DECEMBER 12, 2013 

Section 1028(a) Study Results To Date 

Arbitration Study 

Preliminary Results 
2 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

Table of contents 

1. Introduction .......................................................................................................... 4

1.1 What is a pre-dispute arbitration clause? ................................................ 4

1.2 The Bureau’s mandate to study consumer arbitration ............................ 8

1.3 What does this presentation cover? ......................................................... 9

2. Summary of results to date ............................................................................... 12

3. Clause incidence and features ......................................................................... 16

3.1 Prior studies ............................................................................................ 17

3.2 Clause incidence ...................................................................................... 19

3.3 Clause length and complexity ................................................................ 28

3.4 Clause features ....................................................................................... 30

3.5 Clause changes ........................................................................................53

4. Incidence and typology of consumer arbitration filings ................................. 58

4.1 Data sources ........................................................................................... 58

4.2 Case incidence ........................................................................................ 62

4.3 Representation ....................................................................................... 70

4.4 Amounts at issue ..................................................................................... 76

4.5 Non-collection arbitrations .................................................................... 82

4.6 Debt collection arbitrations ................................................................... 92

4.7 Which consumers bring arbitrations? ................................................... 96
3 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

4.8 Prior litigation ....................................................................................... 101

4.9 Initial fee allocation ............................................................................... 110

5. Small claims court data ................................................................................... 118

5.1 Previous studies .................................................................................... 120

5.2 Data sources .......................................................................................... 121

5.3 Incidence ............................................................................................... 124

6. Future work ...................................................................................................... 129

Appendix A .............................................................................................................. 132

Clause incidence methodology ...................................................................... 132

Appendix B .............................................................................................................. 136

Arbitration data procedures .......................................................................... 136

Appendix C .............................................................................................................. 149

Identifying credit card cases in federal district courts .................................. 149

Appendix D .............................................................................................................. 151

Additional arbitration data ............................................................................ 151

Appendix E .............................................................................................................. 155

Small claims court data and methodology .................................................... 155

Appendix F .............................................................................................................. 167

Defined terms ................................................................................................. 167
4 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

1. Introduction 

In section 1028(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, 

Congress instructs the Consumer Financial Protection Bureau (the “Bureau”) to study the use of 

pre-dispute arbitration contract provisions in connection with the offering or providing of 

consumer financial products or services, and to provide a report to Congress on the same topic. 

The Bureau is in the process of conducting that study. This document presents preliminary 

results reached in the Bureau’s study to date. These results are subject to revision when the 

Bureau submits its statutorily-mandated report to Congress if further analysis so warrants. 

Furthermore, the Bureau’s report to Congress will contain additional analyses that the Bureau is 

planning to conduct but for which the Bureau does not yet have even preliminary results. A 

concluding section identifies work that the Bureau may or expects to cover in later stages of its 

study that will also inform its report to Congress. 

1.1 What is a pre-dispute arbitration 

clause? 

Companies provide almost all consumer financial products and services subject to the terms of a 

written contract.1

 Whenever a consumer obtains a consumer financial product such as a credit 

card, a checking account, or a payday loan, he or she typically receives the company’s standardform, written legal contract. 

In addition to being governed by such contracts, the relationship between a consumer and a 

financial service provider will generally be governed by one or more federal consumer protection 

 

1 Section 1002(5) of the Dodd-Frank Act defines “consumer financial product[s] or service[s].” See 12 U.S.C. § 5481(5). 
5 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

laws and often by state consumer protection laws. These laws create legal rights for consumers 

and impose duties on financial service providers. Absent an agreement to the contrary, if a 

dispute arises between a consumer and a company as to whether one side or the other is 

adhering to its contractual or statutory duties, the aggrieved party generally has the right to seek 

resolution of the dispute in a court of law (although some state and federal laws provide only for 

public, and not private enforcement). Furthermore, the federal court system and most state 

court systems provide for a class action process in which, in defined circumstances, one or more 

plaintiffs may file suit on behalf of similarly-situated individuals. If such an action is certified by 

the court as meeting the criteria for a class action and plaintiffs prevail or secure a settlement, 

all members of the class—for example, customers of a company who have been adversely 

affected by a particular practice—may be eligible to obtain relief without initiating their own 

lawsuits. Conversely, if the defendant prevails in a certified class action, all members of the class 

may be bound by the decision and thereby precluded from initiating their own lawsuits with 

respect to the claims at issue in the class case. 

As a general rule, the parties to a contract can agree to an alternative means of resolving any 

disputes that arise between the parties, including both contractual disputes and disputes under 

state or federal law. The most common form of alternative dispute resolution is final and 

binding arbitration in which a privately-appointed individual—an arbitrator—is empowered to 

resolve claims that arise between the parties.2 

As discussed in detail in section 3, contract clauses that provide for pre-dispute arbitration 

appear to be a common, but not a universal, feature of consumer financial contracts. These 

arbitration clauses are sometimes described as “mandatory.” Under the terms of such 

agreements, either side can mandate that a dispute that arises between the parties be resolved in 

binding arbitration.3 The clauses are described as “pre-dispute” because they commit the parties 

to this arrangement before there is a dispute between them. 

 

2 In some cases, more than one arbitrator may be involved in resolving a dispute. 

3 Alternatively, the term “mandatory,” when used to describe arbitration clauses in the consumer context, may derive 

from the nature of consumer contracts. When a consumer uses a consumer financial product, he or she is usually 

bound by the terms of a consumer contract. The terms of that contract are not generally open to negotiation by the 

consumer, but are instead offered on a take-it-or-leave-it basis, meaning that the consumer either accepts those terms 

or instead shops for another product with different standard-form terms. In legal terms, the contract is one of 
6 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

These arbitration clauses generally give each party to the contract two distinct contractual 

rights. First, either side can file claims against the other in arbitration and obtain a binding 

decision from the arbitrator. Second, if one side sues the other in court, the party that has been 

sued in court can invoke the arbitration clause to require that the party that went to court 

instead proceed, if at all, in arbitration. 

Arbitration clauses almost always specify the private arbitration organization that will 

administer the dispute if and when the clause is invoked by the consumer or the company. The 

American Arbitration Association (or “AAA”) is one such “arbitration administrator”; JAMS, 

Inc. is another. For the consumer financial contracts we have reviewed to date, our research 

shows that the AAA is the most commonly specified organization in such pre-dispute arbitration 

clauses. We review certain AAA data in section 4 below.4

Arbitration clauses may have a number of other features that address where disputes may be 

adjudicated, the timing for filing disputes, and the remedies that may be awarded. Additionally, 

arbitration clauses may include limitations on the use of class proceedings and “carve-outs” for 

small claims court proceedings.5 

Pre-dispute arbitration has become a contentious legal and policy issue. Following a series of 

Supreme Court cases interpreting the 1925 Federal Arbitration Act (the “FAA”), courts regularly 

enforce pre-dispute arbitration clauses in consumer, employment, and other contexts in which 

the relevant contract is not subject to negotiation between the contracting parties.6 At least from 

 

adhesion, making the clause “mandatory” in contrast to the voluntary clauses that may be reached by negotiation 

between commercial parties. See, e.g., Jean R. Sternlight, Creeping Mandatory Arbitration: Is It Just?, 57 STAN. L.

REV. 1631, 1632 n.1 (2005). Other scholars argue that the term “mandatory arbitration” may be better reserved for 

arbitration that is mandated by statute or regulation. See, e.g., Ian R. Macneil et al., FEDERAL ARBITRATION LAW 

§ 17.1.2.2, at 17:8-17:9 (Supp. 1999). 

4 The AAA is a non-profit organization. It was founded in 1926, following enactment of the Federal Arbitration Act, 

with the specific goal of helping to implement arbitration as an out-of-court solution to resolving disputes. It 

describes itself as being dedicated to “the development and widespread use of prompt, effective and economical 

methods of dispute resolution.” Its mission statement and other information are available at the AAA’s website, 

www.adr.org. 

5 We discuss these two features at sections 3.4.2 and 3.4.5. 

6 Chapter 1 of the FAA is codified at 9 U.S.C. §§ 1-16. It provides that an arbitration award is final and binding, with 

limited grounds available for judicial review. See 9 U.S.C. §§ 9-10. There has been an active scholarly and judicial 

debate over the meaning of the FAA, particularly as it applies to consumer contracts and state court proceedings. See 
7 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

the late 1990s, the inclusion of arbitration clauses in consumer financial contracts appears to 

have become more common.7 In 2011, the Supreme Court issued its decision in AT&T Mobility 

LLC v. Concepcion.

8 In that case, the Court held that the FAA preempted state law that would 

have prohibited the enforcement of a consumer arbitration clause with a “no-class” provision. 

Prior to that decision, courts were divided on state law challenges to the enforceability of noclass provisions in arbitration clauses. 

Some commenters take the view that pre-dispute arbitration clauses contained in standard-form 

contracts are unfair to consumers. Critics generally focus on three areas. First, they attack 

arbitration as a dispute resolution process. They contend that it reduces or eliminates 

procedural protections—such as a right of appeal or access to discovery—that are generally 

available in court.9 There are also claims that arbitration may be biased against consumers, and 

that it may not be as fast or cheap as its proponents claim.10 Second, especially in the wake of the 

Supreme Court’s decision in Concepcion, critics argue that arbitration clauses may immunize 

companies from a range of private civil liabilities, such as by reducing the availability of 

discovery or by eliminating class proceedings.11 According to this argument, arbitration clauses 

may undermine deterrence and leave widespread wrongdoing against consumers unaddressed. 

Finally, critics assert that arbitration, which is almost always conducted in private, undermines 

 

David S. Schwartz, The Federal Arbitration Act and the Power of Congress over State Courts, 83 OR. L. REV. 541, 541-

630 (2004); Christopher R. Drahozal, Federal Arbitration Act Preemption, 79 IND. L.J. 393, 393-440 (2004). 

7 For example, a number of large credit card issuers moved to include arbitration clauses in their consumer credit 

card contracts from the late 1990s. The reasons for this shift are contested and the focus of a court case, Ross v. Bank 

of America et al., 05-Civ. 7116, which is pending in the United States District Court for the Southern District of New 

York. We discuss the Ross case further in section 3. The detailed timeline for adoption by credit card issuers is 

discussed, inter alia, in the report of the Ross defendants’ expert, Professor Kenneth G. Elzinga, dated September 21, 

2010. The timeline of adoption for other products may differ, of course, and adoption has not been universal, as we 

discuss in section 3.2. 

8 AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740 (2011). 

9 See, e.g., National Association of Consumer Advocates (“NACA”) and National Consumer Law Center (“NCLC”) RFI 

Comment at 5. 

10 See, e.g., Americans for Financial Reform (“AFR”) RFI Comment at 5. 

11 See, e.g., Public Justice RFI Comment at 4. 
8 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

benefits inherent in the public nature of the court system, such as transparency and the 

development of clear precedents.12 

In contrast, defenders of pre-dispute arbitration clauses take the view that arbitration offers “a 

faster, more efficient and more cost-effective method of resolving disputes than court 

litigation.”13 According to this point of view, arbitration “minimizes the disruption and loss of 

good will that often results from litigation and ... reduces litigation costs.”14 Arbitration 

proponents also claim that these cost savings inure to the benefit of consumers through lower 

prices and/or expanded access.15 Finally, while proponents of arbitration clauses may 

acknowledge the potential impact on class proceedings, many take the view that such 

proceedings typically are meritless, inefficient, and provide little or no benefit to consumers.16

They contend that the reduced cost of arbitration together with various provisions of arbitration 

clauses (including the availability of small claims court as well as contingent minimum awards 

in arbitration) provide ample opportunity for consumers to obtain redress for asserted wrongs 

that involve relatively small amounts of money. 

1.2 The Bureau’s mandate to study 

consumer arbitration 

Section 1028(a) of the Dodd-Frank Act requires the Bureau to “conduct a study of, and . . . 

provide a report to Congress concerning, the use of agreements providing for arbitration of any 

future dispute between covered persons and consumers in connection with the offering or 

providing of consumer financial products or services.” “Covered persons” are defined as “any 

 

12 See, e.g., NACA & NCLC RFI Comment at 5-6. 

13 American Bankers Association (“ABA”), Consumer Bankers Association (“CBA”), and The Financial Services 

Roundtable (“FSR”) RFI Comment at 2. 

14 Id. 

15 See, e.g., American Financial Services Association (“AFSA”), RFI Comment at n.30. 

16 See, e.g., ABA/CBA/FSR RFI Comment at 9 n.16. 
9 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

person that engages in offering or providing a consumer financial product or service.”17 Because 

section 1028(a) specifically addresses the use of pre-dispute arbitration clauses in consumer 

financial contracts, those “agreements”—and the consumer disputes that may be subject to their 

terms—have been and will remain the focus of the Bureau’s study. 

As a preliminary step in undertaking the study, the Bureau published a Request for Information 

(the “RFI”) in 2012 that sought comments on the appropriate scope, methods, and data sources 

for the required study.18 We received 60 comments in response to the RFI. We refer to a number 

of those comments in this presentation.19 Most comments came from trade associations, 

consumer groups, academics, or law firms. We received almost no comments from individual 

financial institutions that include arbitration clauses in their standard-form contracts with 

consumers. 

1.3 What does this presentation cover? 

This presentation includes preliminary results reached in the Bureau’s study to date. As our 

study effort continues, we will refine and place this work into fuller context. The Bureau is 

disclosing these preliminary results at this time to provide stakeholders with greater 

transparency into the work the Bureau has undertaken to date and to provide further detail on 

the work the Bureau is planning to undertake before issuing its report to Congress. 

This presentation has five sections: 

 Section 2 is an Executive Summary of the results to date. 

 Section 3 addresses our preliminary findings with respect to the incidence of arbitration 

provisions in the three markets which we have studied thus far: consumer credit card, 

 

17 12 U.S.C. § 5481(6)(A). 

18 See Consumer Financial Protection Bureau, Request for Information Regarding Scope, Methods, and Data Sources 

for Conducting Study of Pre-Dispute Arbitration Agreements 4 (Apr. 2012) (Docket No. CFPB-2012-0017). 

19 We cite to these using the name of the commenter and the title “RFI Comment.” All such RFI Comments are 

available on www.regulations.gov, accessible from the Bureau’s website, www.consumerfinance.gov. 
10 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

checking account, and general purpose reloadable prepaid card agreements. It identifies 

the extent to which these clauses are included in consumer contracts in these three 

markets. It also reviews the features of these clauses. 

 Section 4 provides a typology of consumer disputes filed with the AAA by consumers 

and/or companies from January 1, 2010 through to the end of 2012 for two of the 

markets for which we have studied the incidence of arbitration clauses—the credit card 

and checking account markets—and also in the payday loan market.20 We review several 

data points, such as the number of filings, the legal claims that they cover, claim 

amounts, initial fee assessments, whether the parties are represented by counsel, and 

demographic distributions of consumers in these arbitrations. We may expand our 

analysis of AAA dispute filings to other consumer financial products in the next phase of 

our work. 

 Section 5 reviews filings in small claims courts by consumers and companies in the credit 

card marketplace. Many arbitration clauses contain small claims court “carve-outs”—

generally enabling either the consumer or the company to use small claims courts, rather 

than arbitration, for claims resolution. This section reviews available data in the states 

and largest counties that provide electronic access sufficient for these purposes to see 

how much use consumers and companies make of small claims court. 

 Finally, section 6 describes areas that the Bureau expects to cover in the remainder of its 

study of pre-dispute arbitration provisions. 

Because the Bureau’s work on this study is ongoing, any of the findings presented here may be 

refined or modified when we issue our report to Congress pursuant to section 1028(a). 

Furthermore, that report will provide additional context to the preliminary results included here 

in at least the following four respects. 

 This presentation focuses on the “front-end” of formal disputes involving consumers: 

who files these disputes, in what numbers, against whom, and about what. In later work, 

 

20 We have identified only four prepaid cases in the data we received from the AAA. We have not provided data 

specific to that market because there are so few of these filed disputes. 
11 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

we intend to address the “back-end” of formal disputes: what happens, in how long, and 

at what cost. 

 This presentation also focuses on filings in arbitration and in small claims court. Later 

work will address consumer cases filed in federal courts and in state courts other than 

small claims courts.21 Numerous commenters have said that an informed assessment of 

arbitration requires some consideration of available alternative forms of formal dispute 

resolution, especially class and non-class actions in court. We agree. 

 This presentation also looks primarily at individual disputes, although it provides some 

initial data points about the interrelationship between individual and class proceedings. 

Later work will look further at consumer class actions. 

 Finally, this presentation is limited to certain aspects of four specific consumer financial 

products: consumer credit cards, checking accounts, general purpose reloadable prepaid 

cards, and payday loans. Later work will cover other aspects of those products, and 

potentially other consumer financial products as well. 

Readers should not interpret this presentation as our assessment, preliminary or otherwise, of 

the relative importance of different areas to be covered in the statutory report to Congress. 

Rather, the subjects addressed here are those as to which we already have been able to obtain 

and analyze sufficient data in order to make some preliminary findings. When the Bureau issues 

its report to Congress, we intend to cover arbitration and court proceedings, including class 

actions—at least to the extent that meaningful comparisons can be made. Only once our work 

reflects that fuller focus, will we submit the report called for by section 1028(a) of the DoddFrank Act. 

 

21 As noted by several commenters, state court data are not available from electronic sources on a comprehensive 

basis. 
12 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

2. Summary of results to date 

While our work remains in progress, we have preliminarily reached the following conclusions 

based on the data that we have reviewed to date: 

 In the credit card market, larger bank issuers are more likely to include arbitration 

clauses than smaller bank issuers and credit unions. As a result, while most issuers do 

not include such clauses in their consumer credit card contracts, just over 50% of credit 

card loans outstanding are subject to such clauses. (In 2009 and 2010 several issuers 

entered into private settlements in which they agreed to remove the arbitration clauses 

from their credit card consumer contracts for a defined period. If those issuers still 

included such clauses, some 94% of credit card loans outstanding would now be subject 

to arbitration.) 

 In the checking account market, larger banks tend to include arbitration clauses in their 

consumer checking contracts, while mid-sized and smaller banks and credit unions do 

not. We estimate that in the checking account market, which is less concentrated than 

the credit card market, around 8% of banks, covering 44% of insured deposits, include 

arbitration clauses in their checking account contracts. 

 In our GPR prepaid card sample, for which data are more limited than for our credit and 

checking account samples, arbitration clauses are included across the market.22 Some 

81% of the cards studied, and all of the cards for which market share data are available, 

have arbitration clauses in their cardholder contracts. 

 

22 “GPR” prepaid cards are general purpose reloadable prepaid cards. See infra note 26. 
13 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

 Nearly all the arbitration clauses studied include provisions stating that arbitration may 

not proceed on a class basis. Around 90% of the contracts with arbitration clauses—

covering close to 100% of credit card loans outstanding, insured deposits, or prepaid 

card loads subject to arbitration—include such no-class arbitration provisions. Although 

these terms effectively preclude all class proceedings, in court or in arbitration, some 

arbitration clauses also expressly waive the consumer’s ability to participate in class 

actions in court. 

 The AAA is the predominant administrator for consumer arbitration about credit cards, 

checking accounts, and GPR prepaid cards. 

 From 2010 through 2012, there was an annual average of 415 individual AAA cases filed 

for four product markets combined: credit card, checking account, payday loans, and 

prepaid cards.23 The annual average was 344 credit card arbitration filings, 24 checking 

account arbitration filings, 46 payday loan arbitration filings, and one prepaid 

arbitration filing. These numbers do not indicate the number of cases in which the filing 

was “perfected”24 and the matter proceeded to arbitration. They indicate only the 

number of filings, deficient or otherwise. 

 Not all these arbitration filings were made by consumers. For the three product markets 

combined, the standard AAA “claim form” records consumers filing an average of under 

300 cases each year.25 The remaining filings are recorded as mutually submitted or made 

by companies. 

 From 2010 through 2012, around half the credit card AAA arbitration filings were debt 

collection disputes—proceedings initiated by companies to collect debt, initiated by 

 

23 Over three years, only four of the filings were prepaid cases. 

24 The AAA views an arbitration filing as “perfected” when all initial fees have been paid, the clause is deemed 

sufficient under the Due Process Protocol, the submission complies with the AAA’s debt collection moratorium (if 

applicable), and the matter is otherwise ready to proceed to arbitration. We discuss the debt collection moratorium in 

section 4.2.2. The Due Process Protocol is discussed at several places, including sections 4.9, and 5. 

25 With prepaid cases included, the average is still under 301 cases each year. The annual average was 235 consumerfiled credit card disputes, 20 consumer-filed checking account disputes, and 44 consumer-filed payday loan disputes. 
14 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

consumers to challenge the company’s claims in court for debt collection, or mutual 

submissions to the same effect. More than a quarter of these debt collection arbitrations 

also included non-debt consumer claims. Many of the credit card disputes that we have 

not formally defined as debt collection arbitrations also include a substantive dispute 

about the amount of debt owed—or not owed—by the consumer to the company. 

 In contrast, very few of the checking account and payday loan AAA arbitration filings 

from 2010 through 2012 were debt collection arbitrations. 

 From 2010 through 2012, a slight majority (53%) of consumers were represented by 

counsel in the AAA arbitrations that we reviewed for these three product markets. For 

non-debt collection disputes, 61% of consumers had a lawyer at some point in the 

arbitration proceeding. For debt collection arbitrations, 42% of consumers had legal 

representation at some point in the proceeding. Companies were almost always 

represented by outside or in-house counsel in both debt collection and non-collection 

arbitrations. 

 From 2010 through 2012, almost no AAA arbitration filings for these three product 

markets had under $1,000 at issue. This was true for debt collection arbitrations and 

other arbitrations as well. For these three product markets combined, during the period 

2010 through 2012, there were an annual average of seven arbitrations per year filed 

with the AAA that concerned disputed debt amounts that were at or below $1,000. For 

the same products, there were an annual average of under eight AAA arbitrations in 

which there was no disputed debt amount identified and the affirmative claim amount 

was at or below $1,000. 

 From 2010 through 2012, for arbitration filings before the AAA involving these three 

products, the average alleged debt amount in dispute was $13,418. The median alleged 

debt amount in dispute was $8,641. Looking only at filings that did not identify a 

disputed debt amount, and excluding one high-dollar outlier, the average amount at 

issue was $38,726, and the median $11,805. 

 Most arbitration clauses that we reviewed contain small claims court carve-outs. 

In 2012, consumers in jurisdictions with a combined total population of around 85 

million filed fewer than 870 small claims court credit card claims—and most likely far 
15 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

fewer than that—against issuers representing around 80% of credit card loans 

outstanding. 

 Credit card issuers are significantly more likely to sue consumers in small claims court 

than the other way around. In the two top-30 counties by population in which small 

claims court complaints can be directly reviewed by electronic means, there were more 

than 2,200 suits by issuers against consumers in small claims court and seven suits by 

consumers against those issuers. (In one of these two counties, companies are not able to 

or face severe limits to bring collection claims in small claims court, so these numbers 

reflect company filings in only one of the two counties. The consumer filing numbers, 

however, are across both counties.) 
16 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

3. Clause incidence and 

features 

A central aspect of the use of arbitration clauses is their incidence—that is, how often they 

appear in contracts. This section examines how frequently arbitration clauses appear in three 

types of consumer financial services contracts: cardholder agreements for credit cards, deposit 

account agreements for checking accounts, and cardholder agreements for general purpose 

reloadable (GPR) prepaid cards.26 Next we consider the length and complexity of arbitration 

clauses relative to the rest of the cardholder agreement. We then look in more detail at 

provisions included in arbitration clauses, such as whether the clauses permit the consumer to 

reject the arbitration clause, what arbitration administrators are specified, and whether they 

preclude class proceedings. Finally, we present data on changes over time in the use of 

arbitration clauses and selected clause features. We look, in particular, at how clauses have 

changed since the Supreme Court’s 2011 decision in Concepcion. 

 

26 A general purpose reloadable (GPR) prepaid card is a card that “a consumer can use anywhere that accepts 

payment from a retail electronic payments network, such as Visa, MasterCard, American Express, or Discover” and to 

which the consumer can add funds after the card is issued. See Consumer Financial Protection Bureau, Advance 

Notice of Proposed Rulemaking, 77 FED. REG. 30,923, 30,923 (May 24, 2012) (Docket No. CFPB-2012-0019). For 

purposes of this presentation, we limit our analysis to GPR prepaid cards that consumers can purchase at retail 

outlets or over the Internet. We do not cover payroll cards or electronic benefit transfer cards, which also can be used 

over electronic payment networks and can be reloaded at least by the provider of the card. 
17 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

3.1 Prior studies 

Several prior studies have examined the use of arbitration clauses in various types of consumer 

financial services contracts. In 2004, Demaine and Hensler found that 69.2% of the consumer 

financial contracts in their sample included arbitration clauses.27 Because they were seeking to 

determine “the frequency with which the average consumer encounters arbitration clauses,”28

they included at most five contracts from a broad range of contract types in their sample, rather 

than investigating any particular type of consumer contract in detail.29 Other studies focusing 

specifically on the use of arbitration clauses in credit card contracts have also relied on small 

samples, typically from the largest credit card issuers.30 One such study, by Eisenberg, Miller, 

and Sherwin, found that 76.9% of the consumer contracts studied included arbitration clauses,31

and that “every consumer contract with an arbitration clause also included a waiver of classwide 

arbitration.”32

 

27 Linda J. Demaine & Deborah R. Hensler, “Volunteering” to Arbitrate Through Predispute Arbitration Clauses: 

The Average Consumer’s Experience, 67 LAW & CONTEMP. PROBS. 55, 64 (2004). They included tax preparation and 

investment contracts, along with credit card and banking contracts, as consumer financial contracts. Limiting their 

results to credit card and banking contracts, 12 of 17 (70.6%) included arbitration clauses. Id. 

28 Id. at 57. 

29 Their sample included two contracts for general credit cards and five each for airline credit cards, store credit cards, 

and banking contracts. See id. at 64. Demaine and Hensler also examined a number of features of the arbitration 

clauses they studied, but reported only aggregate findings for all consumer contracts. 

30 E.g., Public Citizen, Forced Arbitration: Unfair and Everywhere 1 (Sept. 24, 2009), 

http://www.citizen.org/documents/UnfairAndEverywhere.pdf (finding that eight of ten “major providers” of credit 

cards and five of seven major banks used arbitration clauses); Amy J. Schmitz, Legislating in the Light: Considering 

Empirical Data in Crafting Arbitration Reforms, 15 HARV. NEGOT. L. REV. 115, 145-46 (2010) (reporting that ten of 13 

credit card contracts included arbitration clauses).

31 Theodore Eisenberg, Geoffrey P. Miller & Emily Sherwin, Arbitration's Summer Soldiers: An Empirical Study of 

Arbitration Clauses in Consumer and Nonconsumer Contracts, 41 U. MICH. J.L. REFORM 871, 883 table 2 (2008). 

Their sample consisted of “26 consumer agreements drafted by 21 companies,” several of which were consumer 

financial services companies: three commercial banks (five consumer agreements), two credit card issuers (two 

consumer agreements), and one financial credit company (one consumer agreement). Id. at 881. 

32 Id. at 884. 
18 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

Rutledge and Drahozal examined the incidence of arbitration clauses in credit card contracts 

using a much larger sample made available under the Credit CARD Act of 2009.33 They found 

that between 2009 and 2010, “the percentage of [credit card] issuers using arbitration clauses 

declined from 17.4% ... to 15.0%,” reflecting a net decrease of eight issuers, and that “the 

percentage of credit card loans subject to arbitration clauses declined from 95.1% to only 

48.0%.”34 This study attributed the decline to two events: (1) the National Arbitration Forum 

ceasing to administer consumer arbitrations following its settlement of a consumer fraud 

lawsuit filed by the Minnesota Attorney General; and (2) the settlement of an antitrust class 

action, Ross v. Bank of America, by four large credit card issuers, under which they agreed to 

remove the arbitration clauses from their credit card contracts for a three-and-one-half-year 

period.35 This study also examined the use of various features of credit card arbitration clauses, 

ranging from arbitration selection terms to class arbitration waivers.36

In November 2012, the Pew Charitable Trusts issued a study of the use of arbitration clauses in 

the checking account contracts used by 100 large financial institutions.37 The study found that 

43% of the institutions in the sample used arbitration clauses, with a “wide disparity” between 

 

33 Peter B. Rutledge & Christopher R. Drahozal, Contract and Choice, 2013 BYU L. REV. 1; see also Christopher R. 

Drahozal & Peter B. Rutledge, Arbitration Clauses in Credit Card Agreements: An Empirical Study, 9 J. EMPIRICAL 

LEGAL STUD. 536 (2012). The relevant statutory provision is Section 204(a) of the Credit Card Accountability 

Responsibility and Disclosure Act of 2009, Pub. L. No. 111-24, 123 Stat. 1746 (May 22, 2009). 

34 Rutledge & Drahozal, Contract and Choice, supra note 33, at 19-20. 

35 Id. at 18-19; see also infra note 51. The Ross case has continued against several other non-settling defendants. The 

main allegations in Ross are that a group of large credit card issuers colluded to include arbitration clauses, including 

class waivers, in credit card contracts. See First Am. Class Action Compl., Ross v. Bank of America, No. 05 CV 07116, 

¶¶ 96-119 (S.D.N.Y. June 4, 2009), http://www.arbitration.ccfsettlement.com/documents/files/2009-06-04-1stamended-complaint.pdf. The case remains pending. 

36 Rutledge & Drahozal, Contract and Choice, supra note 33, at 21-49. 

37 Pew Charitable Trusts, Banking on Arbitration: Big Banks, Consumers, and Checking Account Dispute Resolution 

(Nov. 2012), http://www.pewstates.org/uploadedFiles/PCS_Assets/2012/Pew_arbitration_report.pdf; see also 

Public Citizen, supra note 30, at 10-11 (deposit account agreements); Pew Health Group, Hidden Risks: The Case for 

Safe and Transparent Checking Accounts 18 (Apr. 2011), 

http://www.pewtrusts.org/uploadedFiles/wwwpewtrustsorg/Reports/Safe_Checking_in_the_Electronic_Age/Pew_

Report_HiddenRisks.pdf (“For 189 of these [265] accounts (representing four out of 10 banks and 71 percent of all 

accounts), the accountholder had to waive the right to a trial before a judge and agree to have the dispute resolved 

before a private arbiter of the bank’s choice.”). 
19 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

the 50 largest (with 56% providing for arbitration) and the remainder of the sample (with 30% 

providing for arbitration).38 The study also reported on various other features of the arbitration 

clauses, finding, for example, that “[o]f the institutions in the top 50 that have arbitration 

clauses, 81 percent have class action bans,” while “[f]or the next 50 institutions, this number 

drops to 62 percent.”39

No prior study of which we are aware has examined systematically the use of arbitration clauses 

in GPR prepaid contracts.40

3.2 Clause incidence 

This section presents data on how frequently arbitration clauses are used in credit card 

contracts, checking account contracts, and GPR prepaid card contracts. The patterns are similar 

for credit card and checking account contracts: most institutions do not use arbitration clauses, 

and credit unions typically do not, but larger institutions are more likely to use arbitration 

clauses than smaller institutions. As a result, a slight majority of credit card loans outstanding 

within the scope of our contract sample are subject to arbitration. Similarly, we estimate that 

just under half of insured deposits at banks are subject to arbitration.41 By comparison, most 

GPR prepaid card agreements in our sample, covering the substantial majority of the amounts 

loaded on such cards, use arbitration clauses. For credit cards, however, the impact of the Ross

settlement is potentially significant.42 While that settlement only removed four issuers from the 

 

38 Pew Charitable Trusts, supra note 37, at 3-4. 

39 Id. at 5. For other features studied, see id. at 4-6 (e.g., opt-outs, carve-outs for small claims court, discovery limits, 

required qualifications for arbitrators, remedy limitations, and shortened statutes of limitations). 

40 For anecdotal reports on the use of arbitration clauses in GPR prepaid contracts, see, e.g., Pew Charitable Trusts, 

Loaded with Uncertainty: Are Prepaid Cards a Smart Alternative to Checking Accounts? 29 app. B (Sept. 2012), 

http://www.pewstates.org/uploadedFiles/PCS_Assets/2012/Prepaid_Checking_report.pdf; Martin Eakes, Are 

Prepaid Credit Cards Helping or Hurting Consumers? (May 25, 2012), http://www.responsiblelending.org/creditcards/policy-legislation/regulators/are-prepaid-credit-cards.html. 

41 We use the term “insured deposits” to refer to the amount of deposits in accounts less than $250,000.

42 The claims at issue in Ross were directed at credit card contracts. Neither the claims in the case nor the settlements 

reached checking account contracts or contracts for any other consumer financial product. 
20 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

category of arbitration users, those four issuers were responsible for around 43% of credit card 

loans outstanding as of the end of 2012. 

We refer to credit card loans outstanding, insured deposits, and GPR prepaid card load volume 

as “account values.” In this section, we report incidence both as a percentage of all companies in 

the samples and as a percentage of all account values in the samples.43 As we explain more fully 

in Appendix A, our measurements of account value for credit cards and checking accounts use 

data from public “call reports” filed with regulators by banks and credit unions.44 Call reports do 

not report consumer deposit volume separate from commercial deposit volume. We use 

“insured deposits,” therefore, as a proxy for consumer deposits.45 Our account value results for 

checking accounts should be viewed accordingly. 

The scope of the arbitration clauses that are included in consumer contracts for these products 

tends to be very broad. Typically, the arbitration clause will apply to all disputes arising out of or 

relating to the contract and account or card, and sometimes it extends to other aspects of the 

parties’ relationship. Exceptions to the arbitration clause take the form of carve-outs, such as the 

small claims court carve-out discussed in section 3.4.2, which exclude certain types of claims 

from arbitration. 

3.2.1 Credit cards 

The contracts in our sample cover almost all consumers in the credit card market. The sample 

on which the findings reported here are based consists of 393 contracts filed by credit card 

issuers with the Bureau as of December 31, 2012.46 Under applicable rules, all credit card issuers 

 

43 By comparison, when we describe the features of arbitration clauses, we present our results as the percentage of 

arbitration clauses (rather than all contracts) in the samples and as a percentage of account values subject to an 

arbitration clause (rather than all account values) in the samples. 

44 Call reports are available at the website for the Federal Financial Institutions Examination Council. See

www.ffiec.gov. 

45 To the extent that our proxy includes commercial deposits that are not subject to arbitration, we will overstate the 

amount of insured deposits subject to arbitration clauses. In general, however, we refer to the share of such deposits 

subject to arbitration, which should minimize the impact of using this proxy. For more information, see Appendix A. 

