|Received:||11/30/2009 5:10:37 PM|
|Organization:||University of Kansas School of Law|
|Agency:||Federal Trade Commission|
|Rule:||Protecting Consumers in Debt Collection Litigation and Arbitration: A Series of Roundtable Discussions" - August, September, and December, 2009|
|Attachments:||545921-00004.pdf Download Adobe Reader|
Comments:This comment is a follow-up to my comment submitted July 28, 2009. Attached is Interim Report No. 1, issued by the Consumer Arbitration Task Force of the Searle Civil Justice Institute, of which I am chair. The following is a brief description of the study and its findings: This Interim Report builds on the Preliminary Report on Consumer Arbitration Before the American Arbitration Association issued in March 2009 by the Searle Civil Justice Institute's Consumer Arbitration Task Force. It seeks to compare the outcomes of debt collection arbitrations to the outcomes of debt collection cases in court to help in evaluating arbitration as a means of resolving consumer disputes. The arbitration cases examined are debt collection cases administered by the American Arbitration Association (AAA) as part of its consumer arbitration docket, supplemented by cases brought by a single debt buyer as part of a consumer debt collection program administered by the AAA. The court cases examined are a sample of cases seeking collection of unpaid student loans in federal court and samples of debt collection cases from Oklahoma state courts and Virginia state courts. The Task Force focused on debt collection cases because debt collection cases tend to present relatively simple legal and factual issues and thus are relatively comparable in arbitration and in court. Key findings are the following: (1) creditors prevailed less often (that is, consumers prevailed more often) in the arbitrations studied than in court; (2) creditor recovery rates in the arbitrations studied were lower than, or comparable to, creditor recovery rates in court; (3) the consumer response rates in the arbitrations studied did not appear to differ systematically from consumer response rates in court; and (4) the rate of other case dispositions (e.g., dismissals and settlements) in the arbitrations studied did not appear to differ systematically from the rate of other case dispositions in court. At a minimum, the findings should dispel the notion that high creditor win rates and recovery rates in debt collection arbitrations in and of themselves show that arbitration is biased in favor of businesses. Instead, high creditor win rates and recovery rates appear to be due to characteristics of debt collection cases rather than the venue – court or arbitration – in which those cases are resolved. While these findings are subject to several important limitations, the report furthers our empirical understanding of arbitration as a means of resolving consumer disputes, and contributes new information to the policy debate over consumer arbitration.