Lawsuit accuses American Arbitration Association of monopolizing consumer market

By Mike Scarcella

May 16 (Reuters) - The influential American Arbitration Association has been sued in U.S. federal court for allegedly monopolizing the market for consumer arbitration and tilting the scales toward corporations in its proceedings.

The proposed nationwide class action was filed on Thursday in the federal court in Arizona by a resident of the state who said she was forced to use the American Arbitration Association’s system in a dispute with an Experian affiliate.

Consumers have suffered financial harm and “lost potential amounts on verdicts by the lack of access to alternative forums with fair rules,” the lawsuit said.

The New York-based American Arbitration Association, which is the sole defendant in the case, had no immediate comment on Friday.

David Chami of Consumer Justice Law Firm, a lead attorney for the plaintiff, in a statement on Friday said arbitration clauses are widely used across industries and have "become nearly unavoidable for consumers." He said his firm was hopeful to "level the playing field for consumers when they are in arbitration."

The lawsuit seeks unspecified monetary damages and a court injunction to undo the group's alleged monopoly.

Companies often promote arbitration as a more efficient way for individual consumers to air their disputes outside of court. Critics have complained broadly for years that arbitration lacks procedural safeguards found in the U.S. court system and mostly favors corporate defendants.

The American Arbitration Association created a “second-tiered justice system that provides consumers with no choice in the forum, the arbitrator, or rules,” the lawsuit said. “Instead, there is only one consistent rule: consumers lose 76% of the time in arbitrations they initiate.”

The American Arbitration Association enjoys 88% market share in arbitrations, which includes the consumer and employment markets, the lawsuit said. Rival JAMS is a distant second, capturing 12% of that market.

The lawsuit said low pay for American Arbitration Association arbitrators means the positions are often filled by retired attorneys or lawyers sponsored by large defense firms, which disfavors consumers.

“Companies that wish to start or maintain neutral consumer arbitration forums are unable to do so because they cannot compete with the AAA’s anti-competitive pricing and unfair rules,” the lawsuit said.

The case is Stephanie Stephens v. American Arbitration Association, U.S. District Court for the District of Arizona, No. 2:25-cv-01650-JJT.

For plaintiff: Susan Mary Rotkis and David Chami of Consumer Justice Law Firm

For defendant: No appearance yet

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