46 The agreements are available at Consumer Financial Protection Bureau, Credit Card Agreement Database, 

http://www.consumerfinance.gov/credit-cards/agreements/. 
21 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

are required to file agreements if they have more than 10,000 open credit card accounts.47

Although many issuers file more than one credit card contract, in almost every case the 

contracts for a particular issuer contain the same dispute resolution clause. (In the rare cases of 

inconsistency for a single issuer, we used the predominant form for that issuer as reflected in 

their filings with the Bureau.) Accordingly, the sample includes one contract per issuer.48 

FIGURE 1: CLAUSE INCIDENCE BY NUMBER OF CREDIT CARD ISSUERS 2012 

Of the 393 credit card issuers, 67 issuers (or 17%) included arbitration clauses in their credit 

card contracts, while 326 issuers (or 83%) did not.49 Larger issuers (as measured by the dollar 

value of credit card loans outstanding) and banks (as compared to credit unions) were more 

likely to use arbitration clauses. Thirteen of the 20 largest bank issuers (or 65%) used arbitration 

clauses. Of the 50 largest bank issuers, 29 (or 58%) used arbitration clauses, and of the 

remaining bank issuers in the sample, 25 of 56 (or 44.6%) used them. However, only nine of 275 

 

47 See 12 CFR § 1026.58(c)(5)(i). Issuers are not required to provide agreements for a private label credit card 

program with less than 10,000 open accounts. See id. § 1026.58(c)(6)(i). (A private label credit card is a credit card 

issued or managed by a financial institution on behalf of a merchant for use only to make purchases at that 

merchant—for example, a department store credit card.) 

48 For additional description of the sample, see Appendix A. 

49 One issuer provided for arbitration only of disputes involving its credit card rewards program and another only for 

disputes arising out of credit insurance for credit card loans. Because the agreements did not include a generally 

applicable arbitration clause, they were coded as not providing for arbitration. 

Arbitration 

provisions, 

17%

No 

provisions, 

83%
22 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

credit union issuers (or 3.3%) used arbitration clauses.50 These results are summarized below in 

Table 1. 

TABLE 1: CLAUSE INCIDENCE IN CREDIT CARD CONTRACTS BY TYPE OF ISSUER 2012 

Arbitration clause No arbitration clause 

# of contracts % of credit card 

loans outstanding # of contracts % of credit card loans outstanding 

50 largest bank 

issuers 

29 

(58.0%) 52.2% 21 (42.0%) 47.8% 

Other bank 

issuers 

25 

(44.6%) 31.1% 31 (55.4%) 68.9% 

Credit unions 9 

(3.3%) 2.5% 266 (96.7%) 97.5% 

Other issuers 4 

(33.3%) Not available 8 (66.7%) Not available 

Total 67 

(17.0%) 50.2% 326 (83.0%) 49.8% 

Overall, for the issuers in our sample, 50.2% of credit card loans outstanding were subject to 

contracts with arbitration clauses; 49.8% of credit card loans outstanding were not. For the 50 

largest bank issuers, 52.2% of credit card loans outstanding were subject to arbitration clauses. 

By comparison, for the remaining (i.e., smaller) banks in the sample, 31.1% of credit card loans 

outstanding were subject to arbitration, while for credit unions, only 2.5% were. 

As noted, however, in late 2009, four of the ten largest issuers (Bank of America, Capital One, 

Chase, and HSBC) settled an antitrust class action by agreeing to remove the arbitration clauses 

from their credit card contracts for three-and-one-half years from a date specified in the 

 

50 Four of 12 other issuers (e.g., retailers and finance companies) used arbitration clauses. Data on credit card loans 

outstanding are missing for two bank issuers, one of which includes an arbitration clause in its credit card contract. 

Another nine bank and credit union issuers reported zero credit card loans outstanding as of December 31, 2012. 

Eight of those nine issuers used arbitration clauses. 
23 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

settlement agreement.51 Those four companies include the three largest credit card issuers that 

currently do not use arbitration clauses.52 Collectively, their credit card loans outstanding 

constitute 86.8% of the outstandings that are not subject to arbitration clauses. Had the settling 

defendants in Ross continued to use arbitration clauses, then nearly 94% of credit card loans 

outstanding would be subject to arbitration clauses. 

 

51 The dates differed among the settling defendants, and ranged from January 1, 2010, to May 1, 2010. The settlement 

agreements also provided for the period to be extended in the event of a delay in mailing change-of-terms notices to 

cardholders. See Stipulation and Agreement of Settlement with Bank of America, N.A. (USA) (N/K/A/ FIA Card 

Services, N.A.) and Bank of America, N.A., ¶ 3(b), Ross v. Bank of America, N.A., (USA), No. 05-cv-7116 (S.D.N.Y. 

Feb. 23, 2010), http://www.arbitration.ccfsettlement.com/documents/files/2010-02-23-stip-and-agreement-withbank-of-america.pdf; Stipulation and Settlement Agreement with Capital One Bank (USA), N.A. and Capital One, 

N.A., ¶ 3(b), Ross v. Bank of America, N.A., (USA), No. 05-cv-7116 (S.D.N.Y. Feb. 23, 2010), 

http://www.arbitration.ccfsettlement.com/documents/files/2010-02-23-stip-and-agreement-with-capital-one.pdf; 

Stipulation and Agreement of Settlement with JPMorgan Chase & Co. and Chase Bank USA, N.A., ¶ 3(b), Ross v. 

Bank of America, N.A., (USA), No. 05-cv-7116 (S.D.N.Y. Feb. 23, 2010), 

http://www.arbitration.ccfsettlement.com/documents/files/2010-02-23-stip-and-agreement-with-chase.pdf; 

Stipulation and Agreement of Settlement with HSBC Finance Corp. and HSBC Bank Nevada, N.A., ¶ 3(b), Ross. v. 

Bank of America, N.A., (USA), No. 05-cv-7116 (S.D.N.Y. Feb. 24, 2010), 

http://www.arbitration.ccfsettlement.com/documents/files/2010-02-24-stip-and-agreement-with-hsbc.pdf. 

52 The other issuer, HSBC, sold a substantial portion of its credit card portfolio to Capital One in 2012. See Howard 

Mustoe, HSBC Credit Card Sale to Capital One Yields $2.5 Billion Premium, Bloomberg.com (May 2, 2012), 

http://www.bloomberg.com/news/2012-05-02/hsbc-gets-31-3-billion-in-cash-for-u-s-card-and-retailsale.html. As of December 31, 2011, HSBC filed agreements for private label credit cards that included arbitration 

clauses. Capital One appears to have acquired those accounts as of December 31, 2012, and those cardholder 

agreements no longer include arbitration clauses. 
24 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

FIGURE 2: CLAUSE INCIDENCE BY CREDIT CARD LOANS OUTSTANDING 2012 

 

3.2.2 Checking accounts 

Our sample of checking account contracts is also designed to provide an overall view of the 

checking account market. It consists of available contracts from three sources: (1) the 100 

largest banks, measured by insured deposits on a consolidated basis53 as of December 31, 2012; 

(2) a random set of 150 mid-sized and small banks, identified using the same consolidated 

measure; and (3) the 50 largest credit unions, also measured by insured deposits as of December 

31, 2012.54 In a handful of cases, different banks in the same holding company used different 

dispute resolution clauses; those banks were included separately in the sample, instead of on a 

 

53 By consolidated basis, we mean that we calculated total insured deposits for all affiliated institutions, unless an 

affiliate used a different dispute resolution clause. See Appendix A. 

54 For companies we selected to be in our sample (either because of their size or because they were part of the random 

selection), we primarily obtained agreements via one of two steps. First, for each credit union and depository 

subsidiary within the sample, we sought to identify a current web-sourced agreement. (We took the most recent 

agreement available for the institution’s website, but we did not assume that any web-sourced agreement with an 

effective date earlier than mid-2011 was current.) When no such agreement was available via that first step, we sent a 

request for a standard-form checking account contract, pursuant to the Bureau’s market monitoring authority under 

Section 1022(c)(4) of the Dodd-Frank Act. The response rate to that 1022(c)(4) request was over 95% on a 

consolidated basis at the time we finalized our data for this publication. We obtained agreements for four bank 

holding companies via a third step of securing an agreement with no indication of a specific effective date from the 

applicable website. Ultimately, we obtained agreements for all large banks, 141 out of 150 mid and small-sized banks, 

and 49 of 50 credit unions. When we present the statutory report, we will include additional data we have secured by 

that point. 

Arbitration 

provision, 

50%

No 

provisions 

(Ross 

settlement), 

43%

No 

provisions, 

7%
25 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

consolidated basis.55 In addition, for a small number of banks and one credit union that were 

selected to be in our sample, we were unable to obtain a standard-form contract by the time we 

aggregated data for this presentation.56 Overall, our sample of checking account contracts 

included in this presentation covers 49 credit unions and, on a consolidated basis, 103 large and 

141 mid-sized and small banks. 

Of the 103 largest banks, 47 (or 45.6%) used arbitration clauses while 56 (or 54.4%) did not. 

Among the 50 largest banks, the use of arbitration clauses was higher—31 of the 50 largest 

banks (or 62.0%) used arbitration clauses, while 16 of the remaining 53 large banks (or 30.2%) 

used arbitration clauses. Overall, accounts representing 58.8% of insured deposits at large banks 

were subject to arbitration clauses, while accounts representing 41.2% of insured deposits at 

large banks were not.57 Taking just the largest 50 banks, accounts representing 61.5% of their 

insured deposits were covered by arbitration clauses, while accounts representing 38.5% of their 

insured deposits were not. By comparison, only 10 of the 141 mid-sized and small banks (or 7.1% 

of the sample), with accounts representing 6.3% of the insured deposits in the sample, used 

arbitration clauses in their checking account contracts. Finally, 4 of the 49 largest credit unions 

(or 8.2%), with accounts representing 8.7% of insured deposits at the largest credit unions, used 

arbitration clauses. These results are summarized in Table 2. 

Extrapolating from our random sample and combining it with the large bank data, we can 

provide an overall estimate of arbitration clause use by the number of banks and by bank 

insured deposit volume.58 On that basis, while only 7.7% of banks use arbitration clauses for 

 

55 This is why the sample of 100 large banks results in 103 contracts for these institutions. 

56 One small institution responded that it did not offer consumer checking accounts. 

57 Three of the large banks in the sample (with 0.5% of insured deposits) used jury trial waivers but provided for 

arbitration in the event the jury trial waiver was unenforceable. Because arbitration was not the primary means of 

dispute resolution, these banks were coded as not using arbitration. 

58 For the largest banks there is no extrapolation since every bank reported. Out of the 6,320 small and mid-sized 

banks, we used a randomly selected sample. Thus, our extrapolation provides an unbiased estimate. Moreover, with 

the sample of 141 banks, out of which 10 reported using arbitration clauses, we can approximate the overall incidence 

utilizing the Central Limit Theorem with the sample mean of 10/141=.071 and the sample variance of .071*(1-

.071)=.066. The sum of 6,320 variables has a mean of 448 and a standard deviation of 20.4. Thus, using the normal 

approximation with a 95% confidence interval, we estimate that between 408 and 488 small and mid-sized banks use 

arbitration clauses. That equates to a range of between 6.5% and 7.7% of small and mid-sized banks. 
26 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

their checking account contracts, accounts representing some 44.4% of bank insured deposits 

are subject to arbitration.59

TABLE 2: CLAUSE INCIDENCE IN CHECKING ACCOUNT CONTRACTS BY TYPE OF FINANCIAL 

INSTITUTION 2013 

Arbitration clause No arbitration clause 

# of contracts % of insured 

deposits # of contracts % of insured deposits 

50 largest banks 31 

(62.0%) 61.5% 19 (38.0%) 38.5% 

Other large banks 16 

(30.2%) 30.0% 37 (69.8%) 70.0% 

Small to mid-sized 

banks 

10 

(7.1%) 6.3% 131 (92.9%) 93.7% 

50 largest credit 

unions 

4 

(8.2%) 8.7% 45 (91.8%) 91.3% 

Overall, therefore, we see for checking accounts the same phenomenon we observe for credit 

cards: clause use is concentrated among large players with larger market shares. Conversely, 

non-use is concentrated among small players with smaller market shares. And in both markets, 

credit union use of arbitration clauses is low, by number of issuers and by market share.60

 

59 As of December 31, 2012, small and mid-sized banks accounted for $1,166,216,407,000 in insured deposits. 

Extrapolating from our sample, for which institutions with arbitration clauses accounted for 6.3% of all insured 

deposits in the sample, we estimate that $73,471,633,641 in insured deposits held by small and mid-sized banks are 

subject to arbitration, and $1,092,744,773,359 are not so subject. For the largest banks, call report data show that 

$1,820,588,262,000 of insured deposits are subject to arbitration, with $1,274,683,807,000 of insured deposits not 

so subject. Combining the two sets of data (($73,471,633,641 +$1,820,588,262,000)/($ 73,471,633,641 

+$1,820,588,262,000 + $1,092,744,773,359+ $1,274,683,807,000)) gives an estimate of 44.4% of insured bank 

deposits subject to arbitration.

60 We cannot extrapolate from the sample of checking account contracts for the largest credit unions because it is not 

random. That sample, however, represents more than 28.3% of all credit union insured deposit volume. Given the low 

incidence of use among small banks, overall use by credit unions is likely to be even lower than the low share 

indicated for the largest credit unions. 
27 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

FIGURE 3: CLAUSE INCIDENCE BY BANK AND BANK INSURED DEPOSIT VOLUME 2013 

 

3.2.3 GPR prepaid cards 

Our data on GPR prepaid card agreements is less complete than for the other types of contracts 

studied. The sample here consists of 63 GPR prepaid cards that were listed on the Visa, 

MasterCard, or NerdWallet web pages that list prepaid cards or that were included in several 

recent studies of the terms of GPR prepaid cards.61 Three firms—Green Dot, H&R Block, and 

NetSpend—dominated the market, collectively with over 68% of the dollar amount loaded on 

cards.62 

For the sample as a whole, 51 of 63 GPR prepaid card contracts (81.0%) included arbitration 

clauses. All three of the leading firms, with 68.6% of the market, used arbitration clauses. 

Indeed, all of the firms for which we have market share data, totaling 82.9% of the dollar 

 

61 See Appendix A for more details. 

62 See Aité Group, The Contenders: Prepaid Debit and Payroll Cards Reach Ubiquity 19 (Nov. 2012). The firms 

identified in the text are formally not issuers of prepaid cards; the issuers are almost always depository institutions. 

(GreenDot, however, now owns a bank issuer.) Firms like NetSpend (which has since been acquired by another 

company, TSYS) are generally referred to as “program managers.” In the GPR prepaid market, the program manager 

generally plays the dominant role with responsibility for most aspects of a program. Two depository institutions, 

Bankcorp Bank and MetaBank, serve a large number of GPR program managers. There is no consistent pattern in the 

cardholder agreements: some cards with the same program manager or the same issuing bank nonetheless have 

different cardholder agreements. 
28 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

amount loaded on cards, used arbitration clauses, and the substantial majority of the remaining 

cards (40 of 52, or 76.9%) used arbitration clauses as well.63 Thus total load in the pre-paid 

market subject to arbitration will be over—and likely substantially over—83%. The overall use of 

arbitration clauses in GPR prepaid card contracts is greater than in either credit card or 

checking account contracts, and much more uniform across larger and smaller players in the 

market—i.e., smaller players are much more likely to use arbitration clauses in GPR prepaid 

card contracts than in credit card or checking account contracts. Consistent with our results for 

credit unions in the other two markets, the contracts in the sample from two credit union GPR 

prepaid card programs did not use arbitration clauses, although a third program used by credit 

unions and small banks does include an arbitration clause in its cardholder agreement. 

3.3 Clause length and complexity 

For credit card contracts with arbitration clauses, we examined various measures of the length 

and complexity of the arbitration clause.64 We have not conducted the same analysis for the 

other two product markets. 

The word count for the credit card arbitration clauses ranged from 78 words to 2,410 words. The 

mean was 1,098 words and the median was 1,074 words. On average, the arbitration clause 

made up 14.1% of the words in the credit card contract (with the median at 13.1%), ranging from 

1.2% to 27.5% of the words in the contract. 

Credit card arbitration clauses almost always were more complex and written at a higher grade 

level than the rest of the credit card contract. The mean Flesch readability score65 for credit card 

 

63 Our market share data comes from the Aité Group report cited in note 62. 

64 Three of the contracts (all from credit unions) incorporated by reference the arbitration clause in the credit union’s 

membership agreement. For purposes of our analysis, we used the arbitration clause from the membership agreement 

for the two membership agreements we were able to obtain rather than the incorporation-by-reference language in 

the credit card contract. We treated the arbitration clause for the other credit union (which we were not able to 

obtain) as missing. Accordingly, the results in this section are based on 66 credit card arbitration clauses. 

65 The Flesch readability score is a widely used standard in plain language analysis. Scores range from 0.0 to 100.0, 

with a higher number indicating greater readability. The calculation of the score takes into account total words, total 

sentences, and total syllables. 
29 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

arbitration clauses—with a higher score indicating greater readability—was 34.5 and the median 

was 33.7.66 By comparison, the mean Flesch readability score for the remainder of the contract 

(i.e., excluding the arbitration clause) was 52.2 and the median was 51.6.67 The readability score 

for the remainder of the credit card contract exceeded the readability score for the arbitration 

clause in every case.68 

Similarly, the mean Flesch-Kincaid grade level69—with a lower grade level indicating greater 

readability—for credit card arbitration clauses was 14.2 and the median was 14.7.70 By 

comparison, the mean Flesch-Kincaid grade level for the remainder of the credit card contract 

was 10.8 and the median was 11.71 Of the 66 contracts studied, only in three cases was the 

Flesch-Kincaid grade level lower for the arbitration clause than for the remainder of the 

contract. 

Arbitration clauses from larger issuers tend to be longer than those from smaller issuers. On 

average, the arbitration clause used by the 20 largest issuers contained 1,330 words, while for 

the other issuers the arbitration clause contained 1,051 words. But the arbitration clauses used 

by the larger issuers fare better on the readability metrics. The Flesch readability score for the 

arbitration clause used by the 20 largest issuers was 37.1. For the remaining issuers it was 33.5. 

The Flesch-Kincaid grade level for the arbitration clauses used by the 20 largest issuers was 13.5. 

For the remaining issuers it was 14.6.72 

 

66 The low was 18.2; the high, 51.1. 

67 The low was 43.3; the high, 66.9. 

68 On average, the readability score for the contract was 17.7 points higher than the score for the arbitration clause, 

with the differences ranging from 2.3 to 38.9. 

69 The Flesch-Kincaid Grade level translates readability to the level of education required to understand the text. A 

lower grade level indicates greater readability. 

70 The low was 9; the high, 20.3. 

71 The low was 6.3; the high, 13.3. 

72 Two of the three largest credit card issuers used two of the three most readable arbitration clauses (by both 

measures) in their credit card contracts. 
30 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

3.4 Clause features 

This section summarizes various provisions that appear in or with arbitration clauses in credit 

card, checking account, and GPR prepaid card contracts. It examines: (1) whether the clause 

allows the consumer to reject the arbitration clause for a limited period; (2) whether the clause 

carves disputes eligible for small claims court out of the obligation to arbitrate; (3) which entity 

or entities may administer the arbitration and how the arbitrator or arbitrators are to be 

selected; (4) the extent to which enforceability decisions are delegated to the arbitrator; 

(5) whether the clause precludes class proceedings; (6) whether the clause limits the recovery of 

punitive or other damages; (7) whether the clause delimits the time period in which a claim 

must be brought; (8) whether the clause precludes the disclosure of information about any 

arbitration; (9) where any in-person hearing is to take place; (10) what the clause provides about 

the costs of arbitration to the consumer and the company; (11) whether the clause provides for a 

contingent minimum recovery; and (12) what the clauses disclose about various core 

characteristics of the arbitration process. For all these variables, we present summary results 

below.73

For several of the features studied, the contract provision can appear either in the arbitration 

clause itself or elsewhere in the contract. For example, punitive damages or consequential 

damages waivers sometimes are included in the arbitration clause, but more commonly are a 

stand-alone provision of the contract. Indeed, such provisions appear not only in contracts with 

arbitration clauses but also contracts without arbitration clauses. To obtain a meaningful 

understanding of the incidence of these sorts of provisions requires examining not only the 

features of arbitration clauses or even the features of consumer financial services contracts with 

arbitration clauses, but also the features of consumer financial services contracts without 

arbitration clauses. In the sections in which this type of comparison is appropriate, we report 

the comparative numbers. 

For each feature, we express the incidence of that feature as a percentage of the number of 

arbitration clauses in the sample for that product. We also state incidence as a percentage of the 

 

73 Some of the features described below may be inconsistent with the due process or fairness protocols applied by the 

AAA and JAMS in administering consumer arbitrations. See infra text accompanying note 80. We describe the 

features here as they appear in the arbitration clauses in the sample, without regard to the AAA’s or JAMS’s policies. 
31 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

account values (credit card loans outstanding, insured deposits, amount loaded on prepaid 

cards) of the market players in the sample subject to arbitration clauses (which, as a shorthand, 

we refer to as “arbitration-subject” account values). For credit cards, we can infer that the data 

reflect the overall incidence of these features for all market players who use arbitration clauses.74

For checking accounts, we can extrapolate from the two samples of banks to obtain an estimate 

for overall incidence for banks that use arbitration clauses. However, this extrapolation is less 

stable than it is for incidence overall given the very limited extent to which smaller banks use 

arbitration clauses at all.75 For GPR prepaid cards, the market share data are limited as 

discussed above.76 As a result, for checking accounts and prepaid cards we do not extrapolate 

from the sample to estimate overall incidence of clause features. 

3.4.1 Opt-outs 

Some of the arbitration clauses in the sample permitted consumers a defined time period to optout of or reject the arbitration clause. To exercise the opt-out, a consumer must follow the stated 

procedure—which generally requires a signed writing submitted by mail, and may include 

requirement that all authorized users on the account consent in writing to the opt-out—within 

the stated time limits.77

Just over a quarter of the credit card arbitration clauses in the sample (18 of 66, or 27.3%) and 

of the checking account arbitration clauses in the sample (16 of 61, or 26.2%) included opt-outs, 

as did 17.6% (9 of 51) of prepaid card arbitration clauses in the sample. The time allowed for 

opting out was generally either 30 days or 60 days, typically from when the account was opened 

or the agreement was mailed, depending on the arbitration clause. No agreements provided for 

shorter or longer opt-out periods, and very few provided for periods (such as 45 days) between 

the two ends of this range. 

 

74 See supra text accompanying note 47. 

75 Because the sample is randomly selected, the extrapolation provides an unbiased estimate. However, given that the 

sample size for the small and mid-sized banks with arbitration clauses is only ten, it is arguably too small to apply the 

normal approximation. 

76 See supra text accompanying note 61; see also Appendix A. 

77 We are not currently aware of prevailing opt-out rates. 
32 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

For checking accounts and prepaid cards, larger players tended to be somewhat more likely than 

smaller ones to permit consumers to opt out of the arbitration clause. Some 38.3% of 

arbitration-subject insured deposits in the sample had an opt-out feature, as did 26.5% of dollar 

amounts of arbitration-subject prepaid card loads. For credit cards, 26.0% of arbitration-subject 

loans outstanding in the sample had an opt-out. These results are summarized in Table 3. 

TABLE 3: ARBITRATION CLAUSES PERMITTING OPT-OUTS FROM ARBITRATION 2012-13 

Opt-out No opt-out 

# of contracts 

% of arbitrationsubject account 

values 

# of contracts

% of arbitrationsubject account 

values 

Credit cards 18 

(27.3%) 26.0% 48 (72.7%) 74.0% 

Checking 

accounts 

16 

(26.2%) 38.3% 45 (73.8%) 61.7% 

Prepaid cards 9 

(17.6%) 26.5% 42 (82.4%) 73.5% 

3.4.2 Small claims

While arbitration clauses typically are drafted broadly to cover a wide range of claims and 

disputes, most of the agreements studied “carved out,” or excluded, certain claims or disputes 

from arbitration. The most common type of carve-out was for claims that either could be or had 

been brought in small claims court. A small claims court carve-out is not necessary for parties to 

use small claims court. What the carve-out typically provides, however, is a contractual right to 

press a claim in small claims court even if the other side would prefer that the claim be resolved 

in arbitration. 

From 59% (checking) to 62.7% (prepaid card) to 66.7% (credit card) of arbitration clauses in the 

samples included carve-outs for small claims court, with large institutions more likely to use 

such carve-outs than small institutions. The 33.3% of credit card issuers that did not use a small 

claims court carve-out in their arbitration clause made up only 1.0% of arbitrati0n-subject credit 

card loans outstanding. Although the percentages were not as stark for checking account 

contracts (41% without a carve-out, comprising 8.5% of arbitration-subject insured deposits in 

the sample) and prepaid card contracts (37.3% without a carve-out, comprising between 5.6% to 

15.3% of arbitration-subject loads in the sample), the pattern was the same. 
33 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

The small claims court carve-outs in arbitration clauses in checking account contracts and credit 

card contracts tended to apply to both companies and consumers.78 Carve-outs for consumer 

small claims only, however, were the dominant form of carve-out for prepaid cards.79 These 

results are summarized in Table 4. 

TABLE 4: ARBITRATION CLAUSES WITH SMALL CLAIMS COURT CARVE-OUTS 2012-13 

Small claims court carve-out No small claims court carve-out 

# of contracts 

% of arbitrationsubject account 

values 

# of contracts

% of arbitrationsubject account 

values 

Credit cards 44 

(66.7%) 99.0% 22 (33.3%) 1.0% 

Checking 

accounts 

36 

(59.0%) 91.5% 25 (41.0%) 8.5% 

Prepaid cards 32 

(62.7%) 84.7%-94.4% 19 (37.3%) 5.6%-15.3% 

3.4.3 Administrators and arbitrators

Arbitration clauses commonly specify a firm to administer the arbitration. The administrator is 

not the arbitrator per se, although as discussed below the administrator may select the 

arbitrator. The administrator generally sets out the procedural rules governing the arbitration. 

In some cases, these rules may be modified by the terms of the applicable arbitration clause. 

Some rules, however, may be deemed by the administrator to be not subject to contractual 

modification. The two main administrators of consumer arbitration in the United States each 

have due process or minimum procedural fairness protocols, and their respective rules state that 

 

78 Some 34.4% of the checking account arbitration clauses in the sample had this feature, representing 74.2% of the 

arbitration-subject insured deposits in that sample. For credit card arbitration clauses, the numbers were 39.4% of 

the agreements and 62.2% of the arbitration-subject credit card loans outstanding. 

79 Some 43.1% of prepaid card arbitration clauses in our sample had this feature, accounting for between 84.4% and 

94.2% of arbitration-subject loads in our sample. One possible explanation for this difference is that few prepaid 

cards offer a credit line, with the result that prepaid issuers generally have no small-dollar debts to collect.
34 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

they will not administer arbitrations except in accordance with those core provisions.80 Finally, 

the administrator provides other administrative services, such as docketing or finding hearing 

locations. 

The arbitration administrator most commonly named in the clauses that we studied was the 

AAA. Some 55.7% of checking account arbitration clauses in the sample listed AAA as the sole 

option.81 One listed JAMS as the sole option. (One also listed the National Arbitration Forum 

(“NAF”) as the sole option, even though NAF ceased administering consumer arbitrations more 

than four years ago.82) Nearly half (48.5%) of credit card arbitration clauses in the sample listed 

AAA as the sole option.83 Three listed JAMS and three listed NAF as sole options. More than a 

third (37.3%) of prepaid arbitration clauses in the sample listed AAA as a sole option.84 For 

prepaid, only one each listed JAMS or NAF as sole options.85

Counting clauses in which AAA is at least an option yields 91.8% of checking account arbitration 

clauses, 83.3% for credit card arbitration clauses, and 94.1% of prepaid card arbitration clauses. 

The comparable numbers for JAMS are 34.4% for checking accounts, 40.9% for credit cards, 

and 52.9% for prepaid cards. By market share, the predominance of the AAA was even greater. 

Over 98% of the relevant account value—whether insured deposits, credit card loans 

outstanding, or prepaid load—subject to arbitration clauses in the samples listed the AAA as at 

least one possible administrator. When an arbitration clause listed more than one 

administrator, it typically permitted the party filing the claim to select among the 

 

80 AAA, Consumer Due Process Protocol (Apr. 17, 1998); JAMS, Policy on Consumer Arbitrations Pursuant to PreDispute Clauses Minimum Standards of Procedural Fairness (July 15, 2009). 

81 Counting clauses that listed AAA or NAF (which no longer administers consumer disputes), this share increases to 

60.7%). 

82 Consent Judgment, Minnesota v. National Arbitration Forum, Inc., No. 27-CV-09-18550 (Minn. Dist. Ct. July 17, 

2009), http://pubcit.typepad.com/files/nafconsentdecree.pdf. 

83 This increases to 50% counting clauses that list AAA or NAF. 

84 This increases to 43.1% counting clauses that list AAA or NAF. 

85 Other less well known administrators listed were National Arbitration and Mediation, Dispute Prevention and 

Resolution, Inc., and the Arbitration Service of Portland, each included in a single arbitration clause from a small 

institution. 
35 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

administrators, except for prepaid card arbitration clauses, which commonly permitted the 

consumer to override the company’s choice even when the company was the claimant.86 

In AAA arbitrations, the AAA selects the arbitrator, subject to possible objections by the 

parties.87 In JAMS arbitrations, JAMS may supply a list of arbitrators from which the parties 

may choose.88 In either case, however, the default rule is that the administrator determines the 

pool of prospective arbitrators, even though it does not arbitrate the dispute itself.89 Most of the 

clauses within the scope of our review did not attempt to modify these default rules for 

arbitrator selection. A minority specified that the arbitrator be a retired judge or an experienced 

lawyer or a lawyer with expertise in the subject matter of the dispute.90 One clause for a small 

bank, required “practical working experience in the banking industry.” That is the only clause 

that we identified, however, to use selection criteria that might be seen as an explicit bias to one 

side of the dispute.91

 

86 If prepaid issuers seldom sue consumers, see supra note 79, this consumer default may be equivalent to the 

claimant default rule for checking and credit card. 

87 See AAA, Supplementary Procedures for Consumer-Related Disputes, Rule C-4 (rules effective Sept. 15, 2005). 

88 E.g., JAMS, Streamlined Arbitration Rules & Procedures, Rule 12(c) & (d) (effective July 15, 2009). 

89 The administrator’s rules and applicable law typically require the arbitrator to disclose conflicts of interest, which 

may provide a basis for a party to object to the arbitrator’s service. E.g., AAA, Commercial Arbitration Rules and 

Mediation Procedures, Rules R-17 & R-18 (Oct. 1, 2013); JAMS, Streamlined Arbitration Rules & Procedures, supra

note 88, Rule 12(i) & (j). 

90 The two most common formulations required either that the arbitrator be a lawyer with at least ten years’ 

experience or a retired judge (18.0% of checking account arbitration clauses, covering 16.8% of arbitration-subject 

insured deposits; 30.3% of credit card arbitration clauses, covering 36.1% of arbitration-subject credit card loans 

outstanding; and 3.9% of prepaid card arbitration clauses, covering 30.9% of arbitration-subject card loads), or that 

the arbitrator be a practicing lawyer where the arbitration is held and have expertise in the applicable substantive law 

(3.3% of checking account arbitration clauses, covering 26.7% of arbitration-subject insured deposits; 4.5% of credit 

card arbitration clauses, covering 7.4% of arbitration-subject credit card loans outstanding; and 2.0% of prepaid card 

arbitration clauses; no load data). 

91 Compare Chavarria v. Ralphs Grocery Co., 733 F.3d 916, 924-25 (9th Cir. 2013) (clause providing for each party to 

identify three candidates to serve as arbitrator; parties, beginning with respondent, take turns striking candidates; 

last remaining candidate, who presumably had been initially identified by respondent, to serve as arbitrator) with

Hooters of Am., Inc. v. Phillips, 173 F.3d 933, 938 (4th Cir. 1999) (clause giving employer unilateral control of pool 

from which arbitrators selected). 
36 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

3.4.4 Delegation

The Federal Arbitration Act allocates authority between courts and arbitrators to decide certain 

legal challenges to the enforceability of arbitration clauses. As a general rule, only an arbitrator 

can decide challenges to the legal validity of the overall contract that contains the clause. Courts, 

however, may decide challenges to the enforceability of the arbitration clause itself, and they can 

also decide whether a party assented to the contract that includes the clause.92 In Rent-A-Center 

West, Inc. v. Jackson, however, the Supreme Court ruled that parties could delegate to the 

arbitrator at least some issues that otherwise would be for the court to decide.93 In that case, the 

Court concluded that based on the terms of the parties’ agreement, the arbitrator—not the 

courts—should properly decide whether the arbitration clause was unconscionable.94 The effect 

of such delegation clauses is to reduce substantially the role of courts in policing the fairness of 

arbitration clauses when they are included in a contract. 

Although none of the arbitration clauses in the samples directly track the language used by the 

clause in Rent-A-Center, a majority of these clauses delegated to the arbitrator exclusive 

authority to make decisions about the enforceability of the arbitration clause. 95 The share 

ranged from 39.3% of arbitration clauses in the checking account sample, to 51.5% of credit card 

clauses, to 60.8% of prepaid card clauses.96 A number of clauses, however, did the opposite: they 

reserved such authority to the court through an “anti-delegation clause.” For checking accounts, 

26.2% of the clauses in the sample have this feature. The numbers for credit cards and prepaid 

cards are 13.6% and 7.8% respectively. 

 

92 See Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 404 (1967) (fraudulent inducement of main 

contract for arbitrator to decide); Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 449 (2006) (illegality of 

main contract for arbitrator to decide). 

93 130 S. Ct. 2772 (2010). 

94 Id. at 2778-79. 

95 Id. at 2777 (“[T]he Arbitrator, and not any federal, state, or local court or agency, shall have exclusive authority to 

resolve any dispute relating to the ... enforceability ... of this Agreement including, but not limited to any claim that all 

or any part of this Agreement is void or voidable.”). 

96 For arbitration-subject account values, the shares are 51.6%, 46.0% and 42.6% for checking, credit cards, and 

prepaid cards respectively. 
37 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

These data points actually understate the extent of delegation to the arbitrator for two reasons. 

First, an additional category of arbitration clauses delegated most enforceability issues to the 

arbitrator, but expressly reserved to the court the exclusive authority to decide the enforceability 

of any contractual limitations on class proceedings. This category appeared in 8.2% of the 

checking account clauses, 25.8% of the credit card clauses, and 13.7% of the prepaid card 

clauses. Second, most courts hold that language on arbitrator authority typically included in 

arbitration rules promulgated by administrators has the same effect as a delegation clause 

(although of course express delegation language in an arbitration clause overrides the 

administrator rule).97 Because almost all of the arbitration clauses in the sample without 

delegation clauses (ranging from 9.1% of credit card arbitration clauses to 17.6% of prepaid card 

arbitration clauses to 26.2% of checking account arbitration clauses) nonetheless selected an 

administrator, those clauses effectively also contained a delegation clause, at least under current 

court decisions.98 

3.4.5 Class action terms

Almost all of the arbitration clauses studied contained terms limiting class proceedings. Thus, 

93.9% of the clauses in our credit card sample, 88.5% of arbitration clauses in our checking 

account sample, and 96.1% of clauses in our prepaid sample did not allow arbitration to proceed 

on a class basis. The handful of clauses that did not include such no-class-arbitration terms 

tended to be from very small institutions. Thus, in our samples, class arbitration was unavailable 

for 99.9% of arbitration-subject credit card loans outstanding, 97.1% of arbitration-subject 

insured deposits, and essentially 100.0% of arbitration-subject dollar amounts loaded on 

prepaid cards. An arbitration clause that does not allow class arbitration precludes any dispute 

subject to arbitration from proceeding as a class action—either in court or in arbitration. These 

results are summarized in Table 5. 

