity to fairly present its claims and defenses.”

3. Rule 20 lacks anything like the provision in Rule 22 that there was no “other exchange of information beyond what is provided for” under Rule 22.

These changes have important effects. By not expressly limiting the scope of discovery to “specific documents” and witness lists, and including the “equality of treatment” principle, new Rule 22 indicates the arbitrator should be more open to discovery than previously. Additionally, the express mention of discovery tools like depositions and interrogatories means that respondent businesses can no longer argue that the Consumer Rules implicitly bar those tools, and it suggests that some level of litigation-style discovery is the new default.

The Arbitrator’s Authority to Order Sanctions (New Rule 57)

Another notable addition is Rule 57. The arbitrator now has express authority to order “appropriate sanctions against a party that has failed to comply with” the Consumer Rules or an order of the arbitrator. Although this is a double-edged sword, it gives the consumer, who is typically at a resource-disadvantage against larger businesses, potentially powerful leverage if the business does not play fair in the discovery process.

Filing Dispositive Motions (New Rule 31(b), Replacing Rule 33)

Another change that weighs in the consumer’s favor is an additional hurdle to filing dispositive motions. Under the old Rule 33, an arbitrator could allow the filing of a dispositive motion if the moving party could show “substantial cause that the motion is likely to succeed.” The new rule, now Rule 31(b), still gives the arbitrator discretion based on whether the movant is likely to succeed. But it adds a new consideration: “the arbitrator shall consider the time and cost associated with the briefing of a dispositive motion in deciding whether to allow any such motion.” Because respondent businesses are more likely to file dispositive motions,[5] this change makes it more difficult for respondents to obtain early relief through a dispositive motion and makes it slightly easier for consumers to make it to a final hearing, which can present significant costs and risks for businesses.

Final Hearing Procedures that Benefit Businesses (Rules 22 & 29)

Not every change benefits consumers, however. For example, old Rule 26 allowed the arbitrator to select a hearing either “by telephone or in person.” But the new Rule 22 makes virtual hearings the default moving forward unless the parties agree otherwise or a party convinces the arbitrator that the hearing should be in person. Virtual hearings may help respondent businesses avoid costly travel and time away from work for their employee-witnesses.

Similarly, under the old Rule 29, cases with claims below $25,000 were decided on the documents only unless “any party” requested “an in-person or telephonic hearing” or the arbitrator determined a hearing was necessary. The new Rule 1(f) contains the same threshold, but a party can no longer request a hearing unilaterally—it requires both parties’ consent or the arbitrator’s determination that a hearing is necessary. This means that respondent businesses who would rather not undertake the logistical and strategic challenges of a hearing can more easily avoid a hearing in smaller cases.

Conclusion

Time will tell how much the AAA’s revisions to the Consumer Rules affect consumer arbitrations. It is possible, for example, that even with more consumer-friendly language, arbitrators’ preference for an efficient and inexpensive alternative to litigation will overshadow other considerations, resulting in little practical change. But for now, consumer advocates should be aware of how these changes may benefit them, and businesses should consult experienced counsel to fully understand the changed landscape of the new Consumer Rules and consider whether revisions to their arbitration provisions are in order.

About the Author

 

Alice LaCour, Partner

Alice is an experienced litigator with extensive courtroom experience from nearly a decade of litigating cases for the U.S. Department of Justice. Follow her on LinkedIn here.

[1] Stephens et al. v. American Arbitration Association, Inc., Case No. 2:25-cv-01650-JJT, ECF 1 at 2, 4, (D. Ariz. 2025), https://fingfx.thomsonreuters.com/gfx/legaldocs/lgvdxzmkevo/Stephens%20v%20American%20Arbitration%20Association.pdf.

[2] AAA Consumer Arbitration Rules (effective May 1, 2025), https://www.adr.org/media/yawntdvs/2025_consumer_arbitration_rules.pdf.

[3] AAA Consumer Arbitration Rules (effective Sept. 1, 2014), https://www.adr.org/media/tiifv2ft/consumer_rules_web.pdf.

[4] Rule 22(a) cautioned the arbitrator to keep “in mind that arbitration must remain a fast and economical process.” Additionally, Rule 22(c) stated that “[n]o other exchange of information beyond what is provided for” was “contemplated under these Rules, unless an arbitrator determines further information exchange is needed to provide for a fundamentally fair process.”

[5] See, e.g., Report on Summary Judgment Practice Across Districts with Variations in Local Rules, The Federal Judicial Center (Aug. 13, 2008), https://www.uscourts.gov/sites/default/files/sujulrs2.pdf (finding that defendants file about 70% of summary judgment motions in federal court).