 

97 See, e.g., Oracle Am., Inc. v. Myriad Group, A.G., 724 F.3d 1069, 1074 (9th Cir. 2013) (“Virtually every circuit to 

have considered the issue has determined that incorporation of the American Arbitration Association’s (AAA) 

arbitration rules constitutes clear and unmistakable evidence that the parties agreed to arbitrate arbitrability.”). 

98 Fifteen of the 16 checking account arbitration clauses without delegation clauses specified an administrator (almost 

always the AAA). Five of the six credit card arbitration clauses and eight of the nine prepaid card arbitration clauses 

without delegation clauses likewise specified an administrator (again, most commonly the AAA, either by itself or 

with JAMS). 
38 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

TABLE 5: ARBITRATION CLAUSES WITH NO-CLASS-ARBITRATION PROVISIONS 2012-13 

No class arbitration No provision on class arbitration 

# of contracts 

% of arbitrationsubject account 

values 

# of contracts

% of arbitrationsubject account 

values 

Credit cards 62 

(93.9%) 99.9% 4 (6.1%) 0.1% 

Checking 

accounts 

54 

(88.5%) 97.1% 7 (11.5%) 2.9% 

Prepaid cards 49 

(96.1%) 100.0% 2 (3.9%) 0.0% 

Some contracts with arbitration clauses also included provisions waiving the right to participate 

in a class action in court, either as a named plaintiff or a member of the class, or otherwise 

precluding the case from proceeding as a class action, for cases not subject to arbitration. Just 

over 30% (19 of 61, covering 10.1% of arbitration-subject insured deposits) of checking account 

arbitration clauses, 13.6% (9 of 66, covering 9.7% of arbitration-subject credit card loans 

outstanding) of credit card arbitration clauses, and 5.9% (3 of 51; no load data) of prepaid 

arbitration clauses included such provisions.99 By comparison, two checking account contracts 

without arbitration clauses from the large bank sample and three from the mid-sized to small 

bank sample included provisions directly waiving class actions in court. One credit card contract 

without an arbitration clause and no prepaid card contracts without arbitration clauses included 

such class action waivers. 

Most of the checking and credit card arbitration clauses in the samples also contained an “antiseverability provision,” stating that if the no-class-arbitration terms are held unenforceable, the 

 

99 A number of these class litigation provisions appeared outside the arbitration clause. This was the case for 13 of the 

19 checking account contracts with arbitration clauses, and one of the nine credit card contracts with arbitration 

clauses. The remainder appeared only within the arbitration clause. Class litigation provisions within the arbitration 

clause are generally more ambiguous. They can be seen as waiving class actions in cases not subject to arbitration, but 

they might instead be seen simply as stating the consequences of the arbitration clause. 
39 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

entire arbitration clause is thereby rendered unenforceable as well.100 Absent that provision, a 

court might hold a no-class-arbitration term unenforceable but the rest of the arbitration clause 

enforceable, meaning that the dispute might then proceed as a class arbitration. With an antiseverability provision, however, if a court held the no-class-arbitration terms unenforceable the 

arbitration clause would become unenforceable as well, and the case might proceed as a class 

action in court rather than as a class arbitration. Close to a majority of the checking account 

arbitration clauses (49.2%, covering 83.2% of arbitration-subject insured deposits) and a slight 

majority of credit card arbitration clauses in the sample (54.5%, covering 66.3% of arbitrationsubject credit card loans outstanding) included such anti-severability provisions, with their use 

being more likely by larger banks and issuers. But only 29.4% of prepaid card arbitration clauses 

(covering 26.7% of arbitration-subject prepaid loads) had an anti-severability provision. 

3.4.6 Relief limits

There is wide variation in the markets we have studied to date with respect to the inclusion in 

contracts with arbitration clauses of provisions to limit damages—most commonly punitive and 

consequential damages. Just over 15% of credit card contracts with arbitration clauses in the 

sample, covering less than 9% of arbitration-subject credit card loans, included damage 

limitations. A slight majority of the damage limitations in these credit card contracts precluded 

the award of punitive damages or consequential damages or both. But many were not absolute 

prohibitions, instead either requiring arbitrators to follow constitutional standards for the 

award of punitive damages101 or setting out special procedures to be followed in the case of an 

award of punitive damages.102

 

100 A severability clause generally states that if a contract provision is unenforceable that provision will be treated as 

severable from the rest of the contract so that the rest of the contract remains enforceable. An anti-severability term 

does the opposite—it makes one or more provisions not severable from the contract or, in this case, from the 

arbitration clause. 

101 Because courts usually hold that arbitration does not constitute state action, constitutional limitations on the 

award of punitive damages might not otherwise apply. See, e.g., MedValUSA Health Programs, Inc. v. 

MemberWorks, Inc., 872 A.2d 423 (Conn. 2005); Mave Enter., Inc. v. Travelers Indem. Co. of Conn., 2013 WL 

5740159 (Cal. Ct. App. Oct. 23, 2013). For an example of such a constitutional limitation see BMW of N. Am., Inc. v. 

Gore, 517 U.S. 559, 575 (1996) (holding that punitive damages award violated due process based on consideration of 

“the degree of reprehensibility of the [conduct], the disparity between the harm or potential harm suffered by [the 
40 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

By comparison, over 60% of checking account contracts with arbitration clauses in the sample, 

covering almost 80% of arbitration-subject insured deposits, included some damages 

limitation.103 (Prepaid card contracts were closer to credit card contracts in frequency.) In most 

checking account contracts, the damages limitation was not in the arbitration clause but 

elsewhere in the contract. Provisions precluding the award of punitive damages, consequential 

damages, or both consequential damages and punitive damages, appeared in 52.5% of the 

contracts (covering 69.0% of arbitration-subject insured deposits). Like the credit card 

contracts, some checking account contracts (8 of 61, 0r 13.1%; 9.2% of arbitration-subject 

insured deposits) made constitutional standards for the award of punitive damages applicable in 

arbitration.104 

A review of contracts without arbitration clauses reveals a roughly similar pattern, albeit with 

damages limitations somewhat less common. Just over 35% of large bank checking account 

contracts without arbitration clauses included either a consequential damages waiver or a 

consequential damages waiver and a punitive damages waiver. For small to mid-sized banks, 

6.1% of checking account contracts without arbitration clauses included such damages 

limitations. A third of the prepaid card contracts without arbitration clauses included a 

consequential damages waiver or a punitive damages waiver or both. Only one of the credit card 

agreements without arbitration clauses limited the recovery of either punitive or consequential 

damages.

 

plaintiff] and his punitive damages award, and the difference between the remedy and the civil penalties authorized 

or imposed in comparable cases”). 

102 The constitutional limit appears in three of 66 credit card arbitration clauses in our sample, representing 2.2% of 

arbitration-subject loans outstanding. One clause, representing 4.7% of arbitration-subject credit card loans 

outstanding, requires the arbitrator to follow specific procedures before making an award of punitive damages. The 

required procedures include issuing a reasoned award and conducting a post-award review of punitive damages, 

comparable to what would occur in court.

103 This share does not include provisions dealing with the award of consequential damages for specific types of 

actions by banks, such as wrongful dishonor or errors in processing wire transfers, which are addressed specifically in 

the Uniform Commercial Code. UCC §§ 4-402(b), 4A-305(c). 

104 A handful of clauses purported to preclude the award of punitive damages while also authorizing the arbitrator to 

award punitive damages subject to constitutional standards.
41 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

3.4.7 Time limits 

Few credit card and prepaid card contracts with arbitration clauses set time limits for 

consumers to file claims in arbitration. Two prepaid card contracts with an arbitration clause set 

a time limit of two years from when the consumer’s claim arose for the consumer to file a claim 

in arbitration. (One of them applied the same time limit to company claims.) Four credit card 

arbitration clauses, all from small issuers, specified time limits for consumer claims, most 

commonly one year from when the claim arose. One of these issuers, however, required both the 

issuer and the consumer to give the other notice of any claim within 90 days of the claim 

arising.105 

A greater number of checking account contracts with arbitration clauses set time limits on 

consumers filing claims in arbitration, although the time limits themselves were not included in 

the arbitration clause. Around 13% of the checking account contracts in the sample had such 

provisions, representing 28.4% of arbitration-subject insured deposits. These generally ranged 

from one to two years from when the consumer’s claim arose. Again, however, one included a 

90-day notice of claim requirement for both the bank and the consumer. 

Overall, the pattern was generally similar for contracts without arbitration clauses. For large 

banks, 10.7% of checking account agreements without arbitration clauses had one-year time 

limits for consumer claims; of the small and mid-sized banks, 1.5% had such limits. Of credit 

card contracts without arbitration clauses, 2.5% had time limits, again requiring consumers to 

bring claims within a year of the claim arising. Only one of the prepaid cards without arbitration 

clauses had a time limit. 

3.4.8 Confidentiality and nondisclosure 

Unlike a judicial proceeding, arbitration as a general matter is a private process: filings are not 

publicly available and hearings are not open to the public. Arbitration rules typically do not 

impose express confidentiality or nondisclosure obligations on parties to the dispute, although 

 

105 The provision added that the sending of a monthly billing statement by the issuer satisfied the issuer’s notice 

obligations. 
42 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

arbitrator ethics rules do impose confidentiality obligations on the arbitrator.106 Most 

arbitration clauses in the sample were silent on confidentiality and did not impose any 

nondisclosure obligation on the parties. Only one prepaid card arbitration clause (2.0% of 

clauses; no load data) and two credit card arbitration clauses (3.0% of clauses, covering 7.3% of 

arbitration-subject credit card loans outstanding) precluded the parties from making disclosures 

about the arbitration proceeding, including its existence and outcome. Non-disclosure 

provisions were more common in checking account arbitration clauses, where they appeared in 

11.5% of clauses covering 28.0% of arbitration-subject insured deposits. By comparison, none of 

the contracts without arbitration clauses imposed non-disclosure obligations on the parties to a 

dispute. 

3.4.9 Hearing location

The arbitration clauses in the samples generally addressed the location of in-person hearings.107

All but five prepaid card arbitration clauses (covering almost all arbitration-subject load 

volume) and all but nine credit card arbitration clauses (covering 92.6% of arbitration-subject 

credit card loans outstanding) addressed the issue. This feature was less common for checking 

accounts, but even there 63.1% of the arbitration-subject insured deposits in the sample 

addressed the hearing location. 

The clauses specified a range of locations. The most common was that the hearing would be held 

in the federal judicial district of the consumer’s residence. A common variation was for the 

hearing to be held in the same city as the U.S. District Court closest to the consumer.108 Other 

 

106 American Bar Association & American Arbitration Association, Code of Ethics for Arbitrators in Commercial 

Disputes, Canon VI(B) (Feb. 9, 2004), 

http://www.americanbar.org/content/dam/aba/migrated/dispute/commercial_disputes.authcheckdam.pdf (“The 

arbitrator should keep confidential all matters relating to the arbitration proceedings and decision.”). 

107 Under the AAA’s Supplementary Procedures, the default is for disputes under $10,000 to be resolved on the basis 

of document submissions (which is known as a “desk hearing”), although either party may request an in-person or 

telephonic hearing. AAA, Supplementary Procedures for Consumer-Related Disputes, Rule C-5 (Effective Sept. 15, 

2005). For disputes over $10,000, “the arbitrator will conduct a hearing unless the parties agree not to have one.” Id.

Rule C-6. 

108 A much less common variation, used by four small credit card issuers and one small bank in its checking account 

contract called for the hearing to be held in the “federal judicial circuit” of the consumer’s residence. 
43 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

clauses identified the consumer’s state or county as the site of the hearing. Depending on the 

product market, between 3.9% to 18.0% of the clauses in the samples provided that any 

arbitration hearing would be at a location “reasonably convenient” for the customer. A handful 

of arbitration clauses—all associated with small institutions—identified specific cities or states in 

which hearings were to be held. Similarly, two arbitration clauses in checking account contracts, 

both from small banks, identified the place where the account was opened as the location of the 

hearing. 

Contracts without arbitration clauses also specified hearing locations using choice-of-court 

clauses mandating an exclusive forum for any court case, but did so less frequently than 

contracts with arbitration clauses. Of the large banks using checking agreements without 

arbitration clauses, 21.4% specified the location of any court proceeding (most commonly, the 

state where the account is located); 4.6% of checking account agreements without arbitration 

clauses for small and mid-sized banks specified the location of any court proceeding (most 

commonly the city where the contract was signed or a specific state and federal court). Only 

3.7% of the credit card contracts without arbitration clauses specified the location of any court 

proceeding, while 33.3% of prepaid card contracts without arbitration clauses did so. 

3.4.10 Costs 

In court systems, the government pays the salaries of judges and much of the cost of 

administering cases, although the filing fees required when initiating a case may defray a part of 

these costs. In arbitration, by contrast, the parties pay all the costs of arbitrating the dispute. As 

a result, the total up-front cost of filing a claim in arbitration—at least for the parties 

combined—is typically higher than the up-front cost of filing a lawsuit in court. Under the rules 

adopted by the AAA and JAMS, procedural costs are generally allocated to the parties at one or 

both of two stages. First, the rules set fees to be paid at the time a claim or counterclaim is filed 

(and sometimes at later points in the process, such as for a hearing). Second, the rules provide 

that the arbitrator may reallocate the fees between the parties in the arbitral award. The fees 

covered by the arbitration rules include both fees to be paid to the administrator and fees to be 

paid to the arbitrator. The parties also may incur attorneys’ fees. 

In addition, the terms of an arbitration clause may address—beyond simply incorporating the 

cost rules of the administrator—how these different costs will be allocated between the parties. 

The arbitration clauses we studied contained three different types of cost provisions: first, 

provisions addressing the initial allocation of arbitration fees; second, provisions addressing the 
44 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

allocation of arbitration fees in the award; and third, provisions addressing the award of 

attorneys’ fees. 

Some contractual allocation of costs—beyond the default rules of the administrator—was the 

norm in the clauses we studied. Only seven credit card clauses (10.6%, all from small issuers and 

covering a negligible market share), 14 checking account arbitration clauses (23.0%, covering 

2.4% of arbitration-subject insured deposits), and five prepaid card arbitration clauses (9.8%, all 

from cards for which load data are not available) did not contain provisions altering the default 

arbitration cost provisions in the administrator’s governing rules. 

Many of the contracts, and in particular the checking account contracts, included general 

provisions on the allocation of costs and expenses that were not specific to arbitration costs. 

This document does not address such provisions or how they may interact with provisions 

specifically addressing arbitration costs.

PROVISIONS ADDRESSING THE INITIAL PAYMENT OF ARBITRATION FEES 

In consumer arbitration, administrative and arbitrator fees are first assessed to the parties at 

filing. We refer to this as the “initial fee” allocation. Under the consumer arbitration rules of the 

AAA and JAMS, initial fees are predominantly allocated to the business rather than the 

consumer.109 (We discuss the AAA’s allocation in more detail in section 4.9.1.) In addition, the 

administrator’s rules may bar the parties from contractually allocating a greater share of fees to 

the consumer. The AAA’s rules, for example, do not permit it to administer a case in which the 

consumer is required by the applicable arbitration clause to pay more at filing than the 

maximum amounts stated in the AAA’s consumer fee schedule. 

Some credit card arbitration clauses provided that the issuer would pay at least some of the 

initial fees otherwise allocated to the consumer under the governing rules. This was true for 22 

clauses (33.3%) representing 46.4% of arbitration-subject credit card loans outstanding. These 

clauses provided that the issuer would pay the fees either unconditionally, for good cause, or 

only if the administrator did not waive the fees, with the amount of the payment varying and 

sometimes limited to amounts in excess of court fees. A slightly smaller proportion of the credit 

 

109 E.g., AAA, Supplementary Procedures for Consumer-Related Disputes, Rule C-8 (“Costs of Arbitration”) (Rules 

Effective Sept. 15, 2005; Fees Effective March 1, 2013); JAMS Policy on Consumer Arbitrations Pursuant to PreDispute Clauses, Minimum Standards of Procedural Fairness ¶ 7 (effective July 15, 2009). 
45 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

card clauses (15 clauses, or 22.7%, covering 43.2% of arbitration-subject outstandings) stated 

that the issuer would advance at least some portion of the consumer’s arbitration fees under 

specified circumstances. Finally, eleven clauses used by small issuers (16.7% of clauses, covering 

a negligible share of outstandings) indicated that the issuer would consider paying or advancing 

the consumer’s arbitration fees, either on request or if the administrator does not waive the fees. 

These results are summarized in Table 6. 

TABLE 6: ARBITRATION CLAUSE PROVISIONS ADDRESSING THE INITIAL PAYMENT OF ARBITRATION 

FEES 2012-13 

# of contracts % of arbitration-subject 

account values 

Company will pay some or all fees 

 Credit cards 22 

(33.3%) 46.4% 

 Checking accounts 27 

(44.3%) 43.7% 

 Prepaid cards 18 

(35.3%) 32.0%-41.8% 

Company will advance some or all fees 

 Credit cards 15 

(22.7%) 43.2% 

 Checking accounts 8 

(13.1%) 16.0% 

 Prepaid cards 7 

(13.7%) 31.2% 

Company will consider or advancing paying some or all fees 

 Credit cards 11 

(16.7%) 0.2% 

 Checking accounts 2 

(3.3%) 0.4% 

 Prepaid cards 17 

(33.3%) 27.0%-36.8% 

Similarly, 44.3% of checking account arbitration clauses (43.7% of arbitration-subject insured 

deposits) provided that the institution would pay or reimburse some portion of the consumer’s 

share of the initial arbitration fees. Again, the prerequisites and amounts varied, with some 

contracts requiring good cause or that the administrator not waive the fees, and some only 

paying the amount in excess of court filing fees. A smaller number (8 clauses, or 13.1%, covering 
46 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

16.0% of arbitration-subject insured deposits) provided that the institution would advance the 

arbitration fees under the specified circumstances. Two clauses (3.3%; 0.4% of arbitrationsubject insured deposits) stated that the institution would consider paying the fees. These 

results are summarized above in Table 6. 

Prepaid card arbitration clauses most commonly provided that the institution would consider 

advancing the consumer’s share of arbitration fees (17 clauses, or 33.3%, covering between 27% 

and 36.8% of card loads); would advance the consumer’s arbitration fees (7 clauses, or 13.7%, 

covering 31.2% of card loads ); or would simply pay the consumer’s arbitration fees, either in 

their entirety (14 clauses, or 27.5%, covering between 5.6% and 15.3% of card loads), to the 

extent the fees exceed filing fees in court (1 clause, 2.0%; no data on loads), up to $500 (1 clause, 

2.0%; no data on loads), or for claims under $50,000 to $75,000 (2 clauses, or 3.9%, covering 

26.5% of card loads). These results are also summarized above in Table 6. 

PROVISIONS ADDRESSING THE ALLOCATION OF ARBITRATION FEES IN THE AWARD 

The rules of arbitration administrators may permit the arbitrator to allocate all arbitration fees 

between the parties in the award, including reallocating initial fees from one party to the other. 

As we explain further in section 4.9.1, prior to March 1, 2013, the default AAA rules provided for 

such reallocation. (From that date, however, the AAA rules restrict reallocation.110) The JAMS 

Streamlined Arbitration Rules also allow for such reallocation, and the JAMS Minimum 

Standards of Procedural Fairness for consumer arbitrations do not appear to restrict the 

practice, except for cases in which California law so requires.111 Our review in this section uses 

the situation under the JAMS rules and the AAA rules in force from 2010 through 2012 as the 

baseline for comparison. 

 

110 The new fee schedule, effective March 1, 2013, provides that “[a]rbitrator compensation ... and administrative fees 

(which include Filing and Hearing Fees) are not subject to reallocation by the arbitrator(s) except pursuant to 

applicable law or upon the arbitrator’s determination that a claim or counterclaim was filed for purposes of 

harassment or is patently frivolous.” AAA, Supplementary Procedures for Consumer-Related Disputes, Rule C-8. The 

credit card contracts studied all predate the revision to the AAA rules. The checking account and prepaid card 

contracts also may not reflect the revision to the rules. 

111 JAMS Streamlined Arbitration Rules & Procedures, supra note 88, Rule 19(e); JAMS Minimum Standards of 

Procedural Fairness, supra note 109, ¶ 8 (“In California, the arbitration provision may not require the consumer to 

pay the fees and costs incurred by the opposing party if the consumer does not prevail.”). 
47 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

Arbitration clauses took noticeably different approaches to the allocation of arbitration fees in 

the arbitrator’s award.112 First, a number of credit card arbitration clauses (23 clauses, or 34.8%, 

covering 21.8% of arbitration-subject credit card loans outstanding) expressly permitted the 

arbitrator to shift the payment of arbitration fees from the issuer to the consumer, as the default 

AAA and JAMS rules already allowed.113 All but one of the clauses permitted the converse as 

well—shifting fees from the consumer to the issuer. Second, a smaller number (5 clauses, or 

7.6%; 17.0% of arbitration-subject credit card loans outstanding) expressly precluded such 

shifting arbitration fees from the issuer to the consumer. Third, others (18 clauses, or 27.3%; 

51.5% of arbitration-subject credit card loans outstanding) affirmatively permitted the consumer 

to recover arbitration fees from the issuer. Five of these clauses (covering 4.3% of arbitration 

subject credit card loans outstanding) also precluded cost-shifting to the consumer, while the 

rest were silent on reallocation to the consumer. While clauses in all three categories would 

allow the arbitrator to shift fees from the consumer to the company, only clauses in the second 

category (and five of the clauses in the third category) offer the consumer any contractual 

protection against the possibility of an adverse reallocation of costs at the award stage. 

Checking account arbitration clauses contained similar provisions. Almost 25% of the clauses 

(15 of 61, covering 16.9% of arbitration-subject insured deposits) expressly permitted the 

arbitrator to shift arbitration costs to the consumer (and the converse as well), in line with the 

default rules. Just over 11% of the clauses (7 of 61, covering 7.9% of arbitration-subject insured 

deposits) precluded cost-shifting back to the consumer. Finally, 14.8% of clauses (9 of 61, but 

covering 28.0% of arbitration-subject insured deposits) expressly permitted the consumer to 

recover arbitration fees from the institution, but only one such clause (covering 0.4% of 

arbitration-subject insured deposits) precluded the arbitrator from shifting costs to the 

consumer. 

The pattern also was similar for prepaid cards. Nine prepaid card arbitration clauses (17.6%; no 

data on card loads) permitted fees to be shifted to consumers (with all but one permitting the 

converse as well), while three clauses (5.9%; 26.5% of arbitration-subject prepaid card loads) 

 

112 Some clauses clearly covered both the administrator’s fees and the arbitrator’s fees, but most were ambiguous 

about whether both types of fees are covered or only the administrator’s fee. 

113 Only one such clause (for a small issuer) requires that a losing consumer pay the issuer’s arbitration costs. The rest 

permitted the arbitrator to so decide but do not require the arbitrator to do so. 
48 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

precluded such fee shifting. Many more prepaid arbitration clauses (22 clauses, or 43.1%; 

57.9%-67.7% of arbitration-subject prepaid card loads) affirmatively permitted prevailing 

consumers to recover their arbitration fees, although without precluding cost-shifting back to 

the consumer. These results are summarized in Table 7. 

TABLE 7: ARBITRATION CLAUSE PROVISIONS ADDRESSING ALLOCATION OF ARBITRATION FEES IN THE 

AWARD 2012-13 

# of contracts % of arbitration-subject 

account values 

Permits shifting issuer fees to consumer 

 Credit cards 23 

(34.8%) 21.8% 

 Checking accounts 15 

(24.6%) 16.9% 

 Prepaid cards 9 

(17.6%) No data 

Bars shifting issuer fees to consumer 

 Credit cards 5 

(7.6%) 17.0% 

 Checking accounts 7 

(11.5%) 7.9% 

 Prepaid cards 3 

(5.9%) 26.5% 

Permits shifting consumer fees to issuer 

 Credit cards114 18 

(27.3%) 51.5% 

 Checking accounts115 9 

(14.8%) 28.0% 

 Prepaid cards116 22 

(43.1%) 57.9%-67.7% 

 

114 Five of these credit card arbitration clauses, covering 4.3% of arbitration-subject credit card loans outstanding, 

also precluded shifting the issuer’s arbitration fees to the consumer. 

115 One of these checking account arbitration clauses, covering 0.4% of arbitration-subject insured deposits, also 

precluded shifting the issuer’s arbitration fees to the consumer. 

116 None of these prepaid card arbitration clauses precluded shifting the issuer’s arbitration fees to the consumer. 
49 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

PROVISIONS ADDRESSING THE AWARD OF ATTORNEYS’ FEES 

A significant share of credit card arbitration clauses directed that the parties bear their own 

attorneys’ fees unless the law requires otherwise (22 clauses, or 33.3%; 45.5% of credit card 

loans outstanding). This was also true for a smaller share of checking account contracts (9 

clauses, or 14.8%; but 37.6% of arbitration-subject insured deposits) and prepaid card contracts 

(3 clauses, or 5.9%; no load data). One prepaid card (which covers 26.5% of arbitration-subject 

card loads in our sample) waived any right of the company to recover attorneys’ fees from the 

consumer. 

Significant shares of arbitration clauses across all three markets, however, did not address 

attorneys’ fees. This was true for 18 credit card clauses (27.3%, covering 21.4% of arbitrationsubject credit card loans outstanding), 22 checking account clauses (36.1%, covering 27.2% of 

arbitration-subject insured deposits), and 35 prepaid clauses (68.6%, covering 73.3% of 

arbitration-subject card loads). When the arbitration clause does not address the issue, the 

arbitrator may award attorney’s fees when permitted by the agreement or applicable law.117

Five credit card arbitration clauses (7.6%, from small issuers representing a negligible market 

share) directed or permitted the arbitrator to award attorneys’ fees to the prevailing party, which 

presumably would have permitted the issuer to recover its attorneys’ fees from the consumer 

when it prevailed, and also would have permitted a prevailing consumer to recover his or her 

attorneys’ fees. Five prepaid arbitration clauses (9.8%; no load data) permitted an award to a 

prevailing party, either the consumer or the company. Three checking account clauses (4.9%; 

1.0% of arbitration-subject insured deposits) would have permitted an award to the prevailing 

party, consumer or company. 

A number of the remaining clauses permitted or directed the award of attorneys’ fees to a 

prevailing consumer. Five credit card clauses (7.6%, covering 10.2% of arbitration-subject credit 

card loans outstanding) directed the issuer to pay the consumer’s attorneys’ fees if the consumer 

prevails. Other credit card clauses expressly authorized (but did not require) the arbitrator to 

award attorneys’ fees to consumers, either if the consumer prevailed (1 clause, or 1.5%; 15.1% of 

arbitration-subject credit card loans outstanding), if the amount awarded was greater than the 

 

117 AAA, Commercial Arbitration Rules, Rule R-43(d)(ii) (effective June 1, 2009); JAMS Streamlined Arbitration 

Rules, supra note 88, Rule 19(f). 
50 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

issuer’s last settlement offer (1 clause, or 1.5%; 0.0% of arbitration-subject credit card loans 

outstanding), or if the arbitrator so determined (1 clause, or 1.5%; 0.2% of arbitration-subject 

credit card loans outstanding). 

Eleven checking account clauses (18.0% of clauses; 18.1% of arbitration-subject insured 

deposits) provided that the arbitrator would award, and another two clauses (3.3% of clauses; 

2.4% of arbitration-subject insured deposits) might award attorneys’ fees to a prevailing 

consumer. An additional three checking account clauses directed (4.9%; 2.5% of arbitrationsubject insured deposits), and another permitted (1.6%; 0.5% of arbitration-subject insured 

deposits), the arbitrator to award the consumer attorneys’ fees if the award exceeded the 

institution’s last written settlement offer, while another directed the award of double attorneys’ 

fees under those circumstances (1.6%; 0.2% of arbitration-subject insured deposits). One 

prepaid clause (no load data) permitted the arbitrator to award attorneys’ fees to the consumer. 

TABLE 8: ARBITRATION CLAUSE PROVISIONS ADDRESSING THE AWARD OF ATTORNEYS’ FEES IN THE 

AWARD 2012-13 

# of contracts % of arbitration-subject 

account values 

Parties bear own attorneys’ fees 

 Credit cards 22 

(33.3%) 45.5% 

 Checking accounts 9 

(14.8%) 37.6% 

 Prepaid cards 3 

(5.9%) No load data 

Attorneys’ fees to prevailing party 

 Credit cards 5 

(7.6%) 0.0% 

 Checking accounts 3 

(4.9%) 1.0% 

 Prepaid cards 5 

(9.8%) No load data 

Attorneys’ fees to prevailing consumer 

 Credit cards 8 

(12.1%) 25.5% 

 Checking accounts 18 

(29.5%) 23.7% 

 Prepaid cards 1 

(2.0%) No load data 
51 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

 No provision 

 Credit cards 18 

(27.3%) 21.4% 

 Checking accounts 22 

(36.1%) 27.2% 

 Prepaid cards 35 

(68.6%) 73.3% 

3.4.11 Contingent minimum award recoveries 

The AT&T arbitration clause at issue in Concepcion provided that a customer would receive a 

minimum recovery of $10,000 if the customer was awarded more in arbitration than the 

amount of the last written settlement offer made by AT&T.118 Contingent minimum recovery 

provisions were uncommon in the arbitration clauses that we studied, although they occurred 

more often in checking account arbitration clauses than in credit card or prepaid card 

arbitration clauses. We did not identify any such terms in contracts without arbitration clauses. 

None of the arbitration clauses in the prepaid card contracts in the sample included a contingent 

minimum recovery provision. Only three (4.5%) of the credit card arbitration clauses studied—

representing 2.3% of arbitration-subject credit card loans outstanding in the sample—included 

such a provision, with the contingent amount ranging from $5,100 to $7,500. By comparison, 

ten arbitration clauses (16.4%) in the checking account sample—representing 10.5% of 

arbitration-subject insured deposits in the sample—included such a provision. For these ten 

checking account contracts, the contingent minimum recoveries generally ranged from $2,500 

to $10,000.119

 

118 See 131 S. Ct. at 1744 & n.3. 

119 Most of the provisions that we identified make the minimum recovery contingent on the arbitrator awarding the 

consumer the relief sought, or greater relief, after the institution refuses to provide such relief. A smaller share use a 

different contingency: whether the arbitrator awards relief equal or in excess of the value of the company’s last 

settlement offer.
52 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

3.4.12 Disclosures 

Most of the arbitration clauses described certain differences between arbitration and litigation 

in court. They typically highlighted some combination of four differences. First, no jury trial is 

available in arbitration. Second, discovery typically is more limited in arbitration than in civil 

court litigation. Third, appeal rights are more limited in arbitration than for decisions of trial 

court judges in civil court cases. Fourth, when parties have agreed to arbitrate, they cannot 

participate in class actions in court.120 Often this descriptive language was capitalized or in 

boldfaced type. 

Of the credit card arbitration clauses studied, 49.3% (covering 40.8% of arbitration-subject 

credit card loans outstanding) identified all four procedural differences; only a number of small 

issuers identified none. Almost every credit card arbitration clause indicated that the consumer 

would not have a right to a jury trial in arbitration (92.5% of clauses, covering 99.7% of 

arbitration-subject credit card loans), and slightly more (94.0% of clauses, covering 99.9% of 

arbitration-subject credit card loans) stated that for claims subject to arbitration the consumer 

could not be party to a class action in court. Over half of the clauses mentioned more limited 

rights to discovery and appeal. 

The checking account arbitration clauses studied contained fewer disclosures. Only 27.9% of 

clauses (covering 19.0% of arbitration-subject insured deposits) identified all four procedural 

differences, while 24.6% of clauses (although again covering smaller issuers) identified none. 

The most common difference disclosed was the lack of a jury trial (75.4% of clauses, covering 

98.1% of arbitration-subject secured deposits). The majority (60.7%, covering 67.5% of 

arbitration-subject insured deposits) stated that for claims subject to arbitration, the consumer 

could not be part of a class action in court. Around 40% noted limited discovery and appeal 

rights. 

The disclosures in the prepaid card arbitration clauses were more like those in credit card 

clauses, with 41.2% (covering from 27.0% to 36.8% of arbitration-subject card loads) disclosing 

 

120 The type of disclosure provisions discussed here are not the same as the no-class-arbitration provisions examined 

earlier. See section 3.4.5. The disclosure provision explains to the consumer that by agreeing to arbitration, the 

consumer will not be able to participate in a class action in court. The no-class-arbitration provision provides that any 

arbitration proceeding will be conducted on an individual basis and not a class basis. Most contracts included both, 

but a few contracts with no-class-arbitration provisions did not make the type of disclosure considered here. 
53 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

all four procedural differences and only 7.8% (with no card load data available) disclosing none. 

Almost all (92.2% of clauses; 100% of arbitration-subject card loads) stated that no jury trial was 

available, most (88.2% of clauses; 100% of arbitration-subject card loads) noted the inability to 

participate in a class action in court, and many highlighted limited discovery (66.7% of clauses; 

42.3% of arbitration-subject card loads) and limited appeal rights (47.1% of clauses; 57.9%-

67.7% of arbitration-subject card loads). 

3.5 Clause changes 

The data presented so far are for arbitration clauses as of the end of 2012 (for credit card 

contracts) or as of the third quarter of 2013 (for checking account and GPR prepaid card 

contracts). This section examines whether the inclusion of arbitration clauses in consumer 

financial services contracts has changed since December 31, 2010, shortly before the Supreme 

Court’s April 2011 decision in Concepcion.121 In Concepcion, the Court upheld a no-classarbitration provision in an arbitration clause against a state law unconscionability challenge, 

overriding a number of state and federal court decisions upholding state laws that had 

invalidated such provisions.122 Following Concepcion, several scholars and commenters 

suggested that companies would inevitably include arbitration clauses with no-class-arbitration 

provisions in all their consumer contracts123 or would revise their arbitration clauses in line with 

 

121 See 131 S. Ct. at 1753. 

122 See, e.g., Skirchak v. Dynamics Research Corp., 508 F.3d 49 (1st Cir. 2007); Shroyer v. New Cingular Wireless 

Services, Inc., 498 F.3d 976 (9th Cir. 2007); Dale v. Comcast Corp., 498 F.3d 1216 (11th Cir. 2007); Muhammad v. 

County Bank of Rehoboth Beach, Delaware, 912 A.2d 88 (N.J. 2006). 

123 E.g., Ian Millhiser, Supreme Court Nukes Consumers’ Rights In Most Pro-Corporate Decision Since Citizens 

United, ThinkProgress: Justice (Apr. 27, 2011) (“After Concepcion, it is only a matter of time before nearly every 

credit card provider, cell phone company, mail-order business or even every potential employer requires anyone who 

wants to do business with them to first give up their right to file a class action.”)

http://thinkprogress.org/justice/2011/04/27/176997/scotus-nukes-consumers. But see Peter B. Rutledge & 

Christopher R. Drahozal, “Sticky” Arbitration Clauses?: The Use of Arbitration Clauses After Concepcion and Amex, 

67 VAND. L. REV. ___ (forthcoming 2014) (finding that most franchisors have not switched to arbitration after 

Concepcion and explaining that “[b]y using an arbitration clause, businesses do more than simply contract out of 

class actions: they contract for a bundle of dispute resolution services, including, for example, a very limited right to 

appeal. For businesses that perceive themselves as unlikely to be sued in a class action (and hence to receive little 

benefit from an arbitral class waiver), the other services bundled with the waiver of class actions ... may discourage 
54 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

the case.124 We focus on changes in the incidence in contracts of arbitration clauses or clause 

features; we do not address changes in the manner and frequency with which clauses are applied 

that may result from intervening legal decisions such as Concepcion or Rent-A-Center. 

Because of data availability, we focus here on changes in the inclusion of arbitration clauses in 

credit card contracts. Only limited data on changes in checking account contracts since 

Concepcion are available, but those data reveal a noticeable increase in the inclusion of 

arbitration clauses among large banks since mid-2012. We have no data on changes in the 

inclusion of arbitration clauses in prepaid card contracts since Concepcion. 

We also note that many companies—particularly smaller entities—use standard forms acquired 

from a form provider, rather than preparing their own customized form. At least 83 of the 141 

small to mid-sized banks (58.9%) in the checking account sample used some version of a 

standard form prepared by a single form provider. At present, that standard form does not 

include an arbitration clause, although the form company does offer an optional free-standing 

arbitration clause. 

3.5.1 Credit cards

The incidence of arbitration clauses in credit card contracts has increased since Concepcion, but 

only slightly. Examining the issuers in our sample that have agreements available for the entire 

period from 2010-2012, the number of issuers using arbitration clauses increased from 57 as of 

year-end 2010, to 58 as of year-end 2011, to 59 as of year-end 2012.125 A total of five credit card 

issuers in our sample have adopted arbitration clauses since Concepcion, while three issuers 

that previously used arbitration clauses stopped using them, for a net increase of two. The dollar 

amount of credit card loans outstanding subject to arbitration clauses has increased somewhat 

more―from 47.2% of credit card loans outstanding as of year-end 2010 to 50.1% as of year-end 

 

them from using an arbitration clause. In addition, even standard form contracts might be sticky―i.e., resistant to 

change even if change might be in the business’s best interest.”).

124 See Myriam Gilles, Killing Them with Kindness: Examining “Consumer-Friendly” Arbitration Clauses After

AT&T Mobility v. Concepcion, 88 NOTRE DAME L. REV. 825, 844-45 (2012). 

125 A review of the credit card contracts available on the CFPB web page reveals no additional issuers switching to 

arbitration between December 31, 2012, and June 30, 2013. We have not yet reviewed the clauses for changes in 

features over this period. 
55 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

2012.126 Of course, 86.8% of credit card loans outstanding without arbitration clauses were 

subject to the Ross settlement during this period, which limited the extent of any shift toward 

arbitration after Concepcion.

127 Of the five issuers that have switched to arbitration since 

Concepcion, all included no-class-arbitration provisions, four of five included delegation clauses 

(the other excepted class issues from its delegation clause), and none had a minimum recovery 

provision. 

Of the issuers that have used arbitration clauses for the entire period from 2010-2012, only a 

small number have changed provisions in their clauses since Concepcion. The only change in the 

inclusion of no-class-arbitration terms by those issuers was the deletion by one issuer of 

language that excluded California accounts from its class waiver. The inclusion of antidelegation clauses by those issuers increased from 33.6% of arbitration-subject credit card loans 

outstanding as of December 31, 2010, to 42.6% as of December 31, 2012.128 Finally, in 2012, two 

of these issuers added contingent minimum recovery provisions to their existing arbitration 

clauses that were similar to those in the clause at issue in Concepcion. Even so, the market share 

covered by such provisions—some 2.3% of arbitration-subject credit cards loans outstanding—

remains small. 

 

126 The five issuers switching to arbitration contributed only a marginal amount to the increase, accounting for 0.2% 

of credit card loans outstanding. Changes in the amount of credit card loans outstanding of existing users of 

arbitration clauses explain almost all of the increase. 

127 See supra text accompanying notes 51 to 52. It is possible, of course, that one or more of the settling defendants in 

Ross might have removed their credit card arbitration clauses even absent Ross. The Ross allegations did not apply to 

checking accounts, but Bank of America removed its arbitration clause from checking accounts in August 2009. See 

Jonathan Stempel, Bank of America ends arbitration of card disputes, REUTERS.COM (Aug. 14, 2009), 

http://www.reuters.com/article/2009/08/14/us-bankofamerica-arbitration-sb-idUSTRE57D03E20090814. On the 

other hand, two issuer defendants did not agree to settle Ross, maintained their clauses, and together with another 

issuer in a parallel proceeding, took the matter through trial. As this presentation was being finalized, the case 

remained pending against all three issuers. 

128 Two issuers replaced their delegation clauses with anti-delegation clauses, two replaced class exceptions with antidelegation clauses, one removed the class exception from its delegation clause, while one added a new delegation 

clause, though it was still subject to a class exception. 
56 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

3.5.2 Checking accounts 

By comparison to credit card contracts, only limited data are available on changes in checking 

account contracts since Concepcion. We compare the contracts used in the Pew Charitable 

Trusts study of checking account contracts―collected from June to August 2012―to the 

contracts we collected just over a year later ― from August to September 2013.129 Thus, the data 

cover only a portion of the period since Concepcion. Any changes to checking account contracts 

prior to summer 2012 will not be reflected in the findings described below.130

The sample consists of 88 large financial institutions (banks and credit unions) as to which the 

sample in the Pew study overlaps with the sample used by the Bureau.131 As of summer 2012, 35 

of the 88 institutions (39.8%) used arbitration clauses in their checking account contracts. As of 

summer 2013, one year later, 42 of 88 (47.7%) used arbitration clauses. Eight banks and one 

credit union switched to arbitration during that one-year period, while two banks switched away 

from arbitration. The eight banks switching to arbitration constituted 9.2% of all arbitrationsubject insured deposits in the large bank sample. The credit union became the largest credit 

union using an arbitration clause, accounting for over one-third of all arbitration-subject 

insured deposits at credit unions in the sample as of year-end 2012. Of the institutions that 

switched to arbitration within the past year, six included delegation clauses, two had antidelegation provisions, and one had neither an anti-delegation nor delegation provision; all but 

one had a no-class-arbitration provision; and none had a contingent minimum recovery 

provision.

As with credit card contracts, only a small number of institutions have changed the terms of 

their existing arbitration clause within the past year. Of the institutions that had arbitration 

clauses in both 2012 and 2013, one adopted a delegation clause, one adopted an anti-delegation 

clause, and a third added language that delegates most issues of enforceability to the arbitrators; 

 

129 Pew Charitable Trusts, supra note 37, at 14. We describe our sourcing of checking account contracts in Appendix A. 

130 For example, press reports indicate that Umpqua Bank adopted an arbitration clause in January 2012, prior to the 

period for which we have data here. See Brent Hunsberger, Umpqua Bank Joins Wells Fargo and Chase in Requiring 

Customers to Arbitrate Disputes, Barring Class Actions, THE OREGONIAN (Jan. 23, 2012), 

http://www.oregonlive.com/business/index.ssf/2012/01/umpqua_bank_joins_wells_fargo_1.html. 

131 Pew was unable to obtain agreements for eight banks in its sample, while four of the banks in the Pew sample 

(based on total deposits) are not in the sample used here (based on total insured deposits).
57 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

its clause previously stated only that class issues were to be decided by a court and was silent on 

the other issues. Two of those institutions adopted no-class-arbitration provisions, and one 

added a contingent minimum recovery provision to its arbitration clause. 
58 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

4. Incidence and typology of 

consumer arbitration filings 

This section presents preliminary results from our review of 1,241 credit card, checking and 

payday loan consumer disputes filed with the American Arbitration Association (“AAA”) from 

the start of 2010 through the end of 2012.132 Based on our review of AAA consumer arbitration 

files, these were the only consumer disputes about any of these three products filed with the 

AAA during that period. 

4.1 Data sources

4.1.1 AAA case data 

Our review used electronic case records that the AAA voluntarily provided to the Bureau (the 

“AAA Data”). The AAA began using its electronic case record system from the beginning of 2010 

for all filings administered as consumer arbitrations. Under the AAA rules—in this case the AAA 

Supplementary Procedures for Resolution of Consumer-Related Disputes—a dispute between a 

consumer and a company is administered as a consumer arbitration if it meets a number of 

criteria. First, the business must have a “standardized, systematic application of arbitration 

clauses with customers and where the terms and conditions of the purchase of standardized, 

consumable goods or services are non-negotiable or primarily non-negotiable in most or all of 

its terms, conditions, features, or choices.” Second, the product at issue must be for personal or 

 

132 We identified four filings relating to prepaid or gift cards. They are not included in the 1,241 because we 

considered that number of cases too small to include as a separate product market in this presentation. 
59 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

household use.”133 (If there is no applicable arbitration clause in the contract between the 

consumer and company, the consumer arbitration rules may still apply if the parties agree to 

submit the dispute to AAA.134) As a result, an AAA “consumer arbitration” is not necessarily one 

filed by a consumer. So long as the criteria described above apply, companies can file consumer 

arbitrations against consumers. 

The AAA agreed to provide to the Bureau all case files from its electronic case record system for 

consumer arbitrations filed from January 1, 2010 through the end of 2012. The material 

volunteered by the AAA covers class arbitrations and non-class arbitrations; filings that went no 

further than an initial filing, as well as those that did advance to formal initiation by the AAA 

and beyond; and all arbitration filings that were submitted as consumer arbitrations regardless 

of subject matter. 

To date, our review of the AAA Data has: (1) identified consumer arbitration filings that cover 

credit card, checking account, payday loan, or prepaid disputes; and (2) extracted data points for 

the first three of these categories. This presentation, therefore, does not cover data about AAA 

consumer arbitrations outside of these particular product markets. We refer to the AAA Data 

that covers these three product markets for filings between January 1, 2010 and December 31, 

2012, as the “AAA Case Data.” 

Our review to this point was limited to AAA files. This is because we have not secured data from 

JAMS and, indeed, JAMS may not have data of the same duration as the AAA. Although we 

intend to continue to explore with JAMS the possibility of obtaining its data, we do not view the 

absence of such data as materially impacting our analysis because, during the 2010-12 period 

under review, the AAA was and remains the largest administrator of consumer arbitration in the 

United States.135 JAMS, the other leading consumer arbitration administrator, has reported that 

 

133 AAA, Consumer-Related Disputes Supplementary Procedures C-1(a) (effective Sept. 15, 2005). The AAA reserves 

discretion whether or not to apply the consumer arbitration rules, with the parties being free to raise disputes about 

their application directly to the arbitrator. See id. 

134 See id. Rule C-3 (effective Sept. 15, 2005). 

135 That was not true until July 2009, when the National Arbitration Forum (“NAF”) settled a consumer fraud suit 

brought by Minnesota Attorney General Lori Swanson. Until that point, NAF was almost certainly administered the 

largest caseload of consumer arbitrations in the U.S. In the settlement, however, it agreed to stop administering new 

consumer arbitrations and exited the consumer arbitration business altogether. 
60 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

it handles “at most” a few hundred consumer cases every year.136 In contrast, the AAA Data 

contain approximately 7,000 consumer arbitration filings over three years. (This number is not 

limited to consumer financial matters.137) Although many of these cases were outside the scope 

of our review, these numbers provide some indication of the relative roles of the AAA and JAMS. 

Moreover, during the time period under study, the AAA was the largest provider of consumer 

arbitration services with respect to consumer financial disputes within the scope of our current 

review. As discussed in section 3.4.3 above, almost all the credit card arbitration clauses studied 

provide for arbitration before the AAA alone (48.5%) or before a choice of the AAA and other 

administrators (a further 34.8%). For checking accounts, the picture is the same. Banks with an 

arbitration clause either specify (91.8%) or require (55.7%) the AAA to be used if arbitration 

were elected by either party. While JAMS is a permitted option for 40.1% of credit card 

agreements and for 34.4% of checking account agreements, it is only once the sole option for 

checking account agreements and only three times the sole option for credit card agreements.138

4.1.2 Existing empirical studies and data 

Although a relatively large number of empirical studies have examined employment and 

securities arbitration, relatively few such studies have examined consumer arbitration in 

detail.139 Drahozal and Zyontz reviewed AAA consumer arbitrations that resulted in an 

 

136 See Jean Sternlight, Mandatory Binding Arbitration Clauses Prevent Consumers from Presenting Procedurally 

Difficult Claims, 42 SW. U. L. REV. 87, 99 n.68 (2012) (“Mandatory Binding Arbitration Clauses”) (citing Jay Welsh, 

JAMS Executive Vice President and General Counsel.) There is general agreement that the AAA and JAMS are the 

leading consumer arbitration administrators. See, e.g., ABA, CBA, & FSR RFI Comment at 3. 

137 It covers all consumer arbitration filings, regardless of subject matter. It also includes filings that were not 

perfected for one or more of the reasons discussed at section 4.2.1 below. Approximately one-third of the filings were 

not perfected. 

138 By market volume subject to arbitration, the AAA is specified still more frequently. See section 3.4.3. 

139 Part of the reason may be that “all arbitration awards in the securities industry are publicly available.” David B. 

Lipsky et al., The Effect of Gender on Awards in Employment Arbitration Cases: The Experience in the Securities 

Industry, 52 INDUSTRIAL RELATIONS: A JOURNAL OF ECONOMY AND SOCIETY 314, 317 (2013). Securities industry 

arbitration encompasses claims involving customers and brokers as well as employment claims involving employees 

and brokerage firms. These arbitrations are administered by the Financial Industry Regulatory Authority (“FINRA”). 

See id. at 322. 
61 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

arbitrator’s “award” during nine months of 2007.140 The AAA Case Data available to us is 

significantly broader than the data covered by this earlier study. It covers a much longer period, 

and it is not limited to case files for awarded cases. A number of summary reviews published by 

the AAA covered all administered AAA consumer arbitrations from 2006 and a sample from 

2007.141

Empirical review of non-AAA consumer arbitrations has generally used NAF data. A number of 

studies have used public data in California for NAF consumer arbitrations from 2003 through 

early 2007.142 Public Citizen identified a set of roughly 34,000 NAF arbitrations for this period, 

all but 118 of which companies filed against consumers, rather than the other way around.143

Almost all the cases were described by NAF as “collection” cases. Ernst & Young carried out a 

review of a sample of NAF consumer-filed arbitrations from 2000 through 2003.144 NAF also 

 

140 See Christopher R. Drahozal & Samantha Zyontz, An Empirical Study of AAA Consumer Arbitrations, 25:4 OHIO 

ST. J. ON DISP. RES. 843, 845 (2010) (“Empirical Study”) (noting relative lack of studies of consumer arbitration). This 

study presented results primarily from analyzing 301 consumer arbitrations closed by an award between April 2007 

and December 2007. See id. at 867-71 (describing data and methodology). This study was part of a broader research 

project supported by the Searle Civil Justice Institute, which was then associated with Northwestern University 

School of Law. Drahozal and Zyontz used the same AAA data for a follow-on study that compared debt collection 

claims by companies in AAA consumer arbitrations with debt collection claims in federal court and in state court 

proceedings in certain Virginia and Oklahoma jurisdictions. See Christopher R. Drahozal & Samantha Zyontz, 

Creditor Claims in Arbitration and in Court, 7 HASTINGS Bus. L. J. 77 (2011) (“Creditor Claims”). 

141 See AAA, Statement of the AAA Before the Constitution Subcomm. of the Senate Comm. on the Judiciary (2007) 

and Analysis of the AAA’s Consumer Arbitration Caseload (2007), both available at the AAA’s website, www.adr.org. 

142 Pursuant to section 1281.96 of the California Code of Civil Procedure law, arbitration providers are required to 

disclose a number of data points about consumer and employment arbitrations in California. See Cal. Civ. Proc. Code 

§ 1281.96. A number of other jurisdictions now have similar requirements. The AAA does not limit its public 

disclosures to California arbitrations, but discloses information on consumer arbitrations throughout the United 

States. Because we have access to AAA electronic case records, however, we have not relied for our review on these 

public data. In addition, as discussed in section 4.2 below, our review covers all consumer arbitration filings with the 

AAA, whereas the publicly available data only reaches disputes that the AAA actually processes. 

143 Public Citizen, The Arbitration Trap: How Credit Card Companies Ensnare Consumers (Sept. 2007), 

http://www.citizen.org/documents/ArbitrationTrap.pdf. 

144 Ernst & Young, Outcomes of Arbitration: An Empirical Study of Consumer Lending Cases (2004), 

http://www.adrforum.com/rcontrol/documents/ResearchStudiesAndStatistics/2005ErnstAndYoung.pdf. This study 

also briefly reviewed certain public data on AAA arbitrations available in California. 
62 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

published at least one review of its own case data.145 Finally, data about consumer arbitration 

can sometimes be obtained from public litigation proceedings. In a number of court cases, 

companies or other parties have proffered evidence about arbitration. 

4.2 Case incidence 

4.2.1 Overall 

For 2010 through 2012, excluding class cases, we identified 1,241 AAA non-class consumer 

arbitration filings about credit cards, checking account, and payday loans.146 The cases covered 

the entire range of arbitral procedure, from cases filed with the AAA but never processed (for 

one of the reasons noted below) to cases decided by the arbitrator in a written award.147 

There are several reasons for an AAA consumer arbitration to proceed no further than filing. 

First, there may be no pre-dispute arbitration clause between the parties, and one or other party 

may not agree to arbitrate post-dispute. Second, the parties may settle the dispute before the 

matter proceeds further. Third, the filing party may abandon the claim before the matter 

proceeds further. Fourth, the AAA may refuse to accept the dispute for one of a number of 

reasons: if the case is inconsistent with the terms of its moratorium on certain debt collection 

disputes, which we describe more fully below; if the company fails to comply with the AAA’s Due 

 

145 Mark Fellows, The Same Result as in Court, More Efficiently: Comparing Arbitration and Court Litigation 

Outcomes, METRO. CORP. COUNSEL (July 2006) (covering NAF cases from 2003 and 2004), 

http://www.metrocorpcounsel.com/articles/6988/same-result-court-more-efficiently-comparing-arbitration-andcourt-litigation-outcomes. 

146 In this time period, there were only two class arbitration filings before the AAA for these three product markets. 

(Claimants in these two cases sought to represent “thousands” of consumers.) One reason for the lack of class 

arbitration filings may be that the applicable credit card and checking account arbitration clauses almost universally 

prohibit class arbitration, as described in section 3.4.5. (That may also be the case for payday lenders, but we do not 

yet have significant data on the point. The Bureau is not aware, however, of any arbitration clause in the consumer 

financial area that expressly permits class arbitration.) This presentation only reviews non-class arbitration filings. 

147 While our focus in this presentation is on the number and type of consumer disputes filed with the AAA, we will 

necessarily be looking at a smaller set of disputes when we later examine awards in arbitrated disputes. We will also 

look to see whether particular types of cases tend to end at specific stages, and comparing that to disposition in the 

court system. 
63 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

Protocol by failing to pay the required filling and administrative fees; if the arbitration clause 

violates the terms of the Due Process Protocol, and the company is not willing to waive the 

violative terms for purposes of the arbitration; if the company has previously refused to comply 

with the Due Process Protocol; or for a claimant’s failure to meet other filing requirements. 

The Bureau recognizes that the number of filed arbitrations is not a metric that can be looked at 

in isolation. We do not know the numbers of credit cardholders, checking account holders, or 

payday borrowers with potentially viable legal claims. With the exceptions noted below, we do 

not yet know the number of claims filed in court proceedings.148 Plainly, the number of 

arbitrations was low relative to the total populations using these products. Using the Bureau’s 

Consumer Credit Panel, which provides a nationally representative, random sample of deidentified credit records procured from a large, national consumer reporting agency, we 

estimate that, as of the end of 2012, there were approximately 160 million credit cardholders in 

the United States. On the assumption that the number of cardholders and the volume of credit 

card loans outstanding are proportionate, when combined with our incidence data from section 

3.2.1, this data indicate that around 80 million cardholders were subject to arbitration clauses as 

of the end of 2012. Data from the Census and from the Survey of Consumer Finance collectively 

suggest that in 2010 about 108 million U.S. households held one or more transaction accounts, a 

category that includes consumer checking accounts.149 Combining data from the Census and the 

FDIC’s National Survey of Unbanked and Underbanked Households suggests that in 2011, 

around 105.1 million households had at least one checking or savings account.150 Again on the 

assumption that the number of checking accounts is proportionate to the volume of insured 

 

148 Of course, the litigation numbers may be impacted up or down by the presence of arbitration clauses, making a 

direct comparison hard. In addition, there are limits on the availability of state court case records. 

149 According to the Survey of Consumer Finances, 92.5% of families had at least one transaction account in 2010. See

Jesse Bricker, Arthur B. Kennickell, Kevin B. Moore, and John Sabelhaus, Changes in U.S. Family Finances from 

2007 to 2010: Evidence from the Survey of Consumer Finances, Federal Reserve Bulletin, vol. 98, no 2 (Feb. 2012), 

Table 6B at page 28. In this study, “family” is comparable to the Census definition of “household.” Id. at 3. According 

to the Census, there were 116,716,331 U.S. households in 2010, which means that approximately 108 million 

households had at least one transaction account in that year. See U.S. Census Bureau; 2010 Demographic Profile Data, 

Profile of General Population and Housing Characteristics: 2010, Table DP-1. 

150 In 2011, according to the FDIC’s survey, there were 9.9 million households without either a checking or a savings 

account. See Federal Deposit Insurance Corporation, 2011 FDIC National Survey of Unbanked and Underbanked 

Households at 510 (2012). The Census identifies 115 million households in that year. See U.S. Census Bureau; 2011 

American Community Survey 1 Year Estimates, Population and Housing Narrative Profile: 2011, Table NP01. 
64 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

deposits, it appears that tens of millions of households are subject to arbitration on one or more 

checking accounts.151 Finally, the FDIC also estimates that around 2 million households use 

payday loans annually.152 

FIGURE 4: NUMBER OF AAA CONSUMER ARBITRATIONS BY PRODUCT 2010-12 

Figure 4 summarizes the breakdown of the 1,241 filings by product market: 1,033 were credit 

card disputes; 71 were checking account disputes; and 137 were payday loan disputes.153 The 

 

151 We do not offer a more specific estimate for checking accounts because: (a) these account data cover savings and 

other transaction accounts; (b) our overall incidence estimate from section 3.2.2 is specific to bank use of arbitration 

clauses for checking accounts, and thus does not reflect the incidence of credit union use; and (c) the section 3.2.2 

incidence estimate uses 2012 and 2013 data, whereas the account data offered here is for 2010 and 2011. 

152 Federal Deposit Insurance Corporation, Addendum to the 2011 FDIC National Survey of Unbanked and 

Underbanked Households Use of Alternative Financial Services (2013) 48. The Pew Charitable Trusts recently 

estimated that around 12 million individuals use payday loans every year. See Pew Charitable Trusts, Who Borrows, 

Where They Borrow, and Why: Payday Lending in America (2012) 4. 

153 For purposes of this analysis, we have included in the category of “payday loan” cases a number of arbitration 

filings involving credit service organizations (“CSOs”). Approximately 23 states allow credit service organizations 

(CSOs) to broker loans. See http://www.responsiblelending.org/payday-lending/policy-legislation/states/CRL-CSOIssue-Brief-FINAL.pdf. In some of these states, CSOs can charge unlimited fees to broker loans. See

http://forabettertexas.org/images/EO_2013_09_StateofPayday.pdf. Although CSO statutes generally contemplate 

that a CSO will broker a loan with a third party lender, there are claims that payday lenders pose as CSOs to evade 

state interest rate caps and make a larger profit on each loan. See http://www.responsiblelending.org/paydaylending/policy-legislation/states/CRL-CSO-Issue-Brief-FINAL.pdf. To account for this possibility, arbitration 
65 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

average annual number of disputes, therefore, was 344 for credit card, 24 for checking account, 

and 46 for payday loans. 

4.2.2 Types of consumer arbitration filings 

Prior analyses of arbitration cases have distinguished company-filed and consumer-filed cases. 

Company-filed cases were generally debt collections arbitrations in which the company sought 

to collect debt or alleged debt from consumers. At least for some creditors for some period of 

time, debt collection arbitration took the place of debt collection litigation. The available data 

indicates that company-filed debt collection actions were the predominant form of consumer 

arbitration cases prior to 2010, with a number of specific credit card issuers making significant 

use of debt collection arbitration before NAF.154

Our analysis of the AAA records persuades us that it is important to identify debt collection 

arbitrations, but that the category of debt collection arbitrations now encompasses more than 

company-initiated arbitrations.155 In 2009, prior to the period for which we have studied AAA 

case records, the AAA adopted a moratorium on the filing of debt collection actions. The 

moratorium continued throughout the study period, and continues to this day.156 It generally 

bars consumer financial companies from filing arbitrations with the AAA to collect debt from 

 

demands filed against CSOs were included in the study when consumers alleged that the CSO originated any loan 

except for an auto-title loan. 

154 NAF reported that in 2006 alone it administered 214,000 debt collection cases. See Drahozal & Zyontz, Creditor 

Claims, supra note 140, at 77 (noting that it used to be generally accepted that “the vast majority of disputes between 

businesses and consumers, both in arbitration and in litigation, involve claims by creditors seeking to recover 

amounts allegedly owed by the consumers” (emphasis added)). In July 2009, however, as a result of its settlement 

with the Minnesota Attorney General, NAF agreed permanently to cease administering most consumer arbitrations, 

including debt collection arbitrations. The Attorney General based the suit, in part, on allegations that NAF shared 

common ownership with a number of firms that filed debt collection claims before NAF. The demise of NAF has been 

extensively covered. See, e.g., Nancy A. Welsh, What is “(Im)partial Enough” in a World of Embedded Neutrals?, 52 

ARIZ. L. REV. 391, 427-31 (2010). 

155 Our review procedures for AAA case records are discussed in detail in Appendix B. 

156 The AAA announced its moratorium on debt collection arbitration on July 23, 2009. See AAA Press Release, 

www.adr.org. Its terms are also stated by the AAA in a Notice on Consumer Debt Collection Arbitrations (Oct. 19, 

2010), available on the same website. The AAA put the moratorium in place after it identified, by its own account, a 

number of potential due process and fairness concerns with debt collection arbitration. See Arbitration or Arbitrary: 

The Misuse of Mandatory Arbitration to Collect Consumer Debts: Hearing Before the Subcomm. on Domestic Policy 

of the H. Comm. on Oversight, 111th Cong. (July 22, 2009) (testimony of Richard W. Naimark on behalf of the 

American Arbitration Association). 
66 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

consumers, but it allows for two exceptions to this general rule. First, such companies may file 

such debt collections if a court orders the case to arbitration. Second, companies can file debt 

collection arbitrations if the consumer affirmatively consents in writing to the arbitration after 

the dispute arises, in which case the arbitration is a “mutual submission.” Furthermore, the 

moratorium does not apply at all to arbitrations filed by the consumer alone.157 

Following the moratorium, there are still company-filed AAA arbitrations that seek to collect 

debt. As noted, these must now follow a court proceeding sufficient to generate a court order in 

favor of arbitration. We included these cases in our debt collection arbitration category. But in 

addition to company-filed debt collection cases there also can be mutual submissions or 

consumer filings.158 To capture all of these categories, we defined “debt collection arbitrations” 

to mean not only collection actions filed by the company, but also those arbitrations filed 

mutually or by the consumer in which the parties are contesting an alleged debt claimed by the 

company in a preceding action in court. 

More specifically, we counted mutual submissions and consumer-filed disputes as debt 

collection arbitrations when the case included a substantive debt dispute and the arbitration 

record shows that there was a prior court proceeding as to which the consumer invoked 

arbitration.159 We recognize that an invocation of arbitration can take several forms. In some 

cases, the record may show that the consumer moved to compel arbitration in a prior court 

collection action. In others, the invocation may consist of filing a demand for arbitration in lieu 

of filing an answer in court to the company’s collection litigation in court. In others, the 

consumer may simply inform the company that he or she is invoking the arbitration clause in 

order to end the collection action in court. Although in some of these cases the consumer may 

also raise non-debt, affirmative claims, we think it is appropriate to describe such disputes as 

 

157 We have not reviewed the AAA filings for compliance with the AAA moratorium. Based on our review to date, 

however, we have no reason to believe the AAA is not following its stated terms. 

158 For purposes of this presentation, we categorize a claim as consumer-filed, company-filed, or mutually submitted 

based on what the AAA claim form records. Further details are in Appendix B. 

159 We do not count a procedural challenge to debt collection, without more, as a substantive debt dispute. So a claim 

under the Fair Debt Collection Practices Act that covers only the manner in which debt is being collected would not be 

considered a substantive debt dispute. We use that term for disputes that cover claims about what amount of money 

is owed (or not owed) to the company by the consumer. 
67 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

debt collection arbitrations.160 Collection claims were previously at issue in court, and the 

amount of debt subject to collection is at issue in the arbitration. 

We recognize that this approach works an expansion of the traditional understanding of debt 

collections as company-filed disputes.161 There were a number of pleading formats in consumerfiled and mutually submitted AAA arbitrations, however, that persuaded us that the debt 

collection category needs to be broadened in this way. In some cases, for example, the consumer 

may affirmatively state that he or she has no claims but wants the arbitrator to resolve the 

merits of the company’s underlying debt collection claim. In others, the consumer states that he 

or she is filing the arbitration demand instead of filing an answer to a collection claim in court, 

or the consumer may file an arbitration for a declaratory judgment that he or she does not owe 

the amount claimed by the company. At least where there is evidence of prior proceedings in 

court, we think it is appropriate to recognize these as debt collection arbitrations, even though in 

some cases they may contain other consumer claims as well.162 

In some respects, however, we may have undercounted debt collection arbitrations in our total 

pool of cases. Our definition relies on an indication in the arbitration record of prior court 

proceedings. The arbitration record may not contain that indication, even when there was, in 

fact, a prior collection action in court. In addition, even when a company has not yet sued in 

court to collect debt, it is possible that some consumers are preemptively filing arbitrations to 

 

160 We provide information about the affirmative claims made by consumers in debt collection arbitrations in section 

4.6.2 below. 

161 There may be a precedent in some of the NAF data. In 2007, Public Citizen published results from its review of the 

nearly 34,000 consumer arbitrations that NAF disclosed as occurring in California between the beginning of 2003 

and March 2007. Consumers filed 118 of these arbitrations. All but 15 of the 118 consumer-filed cases, however, were 

described by NAF as “collection” cases. See Public Citizen, supra note 143, at 1-2. Drahozal & Zyontz did not identify 

any consumer-filed cases as debt collection arbitrations in their review of 2007 AAA consumer case records. It is 

possible, however, that their study would not have identified such cases because their sample of case records was 

limited to awarded cases. To the extent that consumer-filed debt collection cases tend to settle out or are withdrawn 

or otherwise closed pre-award, they will not show up in awarded cases. Alternatively, these cases may have become 

more common since 2007. 

162 Overall, most of the consumer- and mutually-filed debt collection submissions encompass only a substantive 

dispute about the amount of debt owed. Fewer than half include non-debt claims as well. See section 4.6.1. 
68 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

challenge the company’s pre-judicial assertion of a debt.163 In fact, a substantial number of the 

“non-debt collection” credit card arbitrations in our review appeared to involve only a 

substantive debt dispute and no non-debt claims at all, even though the arbitration may be filed 

by a consumer. Ultimately, though, we opted to use objective rules to define debt collection 

arbitrations, rather than trying to assess whether the weight of the arbitration record indicated 

that collection activity was already underway before a substantive debt dispute reached 

arbitration. But it is important to bear in mind that our “non-debt collection category” included 

a large number of cases in which debt was at issue.164 

FIGURE 5: ARBITRATION FILINGS BY TYPE AND PRODUCT 

 

163 Cf. Sternlight, Mandatory Binding Arbitration Clauses, supra note 136, at 99 & n.69 (noting statement by JAMS 

General Counsel that most consumer arbitrations filed before JAMS “are from claims alleging that certain credit card 

companies violated federal collection statutes, asserted to fend off potential collections actions by those companies.”). 

164 We considered relying only on the subject matter of the claims at issue in arbitration to differentiate “debt 

arbitrations” from “non-debt arbitrations.” Our subject-matter typology for disputes, which we discuss in sections 

4.5.2 and 4.6.2, identifies when arbitrations include substantive claims about the amount of debt owed. We 

determined, however, not to rely on that debt dispute tag alone. 

2010 2011 2012 
69 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

Figure 5 shows the breakdown between debt collection arbitrations and non-debt collection 

arbitrations by product market for the three years covered by the AAA Case Data. Overall, there 

were 522 debt collection arbitrations and 719 non-debt collection arbitrations for all three years 

combined for our product markets. For checking account and payday loan arbitrations, the 

norm was non-collection. For credit card, by contrast, debt collection arbitrations were a slight 

majority of the disputes. All but four debt collection arbitrations were credit card disputes. 

At least in the period of our review, parties initiated AAA consumer arbitrations by filing a 

standard one-page “claim form.” The claim form asks whether the arbitration is submitted at the 

request of the consumer, at the request of the company, or by “mutual agreement,” meaning that 

the arbitration is submitted by both parties.165 We recorded the identity of the filing party based 

on the indicated response to this question.166 Claim forms recorded 146 (or 28%) of the debt 

collection arbitrations in the AAA Case Data as company-filed. Another 47 (or 9%) of debt 

collection arbitrations were mutual submissions. Finally, 329 (or 63%) were consumer 

submissions. On the non-collection side, 569 (or 79%) of the filings were by consumers. There 

were smaller shares of mutual submissions (132 filings or 18%) and company-filed (18 filings or 

3%) non-collection claims. 

We discuss debt collection arbitrations and non-collection arbitrations in more detail in sections 

4.5 and 4.6. 

4.2.3 Credit card federal court filings 

Although we have not completed our litigation review of court filings raising disputes about 

these same three products, we have obtained some results. For comparative purposes, we 

provide those results here. Our methodology to identify these cases is provided in Appendix C. 

For the 2010 through 2012 period, we have preliminarily identified 3,054 credit card cases filed 

in federal court. This breaks down into 1,033 cases in 2010, 883 cases in 2011; and 1,138 cases in 

 

165 The claim form first asks: “How is this claim being filed?” Parties are instructed to check only one option. In 

addition to “By request of the consumer,” and “By request of the company,” the form offers “By mutual agreement 

(“submission”).” 

166 We have not attempted to verify whether that recording was accurate. At least in some cases, we have noted that 

there is no apparent signature from the identified claimant in the record we have reviewed. 
70 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

2012. All but four cases were filed by consumers, which means that consumers filed more than 

four times as many federal court credit card disputes as AAA credit card arbitrations over this 

time period.167 There were jury demands in 2,739 of these federal filings. Some 418 of the cases 

were filed as purported class actions. Of these, 156 were filed in 2010, 121 were filed in 2011, and 

141 were filed in 2012. 

4.3 Representation 

4.3.1 Prior research 

Prior research has studied representation rates, and their potential impact, in AAA consumer 

arbitrations. In their study of 301 AAA consumer arbitrations that resulted in an award in 2007, 

Drahozal & Zyontz found that consumers proceeded without an attorney in almost half the 

cases.168 Consumers were significantly more likely to have counsel when they were the claimant 

in arbitration (55.4%) than when they were responding to company claims in arbitration 

(29.5%). Some studies also report high rates of employee representation by counsel in AAA 

employment arbitration.169

4.3.2 Data 

The following four figures show representation rates in the AAA Case Data, for consumers and 

companies, for all three product markets, and by debt collection and non-collection arbitrations. 

These data may understate company representation rates. It was straightforward from the AAA 

Case Data to identify the presence of outside counsel acting for the consumer or the company. It 

 

167 Over three years, some 705 of the AAA filings were credit card disputes that the claim form recorded as being filed 

by consumers. None of the class arbitration filings were credit card disputes. 

168 Drahozal & Zyontz, Empirical Study, supra note 140, at 903. 

169 See Alexander Colvin, An Empirical Study of Employment Arbitration: Case Outcomes and Processes, 8:1 J. EMP.

LEG. STUD. 1 (March 2011) at 16-17; see also Elizabeth Hill, Due Process at Low Cost: An Empirical Study of 

Employment Arbitration Under the Auspices of the American Arbitration Association, 18 OHIO ST. J. ON DISP. RES.

777, 800 n.93 (2003) (for a sample of awarded AAA employment arbitrations, employees subject to a mandatory 

arbitration clause proceeded pro se in one-third of the cases). 
71 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

was hard to tell, however, whether an internal company representative was a lawyer. Except 

where we could reliably identify outside or in-house counsel, therefore, we assumed that 

companies were unrepresented. 

FIGURE 6: OVERALL REPRESENTATION RATES BY ARBITRATION TYPE 2010-12 
72 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

FIGURE 7: CREDIT CARD ARBITRATION REPRESENTATION RATES 2010-12 

FIGURE 8: CHECKING ACCOUNT ARBITRATION REPRESENTATION RATES 2010-12 

Consumers in

credit cardrelated debt

collection filings

Companies in

credit cardrelated debt

collection filings

Consumers in

credit cardrelated non-debt

collection filings

Companies in

credit cardrelated non-debt

collection filings

No lawyer 301 4 247 58

Lawyer 217 514 268 457

0

100

200

300

400

500

600

Arbitration filings

Consumers in

checking-related

debt collection

filings

Companies in

checking-related

debt collection

filings

Consumers in

checking-related

non-debt

collection filings

Companies in

checking-related

non-debt

collection filings

No lawyer 1 0 31 14

Lawyer 1 2 38 55

0

10

20

30

40

50

60

70

80

Arbitration filings
73 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

FIGURE 9: PAYDAY ARBITRATION REPRESENTATION RATES 2010-12 

The AAA Case Data show that companies rarely participated in consumer arbitration about 

these three products without counsel. It should be noted, however, that at least some 

jurisdictions have unauthorized practice rules that may require companies to be represented in 

arbitration.170 Whatever the reason, companies were overwhelmingly represented by counsel, 

both in debt collection and non-debt collection arbitrations, and across all three product 

markets we examined. 

Furthermore, the data are consistent with the notion that a significant share of the consumers 

who are in arbitration see it as being in their interest to have counsel as well. Overall, nearly 53% 

of consumers in these arbitrations had counsel. In non-collection cases, consumers were 

generally more likely (61%) to be represented by counsel than to proceed without counsel 

 

170 See, e.g., Nisha, LLC v. TriBuilt Const. Group, LLC, 388 S.W.3d 444 (Ark. 2012). 
74 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

(39%).171 (The rate of representation, moreover, did not vary to any extent between noncollection cases that included debt disputes and those that did not.) In debt collection 

arbitrations, consumer representation was somewhat lower at 42% of the disputes filed. 

4.3.3 Repeat counsel 

Another feature of representation in these consumer arbitrations was the presence of “repeat 

counsel,” meaning counsel who appeared in more than one case in our dataset. There were 

several firms that showed up repeatedly across the cases in which there was representation. 

This phenomenon was similar for consumer representation in debt collection and non-collection 

cases. Of consumers represented in debt collection arbitrations, 71% were represented by repeat 

counsel, and 59% were represented by one of only five repeat firms.172 Of consumers represented 

in non-collection disputes, 77% of represented consumers had a repeat counsel. In this case, 

however, one firm accounted for 29% of the non-collection cases in which consumers had repeat 

counsel. Overall representation data, including repeat representation data, are depicted in 

Figures 10 and 11. (The shares depicted in Figures 10 and 11 are for consumers overall. In 

contrast, the numbers above use represented consumers as the denominator.)

 

171 Absent one counsel, who represented consumers in 18 effectively identical payday arbitrations in 2010 alone, this 

number would fall. These cases were all follow-on filings from a single court case in which the same counsel 

represented a total of 19 consumers. 

172 Scholars who have attempted to study whether there is a “repeat player” impact on arbitration outcomes debate 

whether or not to count the first instance of a “play” by a counsel or party that then becomes a repeat player. See, e.g., 

Colvin, supra note 169, at 13. For present purposes, we have counted the first play visible to us in the AAA Case Data. 
75 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

FIGURE 10: CONSUMER REPRESENTATION IN DEBT COLLECTION ARBITRATIONS 2010-12 

FIGURE 11: CONSUMER REPRESENTATION IN NON-COLLECTION ARBITRATIONS 2010-12 

Repeat counsel players also featured on the company side of these disputes, as might be 

expected given that companies were themselves repeat players. Repeat outside counsel figures 

in 78% of non-collection cases in which companies were represented. Five repeat players 

accounted for 22% of the non-collection cases in which companies were represented. Repeat 

outside counsel were more prevalent in debt collection cases. Some 90% of the debt collection 

cases in which companies were represented featured repeat counsel. Five repeat outside counsel 

accounted for 45% of the debt collection cases in which companies were represented. 
76 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

4.4 Amounts at issue 

4.4.1 Prior research 

Some earlier empirical work makes claims for the effectiveness of consumer arbitration in 

handling individual small-dollar disputes. Ernst & Young reported in a 2004 study of consumer 

arbitration that 73% of the 226 “lending-related” arbitration claims that consumers filed before 

NAF between January 2000 and January 2004 were for “small claims.” Ernst & Young used this 

term to describe consumer claims up to $15,000. The study distinguished “small” claims from 

“medium” claims—ranging from $15,000 to $75,000—and from “large” claims—those above 

$75,000.173 

Other studies have described amounts at issue in consumer arbitration, though without claiming 

that consumer arbitration is effective at handling small claims.174 Using case records from a 

nine-month sample of AAA consumer arbitrations that reached awards in 2007, Drahozal and 

Zyontz found that 91.5% of consumer claimants brought compensatory claims for $75,000 or 

less, and 39.1% of consumer claimants brought claims seeking less than $10,000.175 The average 

consumer claim was for $46,131, with most consumer claims under $70,756, although there 

were a small number of very high consumer claims.176 They also noted that the proportion of 

business claims under $75,000 was higher than the proportion of consumer claims, although 

the number of consumer claims under $75,000 was much greater.177 

 

173 Ernst & Young, supra note 144, at 8. 

174 See Drahozal & Zyontz, Empirical Research, supra note 140, at 875. 

175 See id. 

176 See id.; see also id. at 876 (graph showing distribution of amounts claimed by consumers and businesses). For 

arbitrations that closed without reaching an award (for example, because they were settled, withdrawn, or otherwise 

closed), the study noted that the average consumer claim amounts for those cases increased to $66,367. See id. at 877. 

177 Some 94.5% of company claims were for under that threshold, and company claims averaged $22,037. See id. In a 

related study, Drahozal and Zyontz also reviewed submitted individual AAA debt collection cases closed between 

April and December of 2007, and found the average amount sought by creditors was $20,445. See Drahozal & Zyontz, 

Creditor Claims, supra note 140, at 84. The sample for this later study consisted of 61 awarded cases and 406 nonawarded cases. The later study also noted that average claim amounts fell to $1,172 in cases awarded under an AAA-
77 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

4.4.2 Metrics 

To identify amounts at issue, we have thus far captured data on amounts at issue at two main 

points. The standard one-page AAA consumer arbitration “claim form” includes brief 

instructions to consumer and company claimants about how to submit a dispute using the 

form.178 It asks the submitting party to “briefly explain the dispute.” It then asks: “Do you believe 

there is any money owing to you? If yes, how much?” Our first claim amount data point is the 

amount stated on the claim form.179 We refer to this as the “claim form amount.” 

Second, if the filing revealed a substantive debt dispute, we separately recorded the disputed 

debt amount, where that information was available.180 Some such arbitrations involve not only 

the disputed debt amount, but other affirmative, non-debt claims. In cases that contain a 

disputed debt amount and such affirmative consumer claims, the amount at issue is open to 

some interpretation. The consumer may mean to dispute the debt and seek damages for the full 

amount of the affirmative claims, but it is also possible that the affirmative claims may not fully 

represent a separate amount at issue.181 For these cases, at least for the time being, we provide 

 

administered program of debt collection arbitrations filed by a single debt purchaser. The AAA administered this 

program between September 2007 and June 2009. See id. at 85. (To the Bureau’s knowledge, the AAA has not 

restarted the program.) 

178 The claim form was in consistent use by the AAA for the consumer arbitrations that we studied. In some cases, it 

represents the full initial statement of the claims at issue. In others, there may be further pleadings attached, such as 

a demand for arbitration or a copy of an underlying court complaint. 

179 Sometimes claim amounts are expressed as a range (“$10,000 to $75,000”) or as a bounded inequality (“up to 

$75,000” or “at least 30,000”). There are a number of different ways to treat these. Our approach here is the same 

method used by Drahozal and Zyontz in their 2010 study. See Drahozal & Zyontz, Empirical Study, supra note 140, at 

874. We take the mid-point of ranges, and the base amount for any bounded inequality. Thus, a range of “$10,000 to 

$75,000” is treated as a claim for $42,500.” A claim for “up to $10,000” or for “at least $10,000” would be treated the 

same: as a claim for $10,000. 

180 We include in the disputed debt amount all components of the alleged debt—principal, fees, and other costs. In 

some cases, there is a specific indication in the record that the consumer disputes the full amount of the debt. In 

others, there is no such qualifier or an explicit statement that the full amount of the debt is at issue; in these cases, we 

record the full amount of the alleged debt as the disputed debt amount. If the consumer only takes issue with a 

specific portion of the debt, however, we use that stated amount as the debt in issue amount. 

181 We recognize that at least in some arbitrations involving disputed debt amounts, the additional consumer claims 

may primarily reflect the consumer’s effort to defeat the company’s effort to collect an alleged debt, which raises the 

possibility that at least in some such cases the disputed debt amount alone may most accurately reflect the “true” 

amount at issue. An alternative view, however, is that even if the debt dispute and the affirmative claims are related, 

the sum of the disputed debt amount and the affirmative claim amounts reflects the size of the range between the 
78 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

data only on the debt amount at issue, but acknowledge that this may under-report the full 

amount at issue for this set of cases. 

We have also begun to record the latest statement of the affirmative claim amount that we were 

able to find prior to claim resolution, but have not completed that review. (Parties may change 

or clarify a claim amount for a number of reasons. They may develop a different valuation based 

on evidence. Their awareness of fees may also change claim amounts.182) We also attempted to 

record punitive damage claims, but we found such claims so seldom quantified that we do not 

think we will be able to offer any assessment of punitive damage claims. (Where punitive 

damage claims were separately identified, we did not include them in the claim form amounts.) 

4.4.3 Data 

Figure 12 shows the distribution of discernible disputed debt amounts in debt collection 

arbitrations in the AAA Case Data. Across 492 disputes, the average was $15,725, with a median 

of $10,266.183 Across 141 disputes, company-filed debt collection arbitrations had an average 

disputed debt amount of $19,619 with a median of $11,303.184 Across 351 disputes, consumerand mutually-filed debt collection arbitrations had an average disputed debt amount of $14,161, 

with a median of $10,000.185

 

outcomes requested by each side. For example, if a consumer sues for $12,000 and a company counterclaims for 

$5,000, the range of possible outcomes is between the consumer losing $5,000 (and not winning the affirmative 

claims) and the consumer winning $12,000 in damages on the affirmative claims (and not losing on the debt claim). 

The difference between these two outcomes—and therefore the amount in dispute—is $17,000, which is the sum of 

the disputed debt and the affirmative claim amounts. 

182 As explained in section 4.9 below, until March of 2013, claim amounts had a direct impact on fee levels for 

consumers and companies in arbitrations covered by the AAA Supplementary Procedures for Consumer Arbitration. 

From March 2013, that is no longer the case. See section 4.9. 

183 This excludes 30 debt collection cases in which the disputed debt amount was not apparent from the arbitration 

record. 

184 This excludes five cases in which the disputed debt amount was not identified. 

185 This excludes 25 cases in which the disputed debt amount was not identified. 
79 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

FIGURE 12: DEBT AMOUNTS IN DISPUTE IN DEBT COLLECTION ARBITRATIONS 2010-12 

FIGURE 13: DEBT AMOUNTS IN DISPUTE IN ALL ARBITRATIONS 2010-12 
80 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

As noted, disputed debt amounts were also at issue in non-debt collection arbitrations. These 

were arbitrations in which there was a substantive debt dispute, but where we lacked one or 

more of the objective criteria we used to identify debt collection arbitrations. Figure 13, 

therefore, shows the distribution of discernible disputed debt amounts across debt collection 

and non-collection cases. For the 787 total disputes in which we could identify a disputed debt 

amount, the average debt amount was $13,418 and the median was $8,641. Over three years, 

there were 21 cases in which the disputed debt amount was at or below $1,000, or an average of 

seven such disputes a year. In total, we saw approximately $10.6 million in debt amounts 

disputed in AAA arbitrations for these product markets from 2010 through 2012. 

Figure 14 shows the consumer claim form amount in all cases in which we could identify a claim 

form amount but could not identify a disputed debt amount.186 Across these 326 cases, the 

average consumer claim amount was $38,726, and the median was $11,805. Overall, we 

identified just under $15 million in claim form amounts in these cases for these product markets 

over this period. The breakdown by product was as follows: 146 credit card cases187 had an 

average claim amount of $26,187 and a median of $8,945; 61 checking account cases188 had an 

average of $66,577 and a median of $15,000; and 119 payday loan cases189 had an average of 

$39,834 and a median of $42,500. 

 

186 We have excluded one claim for $100,000,000, both from the figure and from the calculation of the mean and the 

median. We have included in the calculation of the mean and median two higher claims, for $500,000 and $1,314,965, 

but we have not shown them in the depicted figure. The data showed some clumping of claims at $10,000, $42,500 

and $75,000, presumably because consumers may align claim amounts to the thresholds at which filing fees change. 

See section 4.9 for more details on how the fee schedules applicable during the period of our review varied by claim 

amount. Finally, this calculation excludes cases in which no specific claim amount was identifiable. 

187 This excludes 64 cases for which no specific claim amount was identifiable. 

188 This excludes 4 cases for which no specific claim amount was identifiable. 

189 This excludes 3 cases for which no specific claim amount was identifiable. 
81 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

FIGURE 14: CLAIM AMOUNTS IN CASES WITHOUT DISPUTED DEBT AMOUNTS 2010-12 

Figure 15 shows a more detailed breakdown for the claims in Figure 14 at the lower end of this 

range. Over three years, therefore, there were 23 claims seeking damages of $1,000 or less, for 

an annual average of just over eight such claims. Of these 23, some 14 were for exactly $1,000, 

meaning that there were nine such cases over three years seeking under $1,000. 

FIGURE 15: SMALLER CLAIM AMOUNTS IN CASES WITHOUT DISPUTED DEBT AMOUNTS 2010-12 
82 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

The Chamber of Commerce, citing Justice Breyer, offers one possible basis for a “small-dollar” 

threshold: an example of a “small damage claim” would be “the value of only a defective 

refrigerator or television set.”190 The average price of a TV set purchased in Q2 2012 was 

$1,224.191 Using that number as a threshold for “small-dollar” claims, there were under 19 cases 

on average each year in which there was a “small dollar” debt dispute. Looking only at cases 

without disputed debt amounts, but only affirmative claim amounts, there were just over 8 cases 

each year on average that were “small dollar.” 

4.5 Non-collection arbitrations 

4.5.1 Incidence by company 

The figures below show the total and annual number of non-collection cases for the most 

frequently named companies in these arbitrations. For each of the three markets, we have 

included the ten most frequently named companies.192 In some cases, the same company shows 

up in more than one figure. These data reflect arbitration filings only; they do not represent 

resolved arbitrations or arbitration awards. Given the overall count of these disputes relative to 

the customer populations of the various companies, the differences among the companies in 

terms of numbers of arbitrations may not be statistically significant. We provide the data in 

order to show the number of disputes faced by the companies that are most often parties to 

these disputes. 

Figure 16 provides data that covers 469 individual credit card arbitration filings over three 

years. Company 1 was named in 183 of these; at least one of companies 2 through 10 was named 

in the remaining 286. The same ten companies were parties in more than 350 federal court 

 

190 Allied-Bruce Terminix Cos. v. Dobson, 513 U.S. 265, 281 (1995), cited in Chamber RFI Comment at 11-12. 

191 Time reported that in Q2 2012, the average price paid for a new TV in the US was $1,224. See

http://business.time.com/2012/08/01/tv-prices-shrink-yet-average-tv-purchase-costs-more. 

192 We have counted all disputes naming a member of the relevant corporate family. 
83 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

credit card filings for the same time period, of which more than 50 were class action filings.193

Company 1 accounted for less than 15% of the federal court filings, although it faced a number of 

class filings in court and no class filings in arbitration. The other nine companies, however, were 

parties in more federal court filings than in AAA non-debt collection arbitration filings for this 

product market.

FIGURE 16: NON-COLLECTION CREDIT CARD ARBITRATIONS BY COMPANY 2010-12 

 

193 See section 4.2.3. 
84 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

FIGURE 17: NON-COLLECTION CHECKING ACCOUNT ARBITRATIONS BY COMPANY 2010-12 

FIGURE 18: NON-COLLECTION PAYDAY ARBITRATIONS BY COMPANY 2010-12 

4.5.2 Claim types and claim subject matters 

To date, there has been relatively little data available about the kinds of claims that consumers 

bring in arbitrations. Some public data give some disaggregation by subject matter of consumer 

arbitrations generally, but there is nothing available that would let a reviewer isolate cases in 
85 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

particular consumer financial product markets, let alone disaggregate those cases into different 

types. 

Within each product market, we used a number of different data fields to capture the type of 

claims involved and their subject matter (or matters). For all arbitrations, we allowed for an 

identification of the basic claim type(s) involved, such as contract law claims, federal statutory 

claims, state statutory claims, fraud, and tort.194 This data is shown in Figures 19 through 21. If a 

case involved claims under a federal statute, we also recorded the specific statute involved.195

This data, too, is shown in Figures 19 through 21. Each case may have raised more than one type 

of claim, but no single case was counted twice in any specific claim category. (Thus, a case that 

raised two FDCPA claims and one FCRA claim would show up once in the federal statutory 

count, once in the FDCPA count, and once in the FCRA count.) Thus, the percentages shown for 

the different claim types do not sum to 100% for any given product. 

 

194 We do not double-count common law fraud under tort as well. “Tort” as used here excludes fraud claims. 

195 The federal statutes listed in the credit card cases are the Fair Debt Collection Practices Act (“FDCPA”), the Fair 

Credit Reporting Act (“FCRA”), the Fair Credit Billing Act (“FCBA”), the Fair and Accurate Transactions Act 

(“FACTA”), the Equal Credit Opportunity Act (“ECOA”), the Communications Act, the Alternative Mortgage 

Transactions Parity Act (“AMTPA”), the Telephone Communications Privacy Act (“TCPA”), the Truth in Lending Act 

(“TILA”) and the Electronic Financial Transactions Act (“EFTA”). The FCBA is actually codified as part of TILA, but 

for clarity we listed FCBA claims separately from other TILA claims. The checking account cases do not add any new 

statutes. The payday cases add the Credit Repair Organizations Act (“CROA”). 
86 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

FIGURE 19: CONSUMER CLAIM TYPES IN NON-COLLECTION CREDIT CARD ARBITRATIONS 2010-12 

Note: 0% entries in Figure 19 reflect a single instance of the claim.
87 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

FIGURE 20: CONSUMER CLAIM TYPES IN NON-COLLECTION CHECKING ACCOUNT ARBITRATIONS 

2010-12 

FIGURE 21: CONSUMER CLAIM TYPES IN NON-COLLECTION PAYDAY ARBITRATIONS 2010-12 
88 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

Finally, we also attempted to characterize each dispute by the core subject matter of its claims. 

We used a maximum of three such subject matter fields for each dispute. Our intention was to 

capture the essence of the dispute, within an objectively applied dispute typology.196 The 

typologies were not identical for each product market. This data is shown in Figures 22 through 

24. (In addition to the subject matter fields we defined, we also used two residual categories for 

each product market: “other” and “not enough information.”) 

For credit card disputes, the listed subject matters in Figure 22 are: substantive debt dispute; 

debt collection process (harassment); debt collection process (other); payment allocation; 

payment posting; interest rate promotions; balance transfer promotions; add-on products; 

interest rates/charges; late fees; account opening issues; account closing issues; credit line 

issues; unauthorized account use; merchant-related error; credit reporting; disclosure of private 

information; discrimination; improper set off; and other fee issues. As discussed in Appendix B, 

our subject matter typology for credit card cases is broader than this, but these were the core 

subject areas within that typology that were raised by these cases. It is notable that while these 

cases did not meet our formal ‘debt collection’ definition, the clear majority (346 out of 515, or 

67%) still included substantive disputes over the amount of debt owing. In fact, although almost 

all non-collection credit card disputes were filed by consumers or as mutual submissions, a 

substantial share (131 out of 515, or more than 25%) of these disputes raised only substantive 

debt issues—and no non-debt claims at all. (As noted above, therefore, our formal definition of 

debt collection arbitrations may have resulted in our undercounting the true number of such 

arbitrations.) 

 

196 Our subject matter categories are to some extent subjective. Clearly, it is possible to devise other typologies that 

are more or less disaggregated. We derived ours from a review of complaints filed on electronic litigation databases 

and by consultation with Bureau experts in specific fields. Our methodology is explained in greater detail in Appendix 

B. 
89 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

FIGURE 22: CREDIT CARD NON-COLLECTION ARBITRATION SUBJECT MATTERS 2010-12 

Notes on Figure 22: 

1. Entries showing 0% reflect either one or two cases. 

2. In 17 of the 32 “Debt collection process (harassment)” disputes, the consumer also brought claims refuting the 

amount of debt claimed, but that information is not reflected in the substantive debt dispute entry. Similarly, in 

37 of 42 “Debt collection process (other)” disputes, the consumer also brought claims refuting the amount of debt 

claimed, and that information is not reflected in the substantive debt dispute entry. These records were not 

characterized as substantive debt disputes due to process limitations. 

For checking account disputes, the listed subject matters in Figure 23 are: debt collection 

process (harassment); overdraft ordering/timing; other overdraft issues; account closing issues; 

account opening/reopening issues; deposits—process issues; deposits—other errors; authorized 

payments—process issues; authorized payments—other errors; improper set-off; unauthorized 

recurring payments; disclosure of private information; other unauthorized use; credit reporting; 

and discrimination. As with credit card, our typology was broader than this, but these were the 

core subject areas raised by these cases. 

 
90 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

FIGURE 23: CHECKING ACCOUNT NON-COLLECTION ARBITRATION SUBJECT MATTERS 2010-12 

For payday loan disputes, the listed subjects in Figure 24 are: substantive debt dispute; debt 

collection process (harassment); rollover issues; improper loan duration; failure to 

disclose/follow core terms; 197 failure to disclose/follow other terms; unlicensed lending activity; 

interest/fees above state cap; loan amount above state cap; improper access to DDA (ACH); 

improper access to DDA (check); product mischaracterization; other unfair loan practices; 

Credit Service Organizations (CSO)—state law issues; and CSO—federal law issues. Once again, 

our typology was broader than this, but these were the core subject areas raised by these cases. 

For non-collection arbitrations that did not raise substantive debt disputes, we have not 

generally identified recurring pleading forms across cases. We have identified 18 payday 

disputes that were essentially the same, each involving the same consumer counsel in 2010. 

These cases were previously all joined in a single court action that was dismissed in favor of 

arbitration upon the defendant’s motion. They were then refiled in arbitration. 

 

197 We defined core terms to be finance charge and loan duration. 
91 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

FIGURE 24: PAYDAY LOAN NON-COLLECTION ARBITRATION SUBJECT MATTERS 2010-12 

Note: In six of the seven “debt collection process (harassment)” disputes, the consumer also brought claims refuting 

the amount of debt claimed, but that information is not reflected in the substantive debt dispute entry because of 

limitations in our coding hierarchy. 

For non-collection arbitrations that included substantive debt disputes (a category 

overwhelmingly made up of credit card cases198), we have not yet identified recurring patterns in 

the cases that raise only debt issues. In the cases that raised debt disputes and non-debt 

affirmative claims, however, we did see some recurring pleading forms used by consumer 

counsel across some of those cases. 

 

198 There are 359 non-collection arbitrations that include substantive debt disputes. Thirteen of these are payday 

cases. The remaining 346 are credit card cases. 
92 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

4.6 Debt collection arbitrations

4.6.1 Incidence 

In light of NAF’s demise and the AAA’s continuing moratorium on company-filed debt collection 

arbitrations, the Bureau noted in its 2012 RFI that we were unaware of recent practice by 

covered persons to bring claims—and in particular debt collection claims—against consumers in 

arbitration. No RFI commenter specifically disputed this observation.199 The number of 

company-filed debt collection claims—an annual average of 49—in the AAA Case Data was 

consistent with the Bureau’s view.200 Adding consumer-filed and mutually-submitted debt 

collection arbitrations to the total count, we identified 522 debt collection arbitrations across 

three years, or an annual average of 174 such filings. Across three years, all but four of these 

were credit card disputes, meaning that there were an annual average of 173 credit card debt 

collection disputes. 

Although the 518 credit card debt collection disputes were the biggest single category in the AAA 

Case Data, they represented a negligible share of credit card debt collection activity overall. 

Although comprehensive national data on credit card collection litigation is not generally 

available, our review of small claims court cases offers some indication of how rare debt 

collection arbitration is at this point. In Philadelphia County, in 2012, in small claims court, and 

focusing only on a group of 10 issuers (rather than all issuers and debt buyers of credit card 

debt), we identified more than 2,200 collection cases, more than four times as many credit card 

debt collection disputes as there were in AAA debt arbitration for the entire country over three 

 

199 The American Bar Association, the Consumer Bankers’ Association, and the Financial Services Roundtable 

confirmed that “since July 2009 arbitration has not been used on a large scale for consumer debt collections initiated 

by companies.” ABA/CBA/FSR RFI Comment at 7, 16. 

200 Almost all company-filed claims were debt collection arbitrations. For credit card disputes, 145 out of 153 

company-filed cases were debt collection arbitrations. This was consistent with prior research concluding that 

company claims in arbitration seek payment for goods delivered or services rendered and for “usually very little else.” 

Drahozal & Zyontz, Empirical Study, supra note 140, at 872; see also Drahozal & Zyontz, Creditor Claims, supra note 

140, at 84 (noting that of the 61 company-filed consumer arbitrations to reach an award in their sample, only 3 were 

likely not classifiable as debt collection cases). 
93 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

years.201 Despite the relative rarity of debt collection arbitration, however, a slight majority of 

the credit card disputes in the AAA Case Data were debt collection arbitrations. 

Figure 25 shows the number of credit card debt collection arbitrations, broken out by the ten 

companies that recur most frequently in the AAA debt cases that we reviewed.202 As with the 

company data on non-collection arbitration filings, the variation here may not have been 

significant in light of the size of the overall product markets. One company, however, accounted 

for more than two and a half times the arbitration proceedings of the other nine companies, 

averaging 118 debt collection arbitrations per year. The drop-off to the remaining companies 

was precipitous: the fifth company on the list averaged only two debt collection arbitrations per 

year, and every company after that averaged only one. 

FIGURE 25: CREDIT CARD DEBT COLLECTION ARBITRATIONS BY COMPANY 2010-12 

 

201 See section 5.3 for detailed data on Philadelphia County small claims court cases. 

202 We have not included checking account or payday debt collection cases because there are only four across the 

three years. 

0 100 200 300 400

Company 27

Company 5

Company 6

Company 26

Company 6

Company 7

Company 3

Company 4

Company 2

Company 1

2010

2011

2012
94 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

We also note that a relatively high share of the debt collection cases were recorded on claim 

forms as being filed by consumers or mutually submitted. Of the 518 credit card debt collection 

arbitrations, more than 72% showed as mutually submitted or consumer-filed. (Most of these 

were consumer-filings, but nearly 9% were recorded as mutual submissions.203) In addition, 

more than 64% of the credit card debt collection cases recorded as filed by consumers or 

mutually submitted (237 out of 373) raised only substantive debt collection issues, and no nondebt claims at all. 

To our knowledge, prior studies covering consumer-filed AAA arbitrations have not previously 

noted consumers bringing debt collection disputes to arbitration. We may look further into 

possible explanations for this apparent phenomenon. How and when such cases are resolved 

may provide us with additional information. We may also confer with some of the counsel 

involved. As we note below, some firms that represent consumers in these cases show a pattern 

of using common pleading forms across cases. 

4.6.2 Subject matter and claims 

Figure 26 shows the distribution of claim types made by consumers in the debt-collection cases. 

It follows the same format as Figures 19 through 21. Any one case may have given rise to more 

than one claim, but no case recorded the same type of claim twice. We limited this to credit card 

cases only because there were so few debt collection cases for the other two products. 

As noted above, some debt collection arbitrations contained consumer claims or counterclaims 

that went beyond disputing the substance of the alleged debt. Over a quarter of the credit card 

debt collection arbitrations included non-debt affirmative consumer claims. Almost all of these 

non-debt claims were made in debt collection disputes filed by consumers or that were mutual 

submissions.204

 

203 Consumers were recorded as filing 67% of the credit card non-c0llection cases that include substantive debt 

disputes. The remaining 33% of this same category were recorded as mutual submissions. 

204 Consumers made non-debt counterclaims in only around 3% of company-filed debt collection arbitrations. By 

contrast, they made non-debt claims in 36% of the consumer-filed debt collection arbitrations and in 42% of mutually 

submitted debt collection arbitrations. 
95 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

FIGURE 26: CONSUMER CLAIM TYPES IN CREDIT CARD DEBT COLLECTION ARBITRATIONS 2010-12 

Note: 0% entries in Figure 26 reflect a single instance of the claim.

Figure 27 shows the subject matter of non-debt claims for credit cards.205 (We excluded 

substantive debt disputes from Figure 27 because, by definition, they were present in all these 

cases. In addition, we do not provide a separate break-out for payday and checking account 

disputes because almost all the debt collection arbitrations concerned credit cards.) In collection 

cases that raised affirmative non-debt claims as well as substantive debt disputes, we saw some 

recurring pleading forms used by consumer counsel across a share of those cases, just as we did 

for non-collection cases raising debt and non-debt disputes. There were more limited 

indications of common patterns across the debt collection cases in which the only claims 

concern the amount of debt owed. 

 

205 We use “non-debt claims” expansively to include all affirmative claims made by the consumer. That includes 

FDCPA claims, unless the only basis of the FDCPA claim is that the amount of debt claimed is incorrect. If we 

identified a consumer FDCPA claim that lacked any further specification of the nature of the claim, we assumed for 

purposes of the subject matter typology that the claim related to the amount of debt asserted and did not otherwise 

challenge the process of collection. Absent that assumption, the debt collection subject categories in Figure 27 (and 

the debt collection process categories in Figure 22) would be larger. 
96 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

FIGURE 27: CREDIT CARD DEBT COLLECTION ARBITRATION SUBJECT MATTERS 2010-12 

Note: Entries showing 0% reflect either one or two cases. 

4.7 Which consumers bring arbitrations? 

We are not aware of scholarship attempting to characterize the demographics of consumers 

involved in consumer arbitrations. In the area of employment arbitration, however, scholars 

have addressed demographic issues in a number of ways. There has been some work to try and 

determine the income level of employee claimants in arbitration.206 There has also been work to 

address outcome variations across arbitrations filed by highly paid employees and lower paid 

employees.207 A number of studies have found significant variations in employment arbitration 

 

206 See Hill, Due Process at Low Cost, supra note 169, at 794 (estimating that 43.5 % of employee claimants in an 

AAA sample of 200 awarded cases earned between $14,000 and $60,000). 

207 See Theodore Eisenberg & Elizabeth Hill, Arbitration and Litigation of Employment Claims: An Empirical 

Comparison, DISP. RES. J., Nov. 2003-Jan. 2004, at 48 (noting an employee “win rate” of 64.9% in AAA employment 

arbitrations that involve higher paid employees, and 39.6% in those involving lower paid employees). Building on this 

work, Choi and Eisenberg note that securities arbitration claimants have win rates between these levels. As an issue 

for future research, they comment that “this pattern may suggest that increased resources are associated with 

claimant arbitration success.” Stephen Choi & Theodore Eisenberg, PUNITIVE DAMAGES IN SECURITIES ARBITRATION: AN 

EMPIRICAL STUDY 535 (2010). Alexander Colvin has identified a 19.7% employee win rate in a data set of AAA 

employment arbitrations for which the “large majority” did not involve highly paid employees. See Alexander Colvin, 
97 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

outcome according to whether the employee claimants were relying on arbitration clauses in 

individually negotiated contracts—which was likely to be the case when the claimant was a 

manager or executive—or instead on clauses in personnel manuals—which was likely to be the 

case for other employees.208 More recently, some work has asserted that a claimant’s gender 

makes a difference to employment arbitration outcomes.209 These various studies suggest that 

there may be value in trying to understand which consumers bring arbitrations in the consumer 

financial area. 

To address this issue, we constructed a location-based income profile of U.S. credit 

cardholders.210 To do this, we identified census tract data from a representative sample of U.S. 

credit cardholders using data from the Bureau’s Consumer Credit Panel, which provides a 

nationally representative, random sample of de-identified credit records procured from a large, 

national consumer reporting agency. Using the Census, we then obtained median income data 

for all the census tracts involved.211 (We do not have actual income data for any individual from 

the credit panel.) This provides an estimate for the percentage of U.S. credit cardholders that 

live in census tracts within certain median income ranges. This background income profile is 

shown in the darker green columns in Figure 28. 

 

Empirical Research on Employment Arbitration: Clarity Amidst the Sound and Fury?, 11 EMPLOYEE RIGHTS &

EMPLOYMENT POL’Y J. 418-19 (2007). A later Colvin study shows a similar win rate for analogous AAA employment 

arbitrations at 21.4%. See Colvin, supra note 169, at 6. This later study also shows win rates increasing with salary 

levels. For employees with salaries below $100,000, win rates were 22.7%. They rose to 31.4% for employees with 

salaries between $100,000 and $150,000. For employees salaried at above $150,000, win rates were 42.9%. See id. at 

10-11. 

208 See Lisa B. Bingham, An Overview of Employment Arbitration in the United States, N. Z. J.INDUS. RELS. at 13, 16 

(June 1998). The AAA classifies employee arbitrations according to the type of underlying agreement: individually 

negotiated or in employer promulgated agreements. See Colvin, supra note 207, at 415. Bingham’s results were that 

employees won 68.8% of the former type of arbitrations, but only 21.3% of the latter type. See id. 

209 See Lipsky et al., supra note 139. This study reports that the gender of the claimant and the claimant’s counsel had 

a “significant effect” on award size. The gender of the arbitrator did not. See id. at 314. The authors acknowledge that 

numerous explanations are possible for this observed effect, including discrepant settlement rates, lower seniority of 

female claimants, and greater seniority of male counsel. See id. at 320-22. 

210 Appendix B provides more detail about our methodology. 

211 For 309 Census tracts, covering around 0.12% of the data relating to the overall credit card population, we had no 

reported median income. 
98 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

We then constructed a location-based income profile of 420 consumers in non-debt collection 

credit card arbitrations.212 (We focused, first, on non-debt collection cases, but, as we discuss 

below, we also covered debt collection cases.) To build this profile, we determined a census tract 

location for filing consumers. Once again, we then used the Census to determine median income 

for that census tract. As a result, we do not have any actual income data for any consumer that 

filed an AAA arbitration. We show this information in the lighter green columns in Figure 28. 

By plotting one distribution against the other, we were able to compare the median income of 

the locations involved in consumer arbitrations in the AAA Case Data with the median income of 

the locations of credit cardholders generally. Figure 29 shows the difference between the two 

distributions. Overall, we saw that locations with incomes below $50,000 were less likely to 

account for credit card arbitrations than for credit cardholding overall. Locations with incomes 

above that level sometimes accounted for more credit card arbitrations than for credit 

cardholding overall, but not consistently so. 

 

 

212 We were not able to associate census tract-based median income information for all of the 515 credit card nondebt collection cases. In some cases, the AAA case records did not provide sufficient location information. The 

analysis here, therefore, covers the 420 cases for which we were able to obtain such information. 
99 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

FIGURE 28: MEDIAN INCOME OF CREDIT CARDHOLDER LOCATIONS AND LOCATIONS OF CONSUMERS 

INVOLVED IN NON-COLLECTION CREDIT CARD CONSUMER ARBITRATIONS 2010-12 

FIGURE 29: PERCENTAGE DIFFERENCES BETWEEN DISTRIBUTIONS IN FIGURE 28 
100 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

We also reviewed all credit card arbitrations, including debt collection arbitrations. Such 

disputes might be expected to originate in poorer locations relative to the distribution of credit 

cardholders overall. But even including all credit card arbitration filings in this analysis—which 

are primarily debt collection disputes—we see a similar pattern. Consumers in such 

arbitrations—even when the disputes involve debt claims—were, relative to the cardholding 

population overall, disproportionally located in areas above $35,000 in average income. 

Locations with incomes above that level sometimes account for more credit card arbitrations 

than for credit cardholding overall, but not consistently so. We show this analysis in 

Appendix D. 

We were not able to follow this same approach for checking account and payday loan 

arbitrations because we do not have data that provides a proxy for the income level of users of 

these products by geographic distribution. We can construct distributions for the income level of 

areas that originate such arbitrations, but we can only compare these to the background 

distribution of income levels for all areas. As a result, we cannot control for the income level of 

the consumers that use these two products in the manner that we can for credit cards.213

The AAA Case Data, therefore, may suggest that credit cardholders who arbitrate will tend to 

exceed a certain income threshold more than credit cardholders generally exceed that same 

threshold. It is important to note, however, that we cannot tell from our data whether or not the 

same was true for consumers in litigation.214 Our data were not sufficient to address the issue 

comparatively. In addition, as noted in section 4.2.1, we worked from a relatively small set of 

arbitrations when compared to the overall credit cardholding population, which underscores the 

need for caution in interpreting this demographic data. 

 

213 Appendix D also contains the checking account and payday distributions. As might be expected, payday 

arbitrations are disproportionately filed from lower-income zip codes, which may reflect that lower-income 

Americans are the primary users of this product. Conversely, checking account arbitrations are disproportionately 

filed from zip codes with a median income of $50,000 to $74,999 in average income, which may reflect the higher 

income level of checking account users. (As discussed in the appendix, however, the distribution regarding checking 

account arbitrations contained the least number of data points—56.) 

214 Class litigation that results in an automatic distribution of relief to affected consumers, however, stands to provide 

some benefit to all income and demographic segments represented in the affected customer base. 
101 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

4.8 Prior litigation 

In some cases, the case record for a dispute in the AAA Case Data provides a clear indication of 

prior court proceedings. We discuss the available record on prior court litigation in this section. 

4.8.1 Individual disputes 

In credit card debt collection disputes, we were able to identify evidence of prior court 

proceedings in 97% of such cases. This is unsurprising given how we have defined debt 

collection arbitrations. In these cases, prior collection proceedings were the norm; in effect, the 

debt collection arbitration took the place of the preceding debt collection litigation. 

Furthermore, leaving aside the mutually submitted debt collection cases, we have identified only 

eight debt collection cases in which there was a clear record that the company was the party to 

invoke arbitration in the prior litigation, indicating that in many of the debt collection cases the 

consumer was the party ending the litigation in favor of arbitration.215 Although this may be a 

common pattern in the AAA Case Data, our Philadelphia County small claims court results gave 

some indication of how rare this consumer response to collection litigation may be overall.216

There were more credit card collection cases filed by just two issuers in that county for 2012 

alone than for all three years of credit card data in the AAA case records from 2010 through 

2012. 

In non-collection cases, by contrast, an indication of prior litigation is the exception, not the 

rule. We were able to identify from the AAA case records only 78 such cases, or 11% of the 718 

non-collection arbitrations. In 19 of these 78 cases, the consumer appeared to have been the 

party to invoke arbitration as to the prior court proceeding. In the remaining 59 cases, the 

available indications were that the company was the party invoking arbitration as to the court 

proceeding. 

It is important to note, however, that these results were based only on a review of the AAA 

electronic case record. We have not attempted to identify a preceding federal or state court case 

 

215 It is possible that in the absence of the moratorium, the company might have filed such disputes in arbitration 

directly. 

216 See section 5.3. 
102 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

using electronic litigation case data.217 Our data, therefore, may show false negatives on this 

point: there could be additional court proceedings that were not viewable from the arbitration 

record alone. In addition, we do not know how frequently companies move in court to invoke 

arbitration in individual proceedings and thus cannot assess the frequency with which such 

actions by companies lead to consumer-initiated arbitration cases. 

4.8.2 Class disputes 

A number of RFI commenters suggested that the Bureau compare the benefits to consumers 

from arbitration to the benefits from class action litigation.218 In fact, the value of such a 

comparison is an area of relative agreement across RFI commenters, including consumer groups 

and members of the plaintiffs’ bar. Some commenters noted that there is limited empirical data 

in this area.219 

The comparison can potentially be made along a number of different metrics, although the lack 

of small-dollar disputes in the AAA arbitration caseload may mean that at least some “apple to 

apple” outcome comparisons may not be available. The presence of prior class litigation 

proceedings, however, provides one point of potential comparison. 

In damages class actions, applicable rules generally entitle potential class members to “opt out” 

of any proposed class.220 Unless a potential class member opts out, he or she will be bound by 

the resolution of the dispute. Potential class members, therefore, generally receive individual 

notice of their potential inclusion in a certified class, and are thereby given the opportunity to 

opt out.221

 

217 As several commenters pointed out, state court records are not consistently available across all state court 

jurisdictions via electronic means. There is no analog to PACER—the federal court record database—that covers all 

state courts. 

218 ABA/CBA/FSR RFI Comment at 3-4, 8 (stating that the Bureau should study whether “class actions provide 

meaningful benefit to individual consumers as compared with individual arbitration”). 

219 ABA/CBA/FSR RFI Comment at 8. 

220 See FED. R. CIV. P. 23(c)(2)-(3). 

221 See id. 
103 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

In many cases, however, notice will not be provided to potential class members until the parties 

have reached a proposed settlement. As a result, many class action notices will also include 

notice of a proposed settlement, laying out two broad options. A potential class member can take 

the offered class settlement terms, which will extinguish his or her right to bring individual 

proceedings on the settled claims. Alternatively, he or she can opt-out of the class action and the 

proposed settlement, and thus be free to pursue an individual case if he or she wishes to do so. 

Such “opt outs” are not bound by the terms of the class settlement releases. They receive no 

relief from the compensatory terms of the damages settlement. As they are not bound by the 

releases, they are free to press their own claim individually against the settling company. To 

preserve that right, courts that approve a class action settlement will typically publish a list of 

individual opt-outs by name. 

Some class action settlements will occur in situations in which the individual consumer who 

opts out can bring a claim in arbitration.222 Class proceedings will toll the applicable statute of 

limitations for putative class members to bring individual actions outside the class litigation.223

The class proceeding may have brought forward certain evidence bearing on the claims in the 

case. It may also have identified and tested certain legal theories, and it may have identified 

certain conduct as potentially actionable. In short, a certain amount of work will already have 

been done for any consumer who may have a preference for a potential arbitrated outcome over 

the proposed class settlement outcome. 

Using electronic case databases, as well as blogs and websites that track class action settlements, 

we have identified eight class action damages settlements that meet the following criteria: first, 

final approval of the settlement took place from the latter half of 2009 or later; second, the 

contract at issue in the class action contained an arbitration clause that offered AAA as an 

arbitral forum; and third, the class action involved one of the three products covered by our 

existing AAA Case Data review. (Other class action settlements may also meet these criteria, but 

these are the ones we have identified to date.) Our criteria were intended to locate cases for 

 

222 This will generally only be the case where, for whatever reason, the defendant has either opted against invoking 

the arbitration clause in the class action or tried to do so and been unsuccessful in that effort. Had the defendant 

successfully invoked the arbitration clause as to the class action, there would be no class action settlement in court. In 

all eight of the cases identified below, one or more defendants attempted to invoke an arbitration clause but were not 

fully successful in that effort. 

223 See, e.g., Crown Cork & Seal v. Parker, 462 U.S. 345, 352 (1983). 
104 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

which we would be able to tell if consumers opted out and brought a AAA arbitration instead of 

applying for or receiving benefits under the class action settlement. In addition to the AAA Case 

Data for 2010 through 2012, we also had some AAA data for 2008, 2009 and 2013 that allowed 

us to check for potential overlap.224 Finally, none of the cases we identified involved presettlement notice to the class. Had they done so, opt-outs might have filed arbitrations earlier 

than the period of our review. 

For all the cases below, we have looked through all three years of the AAA Case Data as well as 

the 2013 AAA data to count the number of consumers who opted out and pressed the same 

claim against one or more of the relevant defendants in arbitration before the AAA. For one 

case, for which notice was sent in November 2007, we also check AAA data for 2008 and 2009. 

Thus far, we have identified three arbitrations in which an opt-out from one of these cases may

have made the same claim in AAA arbitration against a party within the scope of the applicable 

settlement.225 No other opt-out from one of these cases appears to have filed the same dispute 

before the AAA. A total of 3,605 individuals opted out of these settlements. More than 13 million 

class members made claims or received payments under these settlements. Total payments or 

debt relief to the classes are in excess of $350 million, exclusive of attorneys’ fees and the value 

of injunctive relief. Further details on each of these class cases are provided below. 

 

224 Because the detailed AAA Case Data were available from the beginning of 2010, we set late 2009 as the cut-off for 

final approval. For cases settled on that schedule, opt-outs bringing AAA arbitrations after final approval should 

generally be visible in the detailed 2010-12 case records. 

225 We cannot be sure that these three opt-outs, in fact, pressed the same claim in arbitration. For two of these optouts, the potentially overlapping AAA arbitration was filed before 2010. For that period, we lack detailed case records, 

but the available AAA data record arbitrating parties matching two opt-outs. In addition, the relevant AAA 

arbitrations involved companies covered by the scope of the applicable class settlement. For these two opt-outs, 

therefore, it is possible that they were involved in follow-on AAA arbitration, but we lack the information to say 

whether that was the case. For the third opt-out, there is a match in the AAA case records and that arbitration 

involves the company that reached the relevant class settlement. However, even though we have the case record for 

this arbitration, the consumer’s claims are stated only in very general terms. It is possible that these general terms 

were intended to capture one or more of the claims covered by the prior settlement, but we do not have enough 

information to say whether that was the case. 
105 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

IN RE CURRENCY CONVERSION FEE ANTITRUST LITIGATION 

The plaintiffs challenged foreign currency and other foreign transaction action fees imposed on 

payment card transactions.226 The defendants were Visa, MasterCard, and a number of large 

credit card issuers. Notice of the proposed settlement was sent to potential class members in 

November 2007.227 The settlement was “claims-made,” meaning that consumers had to submit 

claims to secure payments under the settlement.228 More than 10 million consumers submitted 

claims under the settlement. (Of these, more than 7 million consumers requested a flat fee 

payment of $25, which was subsequently reduced to $18 because of claim volume. Another 3 

million consumers submitted more detailed claim materials, which entitled them to a 

significantly larger recovery.229) Overall, the settlement distributed around $263 million to 

consumer members of the settlement class.230 The court entered final approval of the settlement 

in 2009, at which time the court excluded 2,878 individuals from the damages class.231 Several 

of the defendants did not have AAA arbitration clauses during some portion of the relevant 

period, but most of the defendants had clauses up until the end of 2009, and one had a clause 

through the entire period. In addition, the settlement released all U.S. Visa and MasterCard 

members, not just the defendants, so the potential for arbitration was widespread.232 

HOOPER V. ADVANCE AMERICA 

The plaintiffs alleged violations of Missouri’s Merchandising Practices Act and Missouri’s 

payday loan statute.233 An arbitration clause accompanied the payday loan contracts provided by 

 

226 In Re Currency Conversion Fee Antitrust Litig., MDL Docket No. 1409 (S.D.N.Y., filed before J.P.M.L. Apr. 13, 

2001). 

227 See Decl. of Edward J. Radetich, Jr., CPA Regarding the Dissemination of Notice to the Class ¶ 7 (Jan. 28, 2008). 

228 See Aff. of Edward J. Radetich, Jr., CPA Regarding Claims Administration at 5 (Sept. 14, 2011). 

229 See id. at 4, 6. 

230 See id. at 21. 

231 See Final Judgment & Order of Dismissal, Ex. A (Nov. 4, 2009). 

232 See id. ¶ 9. 

233 Hooper v. Advance America, Cash Advance Centers of Missouri, Inc., No. 08-cv-04045-NKL (W.D. Mo. filed Mar. 

10, 2008). 
106 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

the defendant, and AAA was an arbitral forum offered in the contract. In July 2010, notice of a 

proposed settlement was mailed to potential class members.234 The court approved the 

settlement in November 2010, identifying 316 consumers who opted out of the settlement 

class.235 There were approximately 10,400 timely claims submitted. Claimants shared 

approximately $520,000 in cash payments, and between $3.8 million and $9 million in debt 

forgiveness.236

HOFFMAN V. CITIBANK 

The plaintiffs alleged that Citibank retroactively increased interest rates on certain customers’ 

outstanding credit card balances in violation of several California laws.237 Citibank administered 

the settlement, and provided notice of the proposed settlement via statements.238 The court 

approved the proposed settlement in December 2010, identifying 140 opt-outs.239 At that point, 

the claims period was still open, so we have not been able to identify the final number of claims 

or the amount paid to class members. Class members were entitled to payments of $18, subject 

to pro rata decrease if there was sufficient claims volume.240 At the time of final approval, when 

the claims period had several months to run, there were 12,500 claims, which suggests that the 

 

234 See Decl. of Jennifer M. Keough Regarding Notice Dissemination in Support of Plaintiffs’ Unopposed Motion for 

Final Approval of Class Action Settlement ¶ 3 (Oct. 27, 2010), ECF No. 65. 

235 See Order and Final Judgment, Ex.1 (Oct. 27, 2010), ECF No. 68. 

236 The $520,000 is an estimate based on the following amounts: a $2 million cash fund, less $950,000 in attorney 

fees and costs, $2,000 in service fees to class representatives, $398,800 to cy pres, and the fund was offset by 

$127,810 for dollar-to-dollar debt forgiveness for one subclass. See id. at 8; Memorandum in Support of Motion for 

Cy Pres Disbursement and Notice of Final Accounting at 2 (Dec. 29, 2010), ECF No. 70. 

237 Hoffman v. Citibank (South Dakota), N.A., No. 06-cv-00571-AG-MLG (C.D. Cal. filed Jun. 21, 2006). 

238 See Supp. Decl. of Deborah L. Thompson re Claims Administration in Support of Final Approval of Settlement ¶ 2 

(Dec. 15, 2010), ECF No. 86. 

239 See Settlement Order and Final Judgment ¶ 6 (Dec. 22, 2010), ECF No. 95. 

240 See Settlement Agreement at 10 (Apr. 22, 2010), ECF No. 61. 
107 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

class received over $225,000.241 Citibank has maintained an arbitration clause providing for 

AAA arbitration throughout the relevant period. 

KUCAN V. ADVANCE AMERICA 

Plaintiffs alleged various violations of North Carolina law by a payday lender. A proposed state 

class settlement was reached in September 2010.242 Notice was mailed in November 2010.243 In 

early 2011, the court entered final approval of the settlement, identifying 19 opt-outs.244 Advance 

America’s loan contract included an arbitration clause that permitted AAA-administered 

arbitration. This was not a claims-made settlement—payments were made automatically to all 

class members. Approximately 135,000 class members shared approximately $11.5 million.245 

HAGER V. CHECK INTO CASH 

Paralleling the claims in Kucan, plaintiffs alleged various violations of North Carolina law by a 

payday lender.246 The arbitration clause at issue allowed AAA to serve as the arbitral forum. A 

proposed settlement was reached in December 2010.247 Notice was sent in February 2011.248

Final approval was entered in April 2011.249 Ten consumers opted out of the settlement class.250

 

241 See Supp. Decl. of Deborah L. Thompson re Claims Administration in Support of Final Approval of Settlement ¶ 3 

(Dec. 15, 2010), ECF No. 86. 

242 Kucan v. Advance America, Cash Advance Centers of North Carolina, Inc.; Advance America, Cash Advance 

Centers, Inc.; and William M. Webster, IV, No. 04-CVS-2860 (N.C. Super. filed Jul. 26, 2004). 

243 See Report by Settlement Administrator ¶ 3 (Jan. 18, 2011). 

244 See Status Report & Mot. Requesting Entry of Final Judgment ¶ 2 (Jan. 18 2011). 

245 See Aff. of Settlement Administrator ¶¶ 2-3 (Jun. 26, 2013). 

246 Hager v. Check Into Cash of North Carolina, Inc. et al., No. 04-CVS-2859 (N.C. Super. filed Jul. 27, 2004). 

247 See Settlement Agreement (Dec. 10 2010). 

248 Interim Status Report & Mot. Requesting Entry of Final Judgment ¶ 1 (Mar. 10, 2011). 

249 See Settlement Order and Final Judgment (Apr. 15, 2011). 

250 See id., Ex. 1. 
108 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

As in Kucan, there was no claims process and payments were made automatically to class 

members. Approximately 104,000 consumers shared more than $7.6 million.251

IN RE CHECKING ACCOUNT OVERDRAFT LITIGATION 

In a number of cases consolidated in this multidistrict litigation in the Southern District of 

Florida, plaintiffs have challenged overdraft fees that were allegedly incurred as a result of the 

order in which the banks processed certain debit transactions.252 Several banks have separately 

settled overdraft class actions. Of the defendants to settle so far, Chase, M&I, and Compass each 

have checking account agreements that provided for AAA arbitration. 

Chase reached a proposed settlement in May 2012.253 Notice was mailed to class members in 

August 2012.254 The court gave final approval in December 2012, identifying 173 consumers who 

opted out.255 Most class members received automatic payments under the settlement, but class 

members were also entitled to submit claim forms for periods for which Chase lacked relevant 

records.256 The class had more than five million members, who received approximately $61 

 

251 See Aff. of Settlement Administrator ¶ 2 (Jul. 1, 2013). 

252 In Re: Checking Account Overdraft Litig., MDL No. 2036 (S.D. Fla., am. consolidated compl. filed Nov. 9, 2009). 

253 See Pls.’ Unopposed Mot. for Prelim. Approval of Class Settlement and for Certification of Settlement Class, Ex. A 

(May 22, 2012), ECF No. 2710-1. 

254 See Decl. of Shannon R. Wheatman, Ph.D. on Implementation and Adequacy of Notices and Notice Plan ¶ 7 (Oct. 

15, 2012), ECF No. 3010-5. 

255 See Final Judgment, Ex. A (Dec. 19, 2012), ECF No. 3135. 

256 See Order of Final Approval of Settlement, Authorizing Service Awards, and Granting Application for Attorneys’ 

Fees at 9-11 (Dec. 19, 2012), ECF. No. 3134. 
109 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

million in payments.257 As part of the settlement, Chase also agreed to restrictions on fees for 

transactions under $5. The court valued this additional relief at $52 million.258

M&I reached a proposed settlement in September 2012.259 Notice was mailed in January 

2013.260 The court gave final approval in August 2013, identifying 34 opt-outs.261 Class members, 

who numbered around 190,000, did not have to submit a claim form to share in $2.7 million in 

cash relief.262 The settlement also contained limits on charging fees for small overdrafts.263 

Compass Bank reached a proposed settlement in March 2013.264 Notice was mailed in April 

2013.265 Notice was sent to approximately 826,000 potential class members.266 The court 

 

257 The $61 million cash distribution is estimated as follows. The total cash to be distributed was $110 million. The 

court awarded class counsel $48.6 million, which was 30% of the total $162 million value of the settlement, including 

injunctive relief. The settlement fund also covered $309,326.50 for litigation expenses, and $5,000 or $2,500 service 

awards to each named plaintiff. See Order of Final Approval of Settlement, Authorizing Service Awards, and Granting 

Application for Attorneys’ Fees at 39 (Dec. 19, 2012), ECF No. 3134. 

258 See id. at 12. 

259 Settlement Agreement (Oct. 1, 2012), ECF No.2981-1. 

260 Decl. of Cameron R. Azari on Implementation and Adequacy of Settlement Notice Program ¶ 16 (Oct. 1, 2012), 

ECF No. 3279-5. 

261 Final Judgment, Ex. A (Aug. 2, 2013), ECF No. 3571. 

262 The $2.7 million cash distribution is estimated as follows. The court awarded class counsel 30% of the total value 

of the settlement, which was $4 million. It also awarded $67,362.50 for reimbursement of litigation expenses, and 

$2,500 service awards to each named plaintiff. See Order of Final Approval of Settlement, Authorizing Service 

Awards, and Granting Application for Attorneys’ Fees (Aug. 2, 2013), ECF No. 3570. 

263 See Settlement Agreement ¶ 50 (Aug. 2, 2013), ECF No. 3570. 

264 Settlement Agreement, No. 09-md-02036-JLK (S.D. Fla. Mar.12, 2013), ECF No. 3330-1. 

265 See Decl. of Cameron R. Azari on Implementation and Adequacy of Settlement Notice Program ¶ 15 (May 16, 

2013), ECF No. 3469-5. 

266 See id.
110 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

entered final approval in August 2013, identifying 35 opt-outs.267 Class members did not have to 

submit claim forms to share in approximately $8 million in cash relief.268

With respect to the Compass and M&I settlements, we do not have significant AAA data to 

review because these settlements were approved so recently. We do, however, have some 

months of AAA data for the period immediately following class notice and can report that that 

period at least was insufficient to generate any pertinent AAA arbitrations. 

4.9 Initial fee allocation 

The consumer arbitrations reviewed by the Bureau are subject to the AAA’s Due Process 

Protocol, which requires that arbitration be available to consumers at a reasonable cost.269 The 

AAA’s Supplementary Procedures for Consumer-Related Disputes are intended to implement 

this and other requirements of the Protocol. Below we briefly describe the fee schedule that 

applied to consumer arbitrations filed with the AAA during the period of our review. The AAA 

changed its fee schedule effective March 1, 2013.270 

 

267 Final Judgment, Ex. A (Aug. 7, 2013), ECF No. 3586. 

268 The $8 million cash distribution is estimated as follows. The court awarded class counsel 30% of the total value of 

the settlement, which was $11.5 million. It also awarded $106,300.20 for reimbursement of litigation expenses, and 

$5,000 service awards to each named plaintiff. See Order of Final Approval of Settlement, Authorizing Service 

Awards, and Granting Application for Attorneys’ Fees (Aug. 7, 2013), ECF No. 3585. 

269 The AAA’s Protocol states that: “Providers of goods and services should develop ADR programs which entail 

reasonable cost to Consumers based on the circumstances of the dispute, including, among other things, the size and 

nature of the claim, the nature of goods or services provided, and the ability of the Consumer to pay.” Principle 6, 

AAA Consumer Due Process Protocol (Apr. 17, 1998) at 19, www.adr.org. 

270 The revised fee schedule is relatively simple. At present, for cases subject to the Supplementary Procedures, 

consumers pay a non-refundable $200 filing fee, regardless of who files the claim or of the amount at issue. In cases 

before one arbitrator, the company pays a partially refundable filing fee of $1,500, which increases to $2,000 in cases 

involving three arbitrators. The company also pays the arbitrator’s compensation, which will be $750 per arbitrator 

for a desk arbitration, and $1,500 per arbitrator per day for arbitrations involving an in-person or telephonic hearing. 

The arbitrator can reallocate initial filing fees, arbitrator compensation, or other expenses to the consumer (or, with 

respect to the $200 consumer filing fee, to the company), but only pursuant to applicable law or the arbitrator’s 

determination that a claim or counterclaim was filed for purposes of harassment or was patently frivolous. The 

business pays a number of other fees, including a hearing fee and any hearing room rental fees. The consumer and 
111 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

4.9.1 Initial fee schedule 

Aside from attorneys’ fees, there were generally two kinds of fees associated with AAA consumer 

arbitrations filed in the period 2010 through 2012. First, there were administrative fees payable 

to the AAA itself. Second, there were arbitrator’s fees payable to the arbitrator.271 Some portion 

of each of these fees was assessed at filing. (We refer to these as the “filing fees.”) During the 

period of our review, all components of filing fees were either administrative fees or deposits 

towards arbitrator fees. 

For the AAA to administer an arbitration case filed in the period of our review, each side was 

required to meet its initial fee requirements. The amounts and allocation of the filing fees during 

the applicable period are set out below. These filing fees were based on the amount of 

compensatory damages claimed or counterclaimed, not the amount of punitive damages, 

attorney fees, or any other amounts. Note that these are not the AAA’s current filing fees for 

consumer arbitrations, which were revised effective March 1, 2013, and therefore did not apply 

to the cases that we reviewed.272 

INITIAL FEES IN AAA CONSUMER ARBITRATIONS DURING RELEVANT PERIOD 

Claims up to $75,000 

Regardless of who filed the arbitration, the consumer’s initial filing requirements were up to 

$125 for claims under $10,000 and up to $375 for claims between $10,000 and $75,000.273 This 

payment was made as a deposit to cover the consumer’s share of the arbitrator fee; none of the 

payment was for administrative fees. The consumer could be refunded some or all of the 

 

company must each pay a $300 abeyance fee if a case is held as inactive for more than a year. Full details of the 

current fee schedule are available on the AAA’s website, www.adr.org. 

271 California requirements call for publication of data about the amount and allocation of arbitrator fees. See Cal. 

Code Civ. Pro. 1281.96(a). 

272 See supra note 270. 

273 Counterclaims that were below $75,000 had no impact on the filing fees. Above $75,000, however, they would be 

subject to the AAA Commercial Rules, as described below. 
112 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

arbitrator’s deposit if it were not to be used—for example, if the case were to settle before an 

arbitrator was appointed.274 

The company incurred all administrative fees, which were $775 for cases up to $10,000 and 

$975 for cases between $10,000 and $75,000. If a hearing were held, the company paid an 

additional administrative fee of $200 for disputes up to $10,000, or $300 for disputes between 

$10,000 and $75,000.275 The company also paid all remaining arbitrator deposits, which ranged 

from $125 for a “desk arbitration” (meaning an arbitration that is resolved on the basis of 

written submissions alone) or telephonic hearing to $625 for an in-person hearing.276 Again, for 

claims up to $75,000, these fees did not change with the identity of the filing party. 

The company could receive some refund of its administrative fees and arbitrator deposits. 

Arbitrator deposits were refunded if not used. Administrative fees were refundable pursuant to 

the Commercial Fee Schedule.277 This required that $350 in administrative fees were not 

refundable to the business, but the remaining administrative fees would be refunded in full if the 

case were settled or withdrawn within 5 days of filing. For cases settled or withdrawn between 6 

and 30 days of filing, the refund was 50%. If the case settled or was withdrawn between 31 and 

60 days of filing, the refund was 25%.278 If a consumer-filed case was withdrawn or settled 

before the consumer paid his or her initial fee, the company might not incur any fees at all.279 

 

274 See AAA, Supplementary Procedures C-8 (effective Jan. 1, 2010), “Fees and Deposits to be Paid by the Consumer.” 

275 For claims under $10,000, the default rule is for the dispute to be resolved without a hearing. However, either 

party may ask for a hearing, or the arbitrator may independently decide that one is necessary. See AAA 

Supplementary Procedures C-5. Conversely, if the claim is for over $10,000, the default is for the dispute to be 

resolved with a hearing. If both parties request no hearing, however, the arbitrator may waive the hearing 

requirement. See id. C-6. 

276 AAA, Supplementary Procedures (effective Jan. 1, 2010) C-8 “Fees and Deposits to be Paid by the Business.” 

277 See id. 

278 AAA, Commercial Arbitration Rules and Mediation Procedures (effective Jan. 1, 2010) Administrative Fee 

Schedules. 

279 One possible implication of this fee schedule is that it may have provided the consumer with certain forms of 

leverage. By filing an arbitration in this time period, a consumer that was willing to incur $125 as an initial—though 

potentially refundable—fee could cause the company to incur a contingent obligation of up to $1,725 for claims below 
113 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

Claims above $75,000 

For consumer-filed claims above $75,000, the consumer paid all the administrative fees, 

pursuant to the regular fee schedule in the AAA Commercial Rules, plus half the arbitrator’s fee 

based on the arbitrator’s usual rates, with a deposit of half the arbitrator’s fee due on filing.280

(For a $100,000 claim, for example, the consumer’s initial administrative fees would be $1,850 

with an additional administrative fee of $750 in the event a hearing is scheduled.281 Arbitrator 

fees would be in addition to this amount.) The administrative fees were subject to refund per the 

terms of the Commercial Fee Schedule discussed above. 

Conversely, for company-filed claims above $75,000, the business paid the administrative fees 

based on the regular fee schedule in the AAA Commercial Rules, plus half the arbitrator’s fee 

based on the arbitrator’s usual rates, with a deposit of half the arbitrator’s fee due on filing. For 

mutually submitted claims above $75,000, the parties were required to allocate the applicable 

administrative fees between them. 

Three-Arbitrator Panels 

For the period in our review, the AAA charged a minimum fee of $2,800 when the arbitration 

clause provided for a 3-arbitrator panel.282 

WAIVERS AND ADJUSTMENTS 

Although the applicable contract could reallocate initial fee burdens away from the consumer, it 

could not add to the consumer’s initial fee burden without violating the applicable AAA rules, 

 

$10,000, and up to $2,025 for claims between $10,000 and $75,000—albeit with the potentially significant caveat 

that, depending on the terms of the arbitration clause, some or all these company fees ultimately could be reallocated 

to the consumer at the discretion of the arbitrator. In addition, the consumer had some degree of control over the 

applicable contingencies. Once he or she paid the initial deposit, the company would incur a partially refundable 

administrative fee of either $775 or $975 and a refundable arbitrator fee of $125. Up until that point, however, the 

company would not incur any fee obligation. Once an arbitrator had been appointed, the company would no longer be 

able to recoup the arbitrator fee and it would face additional costs of between $825 and $925 if the consumer 

successfully pressed for an in-person hearing. 

280 AAA, Supplementary Procedures (effective Jan. 1, 2010) C-8 “Fees and Deposits to be Paid by the Consumer.” 

281 See id. 

282 See AAA, Commercial Rules (fees effective June 1, 2010) at 39. We identified two cases in which the AAA made an 

initial fee assessment of $2,800 for a 3-arbitrator panel. In one case, the AAA assigned the company the full 

obligation. In the other, the AAA did not assign the obligation, but sought payment from the parties collectively. 
114 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

including the Due Process Protocol. Some contracts, therefore, allowed for an advancement of 

the consumers’ fees.283

The consumer could apply for a waiver of otherwise applicable fees.284 In the period of our 

review, the AAA allowed consumers to apply for a hardship waiver or deferral of any applicable 

administration fee if their gross annual income was below 200% of the federal poverty 

guidelines. The AAA rules also recognize California law providing for a waiver of arbitration of 

fees and costs, exclusive of arbitrator fees, for consumers with a gross monthly income of less 

than 300% of the federal poverty guidelines.285 For claims of any value, the consumer was also 

able to request an arbitrator willing to serve pro bono, although the rules did not guarantee that 

one would be provided. 

In addition, as noted above, the arbitrator had discretion to reallocate administrative or 

arbitrator fees in the award, as he or she might deem appropriate.286 Unless the contract or 

applicable law required otherwise, the arbitrator might also reallocate attorneys’ fees. The AAA 

fee schedule did not require any specific allocation of attorneys’ fees.

4.9.2 Data 

For the three product markets covered, Figures 30 and 31 show the fee amounts assessed at the 

front end of the AAA arbitrations from 2010 through 2012. These initial assessments are 

typically set out in AAA correspondence to the parties. 

We have not determined if the parties paid the initial assessments reflected below. For example, 

it is possible that claims may have withdrawn or settled before the payment of all these initial 

 

283 See section 3.4.10. 

284 See AAA, Commercial Arbitration Rules R-49 (effective June 1, 2009, through October 1, 2013). 

285 See CAL. CODE CIV. P. 1284.3 (cited in AAA, Supplementary Procedures C-8). The California waiver applies to all 

consumer agreements subject to the California Arbitration Act and to all consumer arbitrations conducted in 

California. 

286 See Drahozal & Zyontz, Empirical Study, supra note 140, at 887-88 n.165; AAA, Commercial Arbitration Rules, 

Administrative Fee Schedule. 
115 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

fees. In addition, we have not determined how fees were finally allocated in these cases.287 As 

discussed above, during the period of our review, the arbitrator had discretion to reallocate fees 

in the award, and final fee allocations may also address fee advances made at the front-end of 

the process. The amounts shown aggregate initial fees for each covered dispute. Thus, they may 

include administrative fees, arbitrator deposits, and any additional initial fees assessed to each 

party.288

FIGURE 30: DISTRIBUTION OF INITIAL CONSUMER FEE ASSESSMENTS 2010-12 

Figure 30 illustrates the initial distribution of consumer fee assessments. The figure does not 

include information about 161 disputes for which we were unable to identify information about 

 

287 We plan to cover the ultimate distribution of fees in the next phase of our work. 

288 For example, an entry reflecting $1,100 in company fees may represent: administrative fees of $775 plus $125 for 

the arbitrator deposit plus $200 for a live hearing; or administrative fees of $975 plus $125 for the arbitrator deposit. 
116 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

the fees assessed to the consumer.289 It does include entries for 320 filings involving fee advance 

requests, nine involving AAA hardship requests, and 15 involving California waiver requests.290

FIGURE 31: DISTRIBUTION OF INITIAL COMPANY FEE ASSESSMENTS 2010-12 

As noted, we have not completed our assessment of fees incurred during this period. Although 

consumer obligations would increase markedly above $75,000, based on the schedule outlined, 

and consistent with the data shown, at lower claim amounts the consumer’s incurred obligation 

was significantly smaller, with the company bearing the predominant share of initial fee 

 

289 In 129 of these 161 disputes, we were unable to identify specific initial fee assessments for either party. In the 

remaining 32 cases, we were able to ascertain that we were missing information on initial consumer fee assessments. 

We excluded data for one case in which the AAA sought payment of a $2,800 initial fee for a three-arbitrator panel 

from the parties collectively, without specifically assigning this initial fee to one side or the other. 

290 These various fee advance and waiver requests overlap in part. 
117 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

obligations.291 Figure 31 illustrates the initial distribution of fees assessed to companies. It does 

not include information relating to 229 proceedings for which we were unable to locate 

information about the fees assessed to the company.292 It does include information relating to 

317 fee advance requests, eight AAA Hardship Requests, and 15 California Waiver requests. 

Finally, we also recorded the number of instances in which the AAA provided formal notice to 

the parties that it declined to administer the arbitration because of the company’s failure to pay 

required fees or deposits. This formal notice also states that because the company has failed to 

comply with AAA policy on consumer arbitrations, the AAA will not administer further disputes 

concerning that company. The notice requests that the company remove the AAA from its 

arbitration clause. In the AAA Case Data, we observed 29 instances of companies receiving this 

letter. All but six concerned credit card disputes. Of the 29, all but one were consumer-filed 

disputes; the final dispute was a mutual submission. 

 

291 Filing fees are generally $400 for United States District Courts. State court filing fees are more varied. One recent 

summary, “Civil Filing Fees in State Trial Courts April 2012,” is available at www.ncsc.org, the website of the National 

Center for State Courts. That summary indicates that filing fees are under $300 (and often significantly so) in almost 

all state trial courts. Small claims court fees are lower, typically on the order of $20 to $75, though in a few states 

exceed $100 for larger claim amounts. See id.

292 This excludes the same 129 cases for which we have no initial fee information, see supra note 289, as well as 100 

cases for which we could ascertain that we were missing company initial fee information. It excludes the one case 

where the AAA sought collective payment of a $2,800 initial fee associated with a three-arbitrator panel. See supra

note 289. 
118 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

5. Small claims court data 

This section presents data from our review of small claims court filings. Our analysis draws on a 

number of different state and county small claims court databases. We reviewed these for suits 

filed against and by ten large credit card issuers, which collectively account for a very significant 

portion of the consumer credit card market. 

We reviewed small claims court data for two reasons. First, as discussed in section 3.4.2, the 

clear majority of the arbitration clauses within our review, specifically recognize—and allow—

access to small claims court as an alternative to arbitration.293 In addition, small claims courts 

are reported to handle a significant share of some disputes about consumer financial 

products.294 Furthermore, small claims courts are generally considered faster, cheaper, and 

simpler than ordinary trial courts of plenary jurisdiction, and are intended to be easier for 

individuals to pursue claims without using a lawyer.295 (In fact, some small claims court 

 

293 Industry groups also urged the Bureau to study small claims courts, especially in the context of small claims court 

carve-outs to arbitration clauses. See, e.g., Chamber of Commerce RFI Comment at 12-13 (“The study should compare 

the features of different types of arbitral and litigation forums, including . . . small claims courts.”). 

294 See Richard M. Hynes, Broke But Not Bankrupt: Consumer Debt Collection, 60 FLA. L. REV. 1, 27-28 (2008) 

(“[M]ost unsecured consumer debts fit comfortably within the jurisdiction of the limited-jurisdiction courts, and the 

overwhelming majority of suits are filed in these courts when they are available.”); see id. at 28 (noting that “the 

exclusion of courts of limited jurisdiction renders most prior studies inapplicable to the questions of how much 

consumer debt collection litigation exists and how it has changed over time.”). 

295 See Suzanne E. Elwell & Christopher D. Carlson, The Iowa Small Claims Court: An Empirical Analysis, 75 IOWA L.

REV. 433 (1990); John C. Ruhnka & Steven Weller, Small Claims Courts: A National Examination at 2-3 (Nat’l Ctr. for 

State Courts 1978) (noting broad consensus as to the goals of the small claims court process, including “accessibility, 

speed, low cost, simplicity, self-representation, fairness, [and] effectiveness.”); John A. Goerdt, Small Claims & Traffic 

Courts: Case Management Procedures, Case Characteristics, and Outcomes in 12 Urban Jurisdictions (Nat’l Ctr. for 

State Courts ed. 1992). 
119 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

jurisdictions generally require parties to proceed without representation.296) We, therefore, 

wanted to see what use parties made of them with respect to consumer financial disputes. 

Second, some commenters argue that the presence of small claims court carve-outs in 

arbitration clauses alleviates any need for any other litigation method to resolve small-dollar 

disputes.297 The argument is that small claims courts are “consumer friendly”298 so that having a 

small claims court carve-out helps endow an arbitration clause with “fundamental fairness.”299

Both the AAA’s Due Process Protocol and the JAMS Minimum Standards of Procedural 

Fairness, which are applicable to most consumer arbitrations, require that pre-dispute 

arbitration clauses permit access to small claims courts.300

 

296 See, e.g., California Department of Consumer Affairs, Basic Considerations and Questions: What Is Small Claims 

Court?, at http://www.dca.ca.gov/publications/small_claims/basic_info.shtml (visited Nov. 20, 2013) (“In most 

situations, parties to a small claims action must represent themselves. As a general rule, attorneys or non-attorney 

representatives (such as debt collection agencies or insurance companies) may not represent you in small claims court. 

Self-representation is usually required. There are, however, several exceptions to this general rule: If the court 

determines that a party is unable to properly present his or her claim or defense for any reason, the court may allow 

another individual to assist that party.”). 

297 See Peter Rutledge, Whither Arbitration, 6 GEORGETOWN J.L. & PUB. POL’Y 549, 570 (2008) (asserting that the 

argument that a mandatory arbitration provision combined with a class action waiver denies consumers access to 

justice is exaggerated by noting that, amongst other things, most arbitration clauses provide access to small claims 

court); see also AFSA RFI Comment at 8 (“[M]any arbitration agreements will allow consumers to bring claims 

otherwise subject to arbitration in small claims court. Thus, for smaller claims, consumers frequently have a choice 

between arbitration and small claims court. This context is important in order to understand the dynamics of the 

claims that are (and are not) asserted in arbitration versus other methods of resolving disputes between consumers 

and covered persons.”). 

298 ABA/CBA/FSR RFI Comment at 14. 

299 ABA/CBA/FSR RFI Comment at 6. See also Mark Furletti, Mandatory Arbitration Provisions in the Credit Card 

Industry at 5-6 (Jan. 2003) http://www.phil.frb.org/consumer-credit-and-payments/payment-cardscenter/events/workshops/2003/MandatoryArbitrationClauses_012003.pdf. Dean Roscoe Pound of Harvard Law 

School is often credited as being the first to articulate a vision of a court to “‘provide for disposing quickly, 

inexpensively, and justly of the litigation of the poor, for the collection of debts in a shifting population, and for the 

great volume of small controversies which a busy, crowded population, diversified in race and language necessarily 

engenders.’” Commonwealth of Massachusetts, DISTRICT COURT DEPARTMENT OF THE TRIAL COURT, REPORT OF THE 

SMALL CLAIMS WORKING GROUP (Aug. 1, 2007) at 3, http://www.lawlib.state.ma.us/docs/smallclaimreport.pdf (citing 

Roscoe Pound, The Administration of Justice in the Modern City, 26 HARV. L. REV. 302, 315 (1912-1913)). 

300 The AAA’s Protocol states that: “Consumer ADR Agreements should make it clear that all parties retain the right 

to seek relief in a small claims court for disputes or claims within the scope of its jurisdiction.” Principle 5, Consumer 
120 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

5.1 Previous studies 

We have not identified significant numbers of recent empirical studies on the incidence and 

nature of consumer financial claims in small claims courts.301 Two older studies cover small 

claims courts in multiple jurisdictions, but neither report on the incidence of consumer financial 

disputes.302 Some studies do suggest the companies make more use of small claims court than 

consumers do, but these are not specific to consumer financial products. Goerdt’s 1992 study of 

12 urban small claims courts showed that business-initiated disputes against individuals made 

up 53% of all cases studied; by contrast, individual-initiated disputes against businesses made 

up 13% of the sample.303 Similarly, in a 1990 study, Elwell & Carlson found that in the Iowa 

small claims court system many more businesses sued individuals than individuals sued 

businesses. 304 In their sample of 1,802 disputes, individuals filed against companies in 4% of the 

 

Due Process Protocol. The JAMS’ Minimum Standards state that: “[N]o party shall be precluded from seeking 

remedies in small claims court for disputes or claims within the scope of its jurisdiction.” Minimum Standard No. 1, 

JAMS Minimum Standards. Explaining the basis for the carve-out, the Reporter for the AAA’s Protocol indicated that 

“[t]he Advisory Committee concluded that access to small claims tribunals is an important right of Consumers which 

should not be waived by a pre-dispute ADR Agreement.” AAA, Consumer Due Process Protocol at 18 (Apr. 17, 1998), 

available at www.adr.org. 

301 Using data from 2007, Drahozal & Zyontz randomly sampled 500 cases filed in Oklahoma small claims court, 

finding 336 disputes related to consumer debt cases, of which “330 were brought by creditors seeking to recover 

unpaid debts [and] only six were brought by consumers against businesses.” Drahozal & Zyontz, Creditor Claims, 

supra note 140, at 88 (analyzing sample of cases closed between March 31, 2007, and January 1, 2008). Of the six 

consumer-initiated claims in Drahozal & Zyontz’s sample, just one dispute involved a credit card. This same work 

cites to a number of older studies of small claims court proceedings that focus primarily on debt collection issues, 

including default incidence. See id. at 82 n.18. 

302 See, e.g., Ruhnka & Weller, supra note 295, at 49-50 (allocating the subject matter of disputes in small claims 

courts in 15 cities into just five categories: “Consumer Plaintiff”, “Seller Plaintiff”, “Property Damage”, “LandlordTenant,” and “Other”); Goerdt, supra note 295, at 7 (analyzing small claims court data from the cities of Cambridge, 

Denver, Des Moines, Fairfax, Hartford, Minneapolis, Portland, Sacramento, San Diego, Seattle, Washington, and 

Wichita); id. at 47-48 (noting incidence of general categories of claims including, “consumer complaints” “debt 

collection, “torts,” “housing,” and “other”).

303 Goerdt, supra note 295, at 7 (analyzing small claims court data from Cambridge, Denver, Des Moines, Fairfax, 

Hartford, Minneapolis, Portland, Sacramento, San Diego, Seattle, Washington, and Wichita); id. at 43-44 (showing 

filing rates by individuals and businesses). 

304 Elwell & Carlson, Iowa Small Claims Court, supra note 295, at 487. 
121 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

cases, and businesses filed against individuals in 47% of the cases.305 The significant use of small 

claims court for debt collection is well documented.306 

5.2 Data sources 

No centralized, comprehensive and searchable source of small claims court cases or dockets 

exists.307 Documents related to small claims cases are generally only available on databases 

maintained by the administrative staffs of the small claims courts themselves (or by physically 

requesting the materials from the clerk’s office). These databases appear to have been designed 

with individual litigants in mind. Working with these databases for the purpose of collecting 

large volumes of data is painstaking. This may be why there is such a dearth of empirical data 

and academic literature on the topic—or why such studies tend to look at fragmentary data. 

Our main sources of data were online small claims court databases for states that offered free or 

reasonable cost access to case information. In addition to these cost criteria, we used three 

searchability criteria for the state court databases. To be included, such databases must: (1) 

purport to provide statewide data; (2) permit searches by party name (or ready identification by 

party if keyword searches are not possible); and (3) allow for by-year date sorting. Databases for 

13 state jurisdictions and the District of Columbia met these criteria. We refer to this as the 

“state-level sample.” We identified 12 states via this method, plus the District of Columbia. We 

also added New York because with the exception of New York City—for which we were able to 

obtain data by other means, as described further below—it otherwise met these same criteria. 

The 14 jurisdictions in the state-level sample, excluding New York City, cover approximately 52 

million people of all ages. 

 

305 See id.

306 In 2007, a working group of Massachusetts trial courts judges and administrators “recognized that a significant 

portion of small claims cases involve the collection of commercial debts from defendants who are not represented by 

counsel.” Commonwealth of Massachusetts, District Court Department of the Trial Court, Report of the Small Claims 

Working Group (Aug. 1, 2007) at 3, http://www.lawlib.state.ma.us/docs/smallclaimreport.pdf. 

307 There is no analog to the PACER system for federal courts. Westlaw and LEXIS provide limited small claims court 

data, mainly dockets, for certain jurisdictions. We used these to check our primary research. As of our search on 

October 16, 2013, Westlaw and LEXIS provided only a limited number of small claims court dockets, from one entire 

state (Wisconsin) and 9 counties out of the top 30 across two different states, California and Florida. 
122 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

To supplement the state-level sample, we also used county-level data. We selected the 30 most 

populous counties in the United States, which largely included areas not in the state-level 

sample. We then reviewed all of the databases in that sample of 30 that met the same cost and 

equivalent searchability criteria as for the state-level sample: free or reasonably priced; 

searchable county-wide; searchable by party name; and restrictable by date. We refer to this as 

the “county-level sample.” Seventeen of the 30 counties met these criteria.308 These 17 counties 

include jurisdictions covering approximately 35 million people of any age. We are not aware of 

another study with coverage as broad as our combined county-level and state-level samples.309 

In all these jurisdictions, we looked for potential credit card cases involving a set of 10 large 

credit card issuers. Given the relative concentration of the consumer credit card market, those 

credit card issuers cover a predominant share of that market.310 In addition to covering very 

large players, our sample covers companies with small claims court carve-outs for both 

consumer and company claims (Citibank, Wells Fargo, USAA, and US Bank); non-mutual small 

claims court carve-outs, meaning that only consumers may require that a dispute be brought in 

small claims court (American Express and Discover); no small claims court carve-out at all 

(Fifth Third); and with no arbitration clause in 2012 (Bank of America, JPMorgan Chase, and 

Capital One).311 

 

308 These added partial geographic coverage in six states not covered under our state-level review—California, Florida, 

Nevada, Pennsylvania, Texas, Washington—and coverage of a number of major cities or urban areas, including 

Houston, Philadelphia, and Silicon Valley. Three New York counties met these criteria as well; we included those 

results under the county search, not the New York state-level search. 

309 Under the auspices of the National Coalition on State Courts, Ruhnka & Weller conducted a study in 1978 of 15 

separate jurisdictions, mainly urban small courts. See generally Ruhnka & Weller, supra note 295. In 1992, also 

working with the National Center for State Courts, Goerdt conducted an analysis of 12 small claims and traffic courts 

in urban jurisdictions. See generally Goerdt, supra note 295. 

310 As of year-end 2012, our sample covers $564.75 billion in credit card outstandings, which represents a 

predominant share of the consumer credit card market. Our sample for the small claims court analysis covers 84% of 

the outstandings covered by the credit card contract sample used for section 3. Concentration at the top-end of the 

credit card market has remained roughly the same over the last decade. Compare The Nilson Report, Issue #1,012 at 1, 

8 (Feb. 2013) (as of 2012, top 10 accounted for 85% of market) with Hynes, supra note 294, at 51 (in 2004, top-10 

accounted for almost 90% of market). 

311 A small claims court carve-out is not necessary for either party to bring a claim in small claims court. Very few predispute clauses require arbitration of all disputes. Instead, the clauses enable either party to invoke arbitration 
123 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

As the issuers in our sample cover such a large share of credit card loans outstanding, we should 

uncover most consumer-issuer disputes involving credit card accounts in the small claims courts 

we selected. We will only uncover suits that can be filed in small claims court. The small claims 

courts covered by our review use a range of jurisdictional limits on the amount that can be 

claimed in small claims court. These limits—which are generally between $2,500 and $15,000—

are laid out in detail in Appendix E. 

To identify consumer credit card suits, we used small claims court dockets to identify cases filed 

by individuals312 against specific issuers and against colloquial names for these entities (such as 

“Bank of America” or “Chase”).313 By attempting to capture all credit card suits filed by 

consumers against these issuers, our search will tend to be over-inclusive. It will include, for 

example, some consumer cases that are not about credit cards.314 It should not, however, under 

count consumer credit card cases against these issuers.315 Our consumer-filed case numbers, 

therefore, can be seen as an outer limit on the number of consumer credit card cases against 

these issuers. 

To identify suits that credit card issuers filed against consumers, we focused on suits in which 

the docket listed: (1) the correct legal name of one of the specific credit-card issuing 

 

unilaterally. A small claims court carve-out, therefore, simply immunizes a small claims court filing from this 

potential effect of the arbitration clause. Entities with a clause but no carve-out, therefore, may still be sued or sue in 

small claims court. It is simply that the other party could then invoke arbitration, although that does not mean that 

the other party will do so. 

312 We excluded cases filed by non-natural persons such as corporations or partnerships. 

313 We included potentially common misspellings, and alternative arrangements of character strings. We excluded 

suits by individuals against entities within the corporate family that included in their name terms such as “mortgage,” 

“home loan,” “auto,” and “insurance.” We would not expect such suits to be credit card cases. 

314 For example, we may capture consumer cases about checking accounts (at least if there are any in small claims 

court). As discussed in Appendix E, our searches using company names that a consumer might associate with our ten 

issuers will also uncover cases against eight of the largest U.S. retail banks. 

315 Our data do not capture credit card-related claims by these issuers’ cardholders against other parties besides the 

issuer. So we are not capturing claims against private label partners. It is possible that consumers intending to sue 

their “credit card company” sue such partners instead. For Philadelphia County, where detailed data are available, we 

did look for suits against the major retail partners of an issuer in our sample that has a large private label business. 

We did not find any such suits. In addition, our data also will not capture claims against (or by) debt collection 

companies that act for issuers or purchase debt from them. 
124 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

subsidiaries316 in our review; and (2) an individual as the defendant. This search will tend to 

over count such suits to the extent that any of the credit card issuers: (1) also provide consumers 

with products other than credit cards; and (2) that non-credit card activity causes companies to 

sue consumers in small claims court. However, our review of public data suggests that this effect 

should not be significant as to most of the issuers.317

Further details about our sources and methodology are included in Appendix E. 

5.3 Incidence 

We start, first, with data from Philadelphia County and Alameda County. These were the two 

jurisdictions in our defined samples for which we were able to obtain underlying case 

documents on a systematic basis. These allowed us to establish, definitively, the nature of the 

claims at issue. 

Using the broad case identification method outlined above, we identified for Philadelphia some 

2,245 cases filed by issuers in our sample. (We identified no such cases in Alameda. In that 

county and in the rest of California, companies face severe limits on bringing collections claims 

 

316 Thus, if there was ambiguity in the name of the company claiming (e.g., the docket identified the plaintiff only as 

“Chase” and not “Chase Bank USA, National Association”), we excluded the dispute from the company-filed results. 

Although we consider it reasonable to assume that outside or in-house counsel will ensure that companies sue using 

their correct legal name, to the extent that is not the case for credit card company suits, we will undercount such suits. 

317 According to call reports, at year end 2012, three issuers in our sample—American Express, Discover, and USAA—

had no consumer loans other than credit card loans. Based on call reports, the other issuers we studied generally had 

as their primary business large consumer loans, such as mortgages, or smaller-dollar loans in the form of credit card 

borrowing. Our results from Philadelphia (see section 5.3) suggest that companies are unlikely to file mortgagerelated claims in small claims court. Leaving aside mortgage, therefore, call reports indicate that most of the 

remaining issuers had a low volume of non-mortgage consumer loans compared to their credit card holdings. This is 

true for Citibank, National Association ($106.7 billion in credit card loans and $894 million in other consumer loans), 

Chase Bank USA, National Association ($93.3 billion in credit card loans and $616.3 million in other consumer loans), 

Capital One ($77.8 billion in credit card loans and $277.5 million in other consumer loans), and JPMorgan Chase, 

National Association ($21.5 billion in credit card loans and $3 billion in other consumer loans). Three of our ten 

issuers, however, had a significant volume of consumer loans other than credit cards: Bank of America, National 

Association and FIA Card Services, National Association ($94.8 billion in credit card loans, $26 billion in auto loans, 

and $22.8 billion in other consumer loans), Wells Fargo Bank, National Association ($16.3 billion in credit card loans, 

$12.5 billion in auto loans, and $8.9 billion in other loans) and Fifth Third Bank ($2.1 billion in credit card loans, 

$11.3 billion in auto loans, and $445 million in other loans).
125 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

in small claims court.318) By using the detailed review of actual pleadings available in 

Philadelphia, we were then able to establish that all but one of the company-filed cases were, in 

fact, credit card debt collection cases. This suggests that our broad methodology provides a 

reasonable, even close, approximation of issuer use of small claims court for credit card disputes 

against consumers. 

Our broad case identification method also identified four Philadelphia cases and 39 Alameda 

cases as consumer-filed credit card cases against the issuers in our sample. When we reviewed 

the actual pleadings in these cases, however, none of the four Philadelphia cases involved an 

individual filing credit card claims against one of the ten issuers.319 Reviewing the pleadings in 

the 39 Alameda cases, we identified only four that were clearly individuals filing credit card 

claims against one of the ten issuers.320 This suggests that our broad methodology may well 

overstate the actual number of small claims court cases filed by credit card consumers against 

our sample of issuers. 

Even using the broad methodology, however, we see relatively low outer limit estimates for 

consumer-filed credit card cases. For our 31 jurisdictions combined, we were able to estimate an 

outer limit of 870 such cases for all of 2012.321 We provide the detailed results of these searches 

in Table 10 in Appendix E. In only three jurisdictions was our outer limit estimate higher than 

70 cases against all issuers combined, and the outer limit for any one issuer was 245 across all 

jurisdictions combined. The outer limit of 36 cases filed against one issuer in Orange County, 

California was the maximum for any one issuer and jurisdiction. 

 

318 See infra note 322. 

319 The four consumer-initiated cases involved (1) a stolen debit card; (2) certain mortgage payments not recognized 

as timely by the bank holding the mortgage; (3) an insurance claim; and (4) a tort that occurred in a bank (a bicycle 

hit a customer). 

320 Thirty-two disputes manifestly did not involve credit cards. These were 17 disputes involving checking accounts; 

ten alleging interference with real estate listings; four about home loans; and one about insurance. Another three 

disputes might conceivably have involved credit cards, but the record was insufficient to show that they actually did so. 

One of these three cases did not clearly identify any product, and merely alleged in a single sentence FCRA violations 

by the issuer. The other two concerned unspecified “lines of credit.” 

321 This adjusts for the actual count in Philadelphia and Alameda counties. 
126 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

Claims filed by credit card issuers against individuals show a different pattern. We report this 

data in Table 9 below. Claim numbers are either substantially lower or higher than the numbers 

of consumer-filed claims. The low numbers in Table 9 predominantly correspond to 

jurisdictions that impose substantial limitations on the use of small claims courts by businesses. 

These include California (here represented by Orange, Riverside, San Bernardino, Santa Clara, 

and Alameda Counties)322 and New York.323 Other jurisdictions have certain procedures that, 

while not targeted explicitly at businesses, may dampen the number of company-initiated 

claims. For instance, in Utah, the clerk of court or a judge is empowered to remove multiple 

disputes filed by a same plaintiff from small claims court to the district court.324 In King County 

 

322 In California, corporations and partnerships may bring no claim larger than $5,000 in small claims court, and no 

more than two such claims of more than $2,500 per calendar year. See California Department of Consumer Affairs, 

Basic Considerations and Questions: What Is Small Claims Court? (last visited Oct. 25, 2013), 

http://www.dca.ca.gov/publications/small_claims/basic_info.shtml (“Corporations, partnerships, unincorporated 

associations, governmental bodies, and other legal entities cannot claim more than $5,000. Also, no claimant (natural 

person or legal entity) may file more than two small claims court actions for more than $2,500 anywhere in the state 

during any calendar year.”). 

323 New York imposes various restrictions on legal entities filing in small claims court. A corporation or partnership 

may only bring a claim in small claims court if it has its principal office in New York state. Further, a corporation or 

partnership must submit a demand letter before filing a claim, and can file no more than 5 claims per calendar month. 

See Access to Justice NY Courts, Your Guide to Small Claims & Commercial Small Claims, 

http://www.nycourts.gov/COURTS/nyc/civil/pdfs/smallclaims.pdf. But the claims that corporations or partnerships 

cannot bring in New York small claims court do not disappear. Rather, it appears that they bring their would-be small 

claims disputes instead in Civil Court, the next court of limited jurisdiction. Of the 523,186 cases filed in Civil Court in 

the Bronx, Kings, Queens and Richmond Counties in 2006, 53% of these cases were categorized by one study as 

“consumer credit litigation.” See Urban Justice, Debt Weight: The Consumer Credit Crisis in New York City and its 

Impact on the Working Poor 8 (Oct. 2007). Similarly, over half of the 320,000 cases filed in New York County Civil 

Court involved consumer credit. See id. (“More and more, New York City Civil Court is becoming a ‘credit card court,’ 

with over 50% of cases filed in that court arising out of ‘consumer credit transactions.’”) Based on a limited sample, 

the study estimated that 10.7% of “consumer credit litigation” cases were, in turn, initiated by the original creditors, 

including credit card issuers. Further, many if not most of these claims would have been under the small claims 

jurisdictional limit of $5,000. See id. 14-16. 

324 Utah Code Title 78A Chapter 8 section 102 (“If a person or corporation other than a municipality or a political 

subdivision of the state files multiple small claims in any one court, the clerk or judge of the court may remove all but 

the initial claim from the court's calendar in order to dispose of all other small claims matters. Claims so removed 

shall be rescheduled as permitted by the court's calendar.”). 
127 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

(WA), attorneys and paralegals are not allowed to appear for either party without the judge’s 

permission.325

TABLE 9: CREDIT CARD ISSUER SMALL CLAIMS COURT SUITS AGAINST INDIVIDUALS BY JURISDUCTION 

2012 

 Citi Wells USB USAA AmX Dis 5/3 BoA Cap1 JPM Total

Alaska 0 10 0 0 0 0 0 0 0 0 10

Connecticut* 262 8 0 0 91 718 0 301 4,274 0 5,654

Delaware 0 0 1 0 22 444 0 0 0 0 467

District of Columbia 76 1 0 0 22 115 0 21 865 0 1,100

Iowa 246 33 0 0 4 501 1 94 260 0 1,139

Minnesota 147 0 0 0 1 114 0 0 2,029 0 2,291

New Mexico 0 2 0 0 29 386 0 2 2 0 421

New Jersey 0 0 0 0 0 0 3 0 0 0 3

New York, ex-NYC 0 0 0 0 0 0 0 0 0 3 3

North Dakota 0 0 0 0 0 0 0 0 0 0 0

Oklahoma 0 4 0 0 0 0 * 0 0 0 4

Oregon 0 0 0 0 0 0 0 0 0 0 0

Utah 0 0 0 0 0 0 0 0 0 0 0

Wisconsin 704 96 48 0 76 2,162 27 1 9,361 14 12,489

Alameda (CA) 0 0 0 0 0 0 0 0 0 0 0

Broward (FL) 265 74 0 0 254 227 2 103 2,647 0 3,572

Clark (NV) 0 0 0 0 0 0 0 0 0 0 0

Harris (TX) 614 356 47 0 319 380 0 1,051 5,046 92 7,905

Hillsborough (FL) 70 0 1 0 67 125 1 0 1,325 57 1,646

King (WA) 0 0 0 0 0 0 0 0 0 0 0

 

325 See King County District Court Services, Information about Small Claims, 

http://kingcounty.gov/courts/DistrictCourt/Smallclaims.aspx. 
128 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

Kings (NY) 0 0 0 0 0 0 0 0 0 0 0

New York (NY) 0 0 0 0 0 0 0 0 0 0 0

Orange (CA) 0 0 0 0 0 0 0 0 0 0 0

Palm Beach (FL) 174 15 0 0 177 306 0 86 1,594 2 2,354

Philadelphia (PA) 79 0 0 0 46 743 0 165 1,212 0 2,245

Queens (NY) 0 0 0 0 0 0 0 0 0 0 0

Riverside (CA) 0 0 0 0 0 0 0 0 0 0 0

Sacramento (CA) 0 0 0 0 0 0 0 0 0 0 0

San Bernardino (CA) 0 0 0 0 0 0 0 0 0 0 0

San Diego (CA) 0 0 0 0 0 0 0 0 0 0 0

Santa Clara (CA) 0 0 0 0 0 0 0 0 0 0 0

Totals 2,637 599 97 0 1,108 6,221 34 1,824 28,615 168 41,303

*Note: Search results for Capital One in Connecticut exceeded 4,274, but further information beyond the 4,274 could 

not be retrieved from that database. 

The higher numbers in our sample are present in jurisdictions that do not have similar limits on 

company filings. In addition, two issuers accounted for the vast majority of company-filed 

cases.326 This may be attributable to the fact that these two issuers are in the subprime credit 

card business, where smaller credit lines are the norm. It may also reflect other issuers making 

greater use of debt buyers or collection agencies. Other studies have also found relatively 

concentrated use by particular issuers of small claims court.327 Appendix E depicts these 

numbers relative to our outer-limit estimates for consumer-filed cases in different jurisdictions. 

 

326 One of these issuers uses a non-mutual small claims court carve-out, which applies only to guarantee the 

consumer’s right to remain in small claims court. The lack of mutuality in a clause, therefore, may not have any 

impact on company use of small claims court. 

327 Beth Healy, Debtor’s Hell, Part 2: A System Compromised, The Boston Globe (July 31, 2006), 

http://www.boston.com/news/special/spotlight_debt/part2/page4.html. 
129 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

6. Future work 

In addition to the work laid out above, the Bureau has a number of phases of work that are 

underway or that are under consideration for inclusion in the statutory report to Congress. We 

discuss each of these below. 

 We will finalize our analysis of arbitration clause incidence and features. This may 

expand to cover some other consumer financial product markets. 

 

 Subject to OMB approval, we plan to conduct a survey of consumers that addresses 

consumer awareness of arbitration clauses and consumer perceptions of and 

expectations about formal dispute resolution. The survey may also explore the role of 

formal dispute resolution terms in consumer product choice. (We have already published 

one detailed proposal in this respect, and have retained survey contractors. We have 

received a number of comments and plan to carry out focus group work. The proposal 

will be revised in light of the comments received, feedback from the survey contractors, 

and any focus group input. We will submit a revised proposal for additional public 

comment before we finalize the proposed survey.) 

 We may review arbitration case record data for filings concerning disputes about other 

consumer financial products or services, such as private student loans. 

 We will continue our review of litigation filings concerning consumer financial products. 

This may involve additional research into claims filed in small claims court. We will also 

review available federal court filings for select products, and, to the extent reasonably 

available from electronic sources, state court filings as well. We may use some sampling 

to control for case numbers. As with the arbitration filings work, this is intended to bring 

to light the types and frequency of claims that consumers bring to this method of formal 

dispute resolution. Viewed in conjunction with the same analysis for arbitration filings, 

this work may also help us to discern the impact of arbitration clauses on the incidence 
130 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

and nature of consumer claims, although we cannot, by definition, directly observe 

claims that consumers may not have pursued at all because of the absence of a particular 

mechanism of formal dispute resolution. 

 

 Once we have completed our front-end identification of consumer financial cases, we will 

consider how—if at all—we might meaningfully compare the disposition of cases across 

arbitration and litigation (including class litigation), both in terms of substantive 

outcome and in terms of procedural variables like speed to resolution. We recognize that 

it may be hard to identify comparable cases across these different alternatives, not least 

because cases are not randomly assigned to the different streams. In addition, numerous 

factors will affect variables like speed to resolution and substantive outcome that are 

independent of the formal dispute resolution mechanism used. 

 As part of our outcome analysis, we are reviewing court records to assess the 

circumstances under which companies invoke arbitration clauses in response to 

consumer claims, and how that invocation may impact the outcome of such claims. One 

way we are exploring this issue is to try to identify consumer challenges that have been 

raised with respect to particular industry practices (or alleged practices) and then assess 

how dispute outcomes are impacted, if at all, by the presence of arbitration clauses and 

the availability of arbitration. 

 We will use public court records to try to assess consumer benefits and transaction costs 

in consumer class actions involving consumer financial services. We will also attempt to 

evaluate whether class actions exert improper pressure on defendants to settle meritless 

claims. We intend to look at the outcomes of filed class actions, including settlements, 

and on dispositive and certification motion practices. 

 We intend to assess the possible impact of arbitration clauses on the price of consumer 

financial products. 

 We are also examining the interrelationship between public enforcement and private 

aggregate enforcement. Although some empirical research compares public enforcement 

and private class actions in securities and antitrust matters, we have not located 

empirical studies that compare these in the context of consumer law. Accordingly, we are 

conducting an empirical analysis in this area. It will consider the types of cases brought 
131 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

by public and private actors, and the relationship between any actions against the same 

defendants or challenging similar conduct. 
132 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

APPENDIX A 

Clause incidence methodology 

This appendix sets out the methodology used in collecting the data described in section 3. 

CREDIT CARD AGREEMENTS 

The sample of credit card agreements studied consists of credit card issuers with agreements on 

file with the CFPB as of December 31, 2010, 2011, and 2012. The Credit CARD Act of 2009 

requires credit card issuers above a de minimus size to post their credit card agreements on the 

issuer’s web page and to file the agreement with the appropriate regulator.328 Initially, the Credit 

CARD Act required the agreements to be filed with the Federal Reserve.329 The Dodd-Frank Act 

changed the requirement so that credit card agreements now must be filed with the CFPB.330

Issuers are required to update their filing only when it changes.331 Some issuers have never filed 

new agreements, so the agreement they have on file has not changed since 2009. Other issuers 

file new agreements every quarter; for those issuers, the agreement studied is the agreement on 

file as of December 31, 2012. Many issuers have multiple agreements on file with the CFPB. In 

almost every case, the dispute resolution clause in each agreement filed by the issuer is identical. 

In the rare case in which an issuer has multiple agreements, the most frequently used type of 

agreement is included in the sample. In a handful of cases, the issuer filed some document other 

than the cardholder agreement with the Bureau. In those cases, the cardholder agreement was 

obtained from the issuer’s website when possible. 

 

328 Credit Card Accountability Responsibility and Disclosure Act of 2009, Pub. L. No. 111-24, 123 Stat. 1746, § 204(a) 

(May 22, 2009); see 15 C.F.R. § 226.58(c)(5) (de minimus exception). 

329 Credit CARD Act, § 204(a). 

330 See 15 U.S.C. § 1632(d). 

331 15 C.F.R. § 226.58(c)(3). 
133 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

Each credit card agreement in the sample was reviewed to determine if it included an arbitration 

clause.332 If it did, the provisions of the arbitration agreement were coded for the information 

described in section 3. One issuer’s agreement, while indicating that it included an arbitration 

clause, incorporated by reference the details of the arbitration clause included in another 

document, which was unavailable. That issuer’s agreement was coded as providing for 

arbitration, but the details of the arbitration provision were coded as missing. 

Data on credit card loans outstanding from the issuer’s December 31, 201o, December 31, 2011, 

and December 31, 2012 call reports were used to measure the relative market share of each 

issuer. Only domestic credit card loans outstanding were used, plus securitized credit card loans, 

if any. Data for related issuers (i.e., those that are subsidiaries of a common parent) were 

consolidated as long as each issuer used the same dispute resolution clause in its credit card 

agreement. If the issuers had different dispute resolution clauses, their data were not 

consolidated and each issuer was included separately in the sample. 

CHECKING ACCOUNT AGREEMENTS 

We examined three samples of checking account agreements: the 100 largest banks based on 

consolidated deposits less than $250,000 (i.e., the deposit insurance threshold); a random 

sample of 150 banks not among the 100 largest (referred to as small and mid-sized banks); and 

the 50 largest credit unions based on the amount of insured deposits. We used insured deposits 

as a proxy for consumer accounts. 

For each sample, we first attempted to collect the institution’s checking account agreement 

(typically its general deposit account agreement) from its web page. If the agreement was not 

available, or if the available agreement was undated or dated prior to 2011, the Bureau directed 

the institution to provide the agreement pursuant to section 1022(c)(4) of the Dodd-Frank 

Act.333 For all of the largest banks, 141 of the 150 small and mid-sized banks, and 49 of the 50 

largest credit unions, we were able to obtain some version of its checking account agreement. 

From that agreement, we determined whether the institution used an arbitration clause, and, if 

so, coded it as described above. 

 

332 Agreements that provided for use of California’s judicial reference procedure were not treated as including an 

arbitration clause. 

333 12 U.S.C. § 5512(c)(4). 
134 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

As noted above, we used consolidated insured deposits, obtained from December 31, 2011 and 

December 31, 2012 call reports, as a measure of market share. As a general matter, insured 

deposits were consolidated across all affiliated institutions. If, however, affiliated institutions 

used different forms of dispute resolution or different arbitration clauses, we included each 

institution separately in the sample.334

GPR PREPAID CARD AGREEMENTS 

As noted above, market data are much less complete for GPR prepaid cards than for either credit 

cards or checking accounts. We included in the sample all GPR prepaid cards (1) listed on the 

Visa, MasterCard, or NerdWallet web pages advertising such cards;335 or (2) examined in 

various recent studies of the terms of prepaid cards.336 We also included agreements from the 

two leading credit union GPR card programs, by PSCU and CUNA.337 Most of the cards in the 

sample (44 of 63, or 69.8%) were listed in multiple sources. We collected the cardholder 

agreements for the cards from the Internet, and excluded eight cards for which cardholder 

agreements were unavailable and three cards that had been discontinued. 

Market share data came from the Aité Group’s November 2012 report on the prepaid card 

market.338 Because of limited market share data, the results for GPR prepaid cards based on the 

dollar amounts loaded on the cards are limited to the firms for which market share data are 

 

334 As a result, for example, our sample of the 100 largest banks includes 103 observations. 

335 MasterCard, Get a Prepaid Card That’s Right for You, http://www.mastercard.us/get-a-prepaid-card.html (visited 

Aug. 2, 2013); Visa, Get a Visa Prepaid Card, http://usa.visa.com/personal/cards/prepaid/prepaid-card-online.html

(visited Aug. 2, 2013); NerdWallet, Prepaid Debit Cards, http://www.nerdwallet.com/prepaid. 

336 Aité Group, supra note 62, at 18-19; Bankrate.com, 2013 Prepaid Debit Cards Survey, 

http://www.bankrate.com/finance/banking/best-prepaid-debit-cards.aspx; Bretton Woods, Inc., Analysis of Branded 

General Purpose Reloadable Prepaid Cards: A Comparative Cost Analysis of Prepaid Cards, Basic Checking Accounts 

and Check Cashing 9 (Feb. 2012); CardHub, Prepaid Cards Report ― 2013, http://www.cardhub.com/edu/prepaidcards-report-2013/; Consumer Reports, Prepaid Cards: How They Rate on Value, Convenience, Safety and Fee 

Accessibility and Clarity 9 (July 2013); Pew Charitable Trusts, supra note 40, at 26. 

337 CUNA, Learn More About Our Prepaid Debit Cards, 

http://www.cunastrategicservices.com/ICUL_Service_Corporation_CUMONEY_Debit_Cards_134.html (last visited 

Oct. 17, 2013); PSCU, Prepaid – Reloadable Cards, http://www.pscu.com/solutions/prepaid-reloadable-cards.html

(last visited Oct. 17, 2013). 

338 Aité Group, supra note 62, at 19. 
135 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

available, which make up 82.9% of the entire market.339 As a result, most of the prepaid cards in 

the sample are not included in the market share figures. Moreover, because two of the firms that 

are included use two different form cardholder agreements, the market share data sometimes 

are presented as ranges rather than as a single figure. 

 

339 Id. at 18-19. 
136 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

APPENDIX B 

Arbitration data procedures 

This appendix describes our methodology for reviewing the data described in section 4. 

OVERVIEW 

The AAA provided us with electronic documents from their case management records regarding 

all non-class consumer arbitrations from January 1, 2010 to February 2013. The AAA grouped 

these .pdf files together in folders by arbitration proceeding. Each folder could contain as few as 

one document to over 400 documents.340 The folders generally all contained some variation of 

the AAA claim form. Otherwise, there were few consistent markers across the documents. 

Accordingly, unless there was a cross-reference from another document, we would likely be 

unaware if documents were missing from the files. Sometimes folders simply stop, seemingly 

mid-way through a proceeding. As we will discuss in future work, it is difficult to tell from the 

case record whether such files reflect claimant withdrawals, settlements, or some other 

outcome. 

We manually reviewed the documents to identify cases relating to our product markets of 

interest: credit cards, checking accounts, and payday loans. This process resulted in 1,241 

folders (each representing a single consumer arbitration) relating to the credit card, checking, or 

payday loan markets from the years 2010, 2011, and 2012. We also identified four prepaid cases, 

which, to date, we have not considered further. We have begun to identify other product 

markets, such as student loan cases, that we may consider in future work. 

 

340 For about two-dozen cases, we were not able to access one or more individual .pdf files provided by the AAA 

because of technical issues. We are working with the AAA to resolve this issue. It is unlikely that these documents 

contain information relating to the data we collected. Once we have resolved the issue, we will update our calculations 

as necessary, and reflect any changes in our statutorily mandated report. 
137 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

Through multiple rounds of manual review, we then coded data points from each of the files 

within our product markets. For some data, the collection process was only an exercise in simple 

data entry: copying information from a particular standard document. In other cases, the 

required information was similarly objective, but required gathering information from multiple 

documents. And finally, one specific type of coding was necessarily more subjective. We discuss 

each of these three “tiers” of data collection below. 

 Direct coding of information from claim forms provided our most “objective” data, as it 

allowed no room for interpretation. This process means that our results capture and 

reflect any errors in the original data. 

 Objective coding across multiple documents was sometimes necessary for certain data 

points. For example, the claim forms may touch on descriptions of the parties’ claims or 

the amounts in dispute, but these descriptions may be more thoroughly elucidated in 

party-drafted summaries of claims, exhibits to claim forms, or correspondence from the 

parties or AAA. The supplemental documents also provided information not raised in the 

claim forms at all, such as fee assessments. Relying on documents outside of the claim 

form, however, introduces some risk of inconsistency because other than the AAA claim 

forms, the case folders did not contain other specific documents on a uniform or nearuniform basis. 

 Finally, our attempt to code the subject matter of claims is more subjective. We used a 

maximum of three such subject matters from a set list for each dispute with the intent of 

capturing the essence of each dispute. The procedure was intended to cover a range of 

claim specification—from a very short case description in a hand-written arbitration 

filing to a 50-page complaint drafted by a team of lawyers in a different dispute. This 

process required a holistic review of each proceeding. To mitigate the risk of 

inconsistent coding across individual reviewers, we relied on multiple rounds of review. 

DIRECT CODING FROM SINGLE DOCUMENTS 

The information we directly coded from AAA claim forms includes but is not limited to: 

 Party and representation information: 

 We coded this information for up to three parties on each side. 
138 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

 We used a binary code to indicate whether more than three parties were involved on 

either “side.” 

 We recorded whether the parties were represented by counsel (including in-house 

counsel for companies) and listed the names of any outside counsel.341

 Basic case information: 

 We recorded whether the claimant(s) purported to represent one or more classes of 

claimants. 

 We listed the date of the claim. 

 If a case file had been closed and then reopened, we recorded the earlier 

date. 

 If the claim form lacked a clear statement about the date, we used other 

information, such as a date header created by a fax-machine, to 

approximate the date. 

 We recorded information from claim forms regarding the relief sought by the 

claimants: 

 We recorded whether claimants sought a specific amount of money; “at 

least” or “at most” certain amounts; or whether they sought a range of 

relief (e.g., “$1,000 to $10,000”). 

 If a claim form attached a supplementary document, like a long-form 

complaint, and included instructions akin to “see attached” in the claim 

form itself, our claim form claim information includes data from those 

incorporated documents. 

 If the documents did not indicate a single overall claim amount for 

multiple claims, we followed the language of the claim form (and attached 

documents), with the exception that if multiple claims related to the same 

cause of action or statute, we would not sum separately delineated claim 

amounts. 

 

341 If any party changed counsel, we recorded the most recent counsel of record. 
139 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

 In many cases, the parties described a specific debt amount in dispute. We 

recorded this number. 

 We also recorded whether the parties sought injunctive relief, declaratory relief, or 

punitive damages.342 

 We recorded who filed the claim. The AAA claim form has three checkboxes 

regarding “who filed,” indicating: consumer-filing, company-filing, or mutual-filing. 

We have not attempted to verify whether the checkbox selected on the claim form is 

an accurate reflection of the submission. 

 We used the address of the first consumer in the AAA claim forms relating to credit card 

disputes to determine a relevant nine-digit zip code. We used that information to 

compare the median income of the consumers’ location against the median income of 

locations for the overall credit cardholding population. The home address information 

was entered into the U.S. Post Office’s on-line “Look up a Zip Code” tool.343 We did not 

record any address information about consumers in this process other than their ninedigit zip codes. If the consumers listed a P.O. Box as their address, we would use the 

nine-digit zip code for the P.O. Box. If they listed their attorney’s address, however, we 

did not include a zip code for them in our analysis. 

DIRECT CODING ACROSS MULTIPLE DOCUMENTS 

We looked to information outside of the AAA claim forms to record certain other information, 

including: 

 Filing fees: 

 We recorded amounts for: 

 Initial administrative fees; 

 

342 We ultimately determined that our data was not sufficiently specific regarding injunctive relief, declaratory relief, 

or punitive damages for reporting purposes. Parties frequently indicated in their claim forms that they were seeking 

such relief, but there was rarely additional information regarding these requests. Similarly, the requests for punitive 

damages were often vague or unbounded. 

343 https://tools.usps.com/go/ZipLookupAction!input.action. 
140 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

 Neutral compensation (money paid by each party to the arbitrator); and 

 Any other fees. 

 In gathering fee information, we also recorded instances relating to consumer fee 

waiver requests and fee advance requests. 

 We recorded whether there was an indication of a prior litigation proceeding and, if so, 

who invoked arbitration as to that prior litigation proceeding. (By “invoking arbitration” 

as to prior litigation, we mean conduct that ends or stays the prior litigation by some 

form of reliance on an arbitration clause. We do not mean filing an arbitration per se.) 

 In many cases documents clearly showed that there was previous litigation and, in 

some cases, they spelled out who invoked arbitration as to those proceedings. For 

example, the arbitration record might contain a court order granting an identified 

party’s motion to compel arbitration. In other cases, the record would include 

documents showing that the consumer initiated the arbitration proceeding in lieu of 

filing an answer in state or federal court. 

 

 In one specific set of cases, we made an assumption about who invoked arbitration as 

to prior litigation. In those cases, the arbitration record: (1) had a clear indication of 

prior litigation; (2) indicated that only one side brought claims in the prior litigation; 

and (3) did not directly identify who invoked arbitration as to the prior litigation. 

When all three criteria were satisfied, we assumed that arbitration was invoked by 

the party who did not file the claims below. Our reasoning was that a party was 

unlikely to file a claim in litigation and then, in the absence of counterclaims, invoke 

arbitration as to its own claim or claims.344

 We have begun attempting to record information about claim amounts to the extent that 

they evolve over time prior to the arbitrator’s resolution or case closure for other 

reasons. This effort involves documents beyond the claim form and attachments to it. 

 

344 In a handful of cases, we found case records that indicated that some companies filed complaints in litigation and 

then actually moved to compel arbitration regarding their own claims—even when there was no consumer 

counterclaim at issue in the court proceeding. 
141 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

 We recorded instances where the AAA stated to a party that it had not complied with the 

AAA Due Process Protocol: e.g., by not paying fees. We also recorded stated terminations 

by the AAA for failure to comply with the Protocol. 

 We recorded basic information about the types of claim brought by each party, 

specifically whether they brought: 

 Federal statutory claims; 

 State statutory claims;345

 Fraud claims; 

 Contract claims; 

 Tort claims; 

 “General, unspecified claims”: given the informal requirements for pleading in 

arbitration, we used this category to record consumer claims that were more 

colloquial in nature—such as “I want my money back,” “This is unfair,” or “I was 

discriminated against”—that the consumer did not identify as falling under any of the 

alternative options above; and 

 “Refutes debt”: we recorded instances in which consumers affirmatively claimed that 

they did not owe an alleged debt, at least to the extent that a consumer did not clearly 

state a contract claim to the same effect. If a consumer did not bring a claim to this 

effect, however, but simply faced a company claim in the arbitration for debt, then we 

did not use this notation. (The fields here were intended to capture claim types, not 

defenses.) 

 We specifically noted instances when consumers brought actions under the following 

statutes: 

 The Alternative Mortgage Transaction Parity Act of 1982, 12 USC § 3801; 

 The Consumer Leasing Act of 1976, 15 USC § 1667; 

 The Electronic Fund Transfer Act, 15 USC § 1693; 

 The Equal Credit Opportunity Act, 15 USC § 1691; 

 

345 As a subset of the statutory claims, we recorded instances where a party brought claims under an unfair or 

deceptive acts or practices statute or rule. 
142 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

 The Fair Debt Collection Practices Act, 15 USC § 1692; 

 The Fair Credit Billing Act, 15 USC § 1601; 

 The Fair and Accurate Credit Transaction Act of 2003, 15 USC § 1601; 

 The Fair Credit Reporting Act, 15 USC § 1681; 

 The Homeowner Protection Act of 1998, 12 USC § 4901; 

 The Real Estate Settlement Procedures Act, 12 USC §2601; 

 The Truth in Savings Act, 12 USC § 4301; 

 The Truth in Lending Act, 15 USC § 1601; 

 The Interstate Land Sales Full Disclosure Act, 15 USC § 1701; 

 Antitrust statutes; 

 The Credit Repair Organization Act, 15 USC § 1679; 

 The Telephone Consumer Protection Act, 47 USC § 227; 

 The Communications Act of 1934, 47 USC § 609; and 

 The Racketeering Influenced and Corrupt Organizations Act, 18 USC § 1961. 

CLAIM SUBJECT MATTERS 

Finally, we attempted to identify the claim subject matter of each dispute, meaning a holistic 

statement about the essence of each arbitration filing. We worked with subject matter experts 

within the Bureau, who reviewed secondary sources and manually reviewed samples of 

complaints in federal and state courts, to help us identify different subject matter areas for 

disputes that might appear between consumers, on the one hand, and companies in connection 

with credit cards, checking accounts/debit cards, and payday loans, on the other hand. 

We organized the subject matters by product in a general hierarchy to mitigate the risk of 

inconsistent coding across multiple reviewers. If application of this hierarchy would cause us to 

miss what we considered to be the “core” subject matters of the claims, then we deviated from it 

to allow for more accurate coding. For each case, we used a maximum of three fields in order to 

capture the “core” subject matters of the dispute. We did not use all three fields unless we 

thought that was necessary. (We frequently used under three.) 

For Filings Relating to Credit Cards 

We coded documents in the following priority order using our three fields. We also noted if: 

(a) the dispute related to other issues not listed among these choices; or (b) there was 

insufficient information to characterize the dispute. Not all of the subject matter categories 

actually appeared in our review of the AAA documents. 
143 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

We could choose one of three different debt-related categories, if any applied: 

 Substantive debt dispute – general claims about debt amounts owed or not owed (often 

brought by companies in the form of accounts stated or breach of contract claims; or 

brought by consumers as requests for declaratory relief that the consumers did not owe 

certain amounts alleged by companies). We also included in this category claims under 

the FDCPA if the only such claim was that the company misrepresented the amount of 

debt in its collection efforts. (If either of the following two debt categories applied, 

however, we did not also code the case as a “substantive debt dispute.”) 

 Debt collection process (harassment) – allegations that a company called consumers 

after hours, used rude or obscene language, or made other threats during debt collection 

activity. 

 Debt collection (process) – other claims relating to a company’s debt collection process, 

such as FDCPA claims that a company contacted consumers known to be represented by 

counsel.346

We also chose any of the following, to the extent that they applied: 

Payments 

 Payment allocation – allegations that payments were applied to the wrong balances 

(such as lower-interest rate balances); 

 Payment period – allegations that a payment or grace period was too short; and 

 Payment posting – allegations that the payment posting process was flawed in some 

respect, such as being too slow. 

Promotions and special features

 Interest rate promotions; 

 Balance transfer promotions; 

 

346 Claims under the FDCPA that companies misrepresented the amount of debt owed, however, were classified as 

“Substantive Debt Dispute” claims. 
144 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

 Convenience checks; and 

 Add-on products. 

Interest and Fee Issues

 Interest rates/charges; 

 Late fees – this category was used, as opposed to “Interest Rates/Charges” when the 

allegations related solely to late fees, with no claims about interest rates; 

 Foreign currency/transaction fees – allegations about foreign currency or transaction 

fees or exchange rate calculations; 

 Annual/monthly fees; and 

 Other fees. 

Credit line issues

 Credit line increases/decreases; 

 Account opening issues; and 

 Account closing issues. 

Improper transactions

 Unauthorized use of account – allegations that account was improperly used by known 

or unknown parties; 

 Merchant-related billing error – allegations that a credit card company has failed to 

address alleged merchant failure to refund or correct consumers’ bills; and 

 Set-off – allegation that party has set-off a credit card balance against some other 

account. 

Information sharing and credit reporting

 Credit reporting; 

 FACTA –if a dispute involved FACTA claims, we would not use the Credit Reporting (or 

the disclosure of private information) notation unless other claims required that we do 

so; and 

 Disclosure of private information – allegations that information was improperly 

disclosed, at least outside the credit reporting context. 
145 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

Other 

 Discrimination; 

 Telemarketing; and 

 Antitrust/conspiracy issues. 

For filings relating to checking accounts and debit cards 

We used similar categories, including options to note that (a) the disputes related to other issues 

not listed among these choices or (b) there was insufficient information to characterize the 

dispute. 

We could choose one of three different debt-related categories, if any applied: 

 Substantive debt disputes; 

 Debt collection process (harassment); and 

 Debt collection process (other). 

We also chose from the following: 

Fee issues, generally 

 Foreign currency/transaction fees; 

 Annual/monthly fees; and 

 Other fees (other than overdraft fees). 

Overdraft issues

 Overdraft ordering/timing; and 

 Other overdraft issues. 

Account opening and closing 

 Refusal to open; 

 Other account opening/reopening issues; and 

 Account closing issues. 

Issues with Deposits

 Deposits – process issues – allegations that deposit process was flawed in some respect 

(e.g., the consumer did not receive deposited funds within the proper time frame); and 
146 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

 Deposits – other errors – allegations of substantive error in the deposit process (e.g., 

that the consumer did not receive deposited funds in whole or in part). 

Issues with Authorized Payments 

 Authorized payments – process issues – allegations that payments process did not work 

properly (e.g., process was contrary to representations); and 

 Authorized payments – other errors –allegations of substantive payment error (e.g., 

wrong person paid or not paid at all). 

Payment error – unauthorized payments

 Unauthorized recurring payments – this also was used for allegations that a bank failed 

to honor stop payments on single checks; 

 Merchant-related error; 

 Improper set-off; and 

 Other unauthorized use – this would cover failure to protect against fraudulent access; 

failure to address fraudulent checks, ACH, debit card, or ATM transactions; 

unauthorized use by known parties; or situations where consumers claimed that banks 

improperly provided funds pursuant to court order. 

Information Sharing and Credit Reporting

 Credit reporting; 

 FACTA; and 

 Disclosure of private information. 

Other

 Add-on products; 

 Discrimination; 

 Telemarketing Issues; and 

 Antitrust/Conspiracy. 
147 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

Finally, for filings relating to payday loans 

We used similar categories, including options to note that (a) the disputes related to other issues 

not listed among these choices or (b) there was insufficient information to characterize the 

dispute. 

Debt issues 

 Substantive debt disputes; 

 Debt collection process (harassment); and 

 Debt collection process (other). 

Account disclosures/breach of contract

 Failure to disclose or follow core terms – we defined core terms to mean the finance 

charge amount and the duration of the loan; and 

 Failure to disclose or follow other terms – this would include disclosure issues relating to 

APRs; if a case fell into both this and the prior category, we would categorize the case as 

falling into this category. 

Rollovers

 Rollover issues. 

State regulatory requirements – we used only one of these four options at most, with priority 

leading from the beginning to the end of this list: 

 Unlicensed lending activity; 

 Excessive interest rates; 

 Improper loan duration; and 

 Loan amount above state cap. 

Bank account debits

 Improper access to DDA (ACH); and 

 Improper access to DDA (Check). 

Refusal

 Refusal to issue or reissue loans. 
148 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

Information sharing or credit reporting

 Credit reporting; and 

 Disclosure of private information. 

Product mischaracterization

 Product mischaracterization; 

 Credit Service Organizations – allegations that state regulations violated; and 

 Credit Service Organizations – allegations that federal regulations violated. 

Other

 Add-on products; 

 Discrimination; 

 Telemarketing issues; 

 Antitrust/conspiracy claims; and 

 Other unfair loan practices. 

 
149 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

APPENDIX C 

Identifying credit card cases in 

federal district courts 

As a basis of comparison, we reviewed pleadings in federal district courts for the years 2010, 

2011, and 2012 to ascertain the number of consumer disputes relating to the credit card product 

market for those years. To gather pleadings for our review, we used the LexisNexis Courtlink 

database, which LexisNexis describes as the “largest collection of dockets and documents.”347

Courtlink search strings are limited to a maximum of either 32 words or 2,000 characters, 

whichever is reached first.348 Courtlink does not allow for the use of parentheses to control the 

order of operations of search terms. Accordingly, we crafted a deliberately overbroad text search 

in Courtlink, using a search string intended to identify documents that were credit-card related 

and likely to be pleadings. We followed that with manual review. 

Our search string was: 

“credit card” or “credit cards” or “charge card” or “charge cards” and complaint or crossclaim or 

counterclaim or crossclaims or counterclaims and not motion 

Applying Courtlink’s order of operations, the search resolved in the following order: 

[(“credit card” or “credit cards” or “charge card” or “charge cards”) and (complaint or crossclaim 

or counterclaim or crossclaims or counterclaims)] and not motion 

 

347 http://www.lexisnexis.com/en-us/products/courtlink-for-corporate-or-professionals.page (“Search across the full 

text of more than 168 million federal and state court dockets and documents in a single click.”). 

348 https://courtlink.lexisnexis.com/Search/Single/SingleSearchHelp.aspx. 
150 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

The search, when applied against all of Courtlink’s federal district court data sets, returned more 

than 32,000 documents. We manually reviewed these documents to isolate complaints in 

federal court containing company-consumer disputes about credit cards. 

We also coded other information, including: 

 Whether the plaintiff purported to represent a class; 

 The court in which the pleading was filed; 

 The docket number; 

 Whether a jury was requested; 

 The filing date; and 

 Whether the consumer or the company filed. 

For manageability, we focused our review on initial complaints, not amended complaints. We 

also eliminated duplicate hits. At the end of that process, we identified 3,054 cases. 
151 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

APPENDIX D 

Additional arbitration data 

This appendix contains additional data figures that are referenced in section 4.7. 

Figures 32 and 33, which relate to all credit card consumer arbitrations (debt collection, along 

with non-debt collection) exclude credit card proceedings for which we were unable to associate 

census tract-based median income information. In some cases, the AAA case record did not 

provide sufficient location information. (For example, it might provide location information 

only for the consumer’s counsel or debt settlement provider.) Thus, the analysis shown here is 

based on information from 911 credit card arbitrations. 

Figures 34 and 35, which relate to checking account/debit card consumer arbitrations, similarly 

exclude arbitrations for which we were unable to associate census tract-based median income 

information. Thus, it is based on information from 56 checking account/debit card arbitrations. 

Finally, Figures 36 and 37, which relate to payday consumer arbitrations, exclude payday cases 

for which we were unable to associate census tract-based median income information. 

Accordingly, it is based on information from 123 payday arbitrations. 
152 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

FIGURE 32: MEDIAN INCOME OF CREDIT CARD HOLDER LOCATIONS AND LOCATIONS OF CONSUMERS 

INVOLVED IN CREDIT CARD CONSUMER ARBITRATIONS 2010-12 

FIGURE 33: PERCENTAGE DIFFERENCES BETWEEN DISTRIBUTIONS IN FIGURE 32, CREDIT CARD 

ARBITRATIONS 
153 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

FIGURE 34: MEDIAN INCOME OF U.S. CENSUS TRACTS AND LOCATIONS OF CONSUMERS INVOLVED IN 

CHECKING ACCOUNT/DEBIT CARD CONSUMER ARBITRATIONS 2010-12 

FIGURE 35: PERCENTAGE DIFFERENCES BETWEEN DISTRIBUTIONS IN FIGURE 34, CHECKING 

ACCOUNT/DEBIT CARD ARBITRATIONS 
154 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

FIGURE 36: MEDIAN INCOME OF U.S. CENSUS TRACTS AND LOCATIONS OF CONSUMERS INVOLVED IN 

PAYDAY CONSUMER ARBITRATIONS 2010-12 

FIGURE 37: PERCENTAGE DIFFERENCES BETWEEN DISTRIBUTIONS IN FIGURE 36, PAYDAY 

ARBITRATIONS 
155 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

APPENDIX E 

Small claims court data and 

methodology 

This appendix provides additional data for section 5. It also provides a more detailed description 

of our methodology. 

DATA BY JURISDICTION 

Table 10 shows data by jurisdiction for our estimated outer limit on consumer claims against our 

credit card issuer sample. 

Our issuer sample covers on the order of 84% of the credit card market measured by 

outstandings.349 

We have included for each jurisdiction the estimated annual volume for credit card direct mail 

for the issuer sample overall, using data from a commercial provider.350 Those volume numbers 

show that our issuer sample collectively has a significant presence in each jurisdiction, at least 

from a marketing perspective.351 It is true that a low number of claims for a specific issuer in a 

particular jurisdiction may reflect a lack of issuance by that issuer in that area. To address this 

issue, we have noted with an asterisk every instance in which a specific issuer had no direct mail 

volume for 2012. Our review sample only includes one predominantly regional player. The rest 

are national issuers. So this effect is primarily isolated to that one issuer. 

 

349 See supra note 310. 

350 Data were available only by state. For counties, therefore, we assume that a county’s population share in the state 

is equal to its share of direct mail. 

351 In addition, for every jurisdiction, the direct mail numbers demonstrate that our sampled issuers collectively have 

a significant presence. 
156 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

TABLE 10: INDIVIDUAL SMALL CLAIMS COURT SUITS AGAINST ISSUERS 2012 

 Citi Wells USB USAA AmX Disc 5/3 BoA Cap1 JPM All 

Issuers 

2012 

Mailings per 

Mintel 

Alaska 1 0 0 0 0 0 * 2 0 0 3 n/a 

Connecticut 0 2 0 0 0 0 * 4 0 5 11 129,650,753 

Delaware 1 0 0 0 0 1 1 1 1 0 5 15,665,346 

District of Columbia 2 4 0 0 0 0 * 2 1 0 9 40,875,797 

Iowa 1 3 4 0 0 0 * 1 5 3 17 125,424,333 

Minnesota 0 17 5 2 0 1 * 1 0 0 26 260,603,424 

New Mexico 0 1 0 1 0 0 * 0 0 0 2 36,658,268 

New Jersey 5 19 0 3 2 0 * 17 2 9 57 271,344,574 

New York, ex-NYC 13 9 0 0 0 0 0 18 6 21 67 70,238,046 

North Dakota 0 0 0 0 0 0 * 0 0 0 0 378,259,494 

Oklahoma 0 0 0 1 0 0 * 0 0 3 4 110,984,476 

Oregon 0 6 2 1 0 0 0 3 1 1 14 156,191,952 

Utah 1 5 1 1 0 0 * 1 0 1 10 116,951,853 

Wisconsin 1 1 1 0 0 0 0 2 0 3 8 253,280,825 

Alameda (CA)* 1 0 0 0 3 0 * 2 0 1 7 57,290,710 

Broward (FL) 1 0 1 0 0 0 0 17 0 4 23 59,396,856 

Clark (NV) 1 2 0 1 1 0 * 6 1 0 12 40,677,128 

Harris (TX) 1 2 0 1 2 0 * 9 6 11 32 118,398,987 

Hillsborough (FL) 0 9 0 1 0 0 0 12 1 4 27 41,767,393 

King (WA) 0 8 1 1 0 0 * 4 0 13 27 71,826,030 

Kings (NY) 11 2 1 0 9 1 0 13 7 32 76 84,569,238 

New York (NY) 15 2 0 0 9 0 0 12 2 27 67 53,545,763 

Orange (CA) 8 14 7 0 1 0 * 36 1 11 78 114,190,320 

Palm Beach (FL) 0 9 1 25 5 0 0 5 2 4 51 44,856,321 

Philadelphia (PA)* 0 0 0 0 0 0 0 0 0 0 0 58,925,778 

Queens (NY) 8 3 0 0 3 0 0 8 10 4 36 75,318,585 

Riverside (CA) 4 8 4 0 1 0 1 32 1 8 59 83,061,972 

Sacramento (CA) 2 9 2 0 1 0 * 0 1 5 20 53,820,389 
157 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

San Bernardino (CA) 0 5 4 0 0 1 * 11 0 4 25 77,203,777 

San Diego (CA) 6 28 6 1 1 0 * 20 2 14 78 117,417,788 

Santa Clara (CA) 0 2 0 0 1 0 * 6 2 8 19 67,584,914 

All jurisdictions 83 170 40 39 39 4 2 245 52 196 870 

The two figures below combine the data from Table 9 in section 5.3 with the data from Table 10 

above. Figure 38 shows the data from the jurisdictions that do not limit or bar the use of the 

small claims courts by companies. In these jurisdictions, company-initiated claims uniformly 

outnumber our outer limit estimate for consumer-filed claims. Figure 39, by contrast, shows the 

data from jurisdictions almost all of which limit or bar company use of small claims court. In 

these jurisdictions, our outer limit estimate for the number of consumer-filed credit card claims 

is larger than the number of company-filed claims. 

FIGURE 38: INDIVIDUAL AND ISSUER USE OF SMALL CLAIMS COURT 2012 – PART 1 (SCALED FROM 

ZERO TO 14,000) 

New Mexico

Delaware

District of Columbia

Iowa

Hillsborough (FL)

Philadelphia (PA)

Minnesota

Palm Beach (FL)

Broward (FL)

Connecticut

Harris (TX)

Wisconsin

-200 1,800 3,800 5,800 7,800 9,800 11,800 13,800

Individual-Initiated

Company-Initiated
158 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

FIGURE 39: INDIVIDUAL AND ISSUER USE OF SMALL CLAIMS COURT 2012 – PART 2 (SCALED FROM 

ZERO TO 100) 

METHODOLOGY 

We searched two sources of data to determine the incidence of consumer financial disputes in 

small claims court: state databases and county databases. 

State-level sample 

We checked the online databases of the small claims courts of the 50 states and the District of 

Columbia. We included a state database as a source of data if it allowed us to do all of the 

following: 

 Perform a keyword search by party name or permit easy identification of parties; 

 Identify a party as a plaintiff, defendant, or third party (such as a trustee or garnishee); 

 Capture statewide data, at least according the database. We excluded states for which we 

could tell that a number of counties were missing. The one exception was New York 

which we included because we were able to capture missing counties using our countybased sample; 

 Conduct statewide keyword searches rather than county-by-county searches; 

 Identify suits filed in 2012; and 

North Dakota

Alaska

Oklahoma

Alameda (CA)

Utah

Clark County (NV)

Oregon

Santa Clara (CA)

Sacramento (CA)

San Bernardino (CA)

King County (WA)

Queens (NY)

New Jersey

Riverside (CA)

New York (NY)

New York, ex-NYC

Kings (NY)

Orange (CA)

San Diego (CA)

-80 -60 -40 -20 0 20 40 60

Individual-Initiated

Company-Initiated
159 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

 Run searches for free or for a reasonable cost (i.e., less than $1,000 per state). 

The jurisdictions meeting the above criteria included Alaska, Connecticut, Delaware, the District 

of Columbia, Iowa, Minnesota, New Mexico, New Jersey, New York (excluding New York City), 

North Dakota, Oklahoma, Oregon, Utah, and Wisconsin. (The databases of the remaining 36 

states did not meet one or more of the criteria above.) According to the 2010 Census data, our 

covered states had a combined population of 52,894,194, or about 17.1% of the total U.S. 

population of 308,745,538.352 The states meeting our criteria were concentrated in the Midwest 

and Northeast. 

County-level sample 

To supplement our state-level sources, we checked the online small claims court databases of 

the 30 most populous counties.353 We included a county as a source of data if the relevant 

database permitted us to do the following: 

 Perform a keyword search by party name or permit easy identification of parties; 

 Identify a party as a plaintiff, defendant, or third party (such as a trustee or garnishee); 

 Identify claims filed between January 1, 2012 and December 31, 2012; and 

 Run searches for free or for a reasonable cost (i.e., less than $1,000 per state). 

Thirteen counties met our criteria above: Harris (TX), Orange County (CA), Riverside (CA), San 

Diego (CA) San Bernardino (CA), Clark (NV), King (WA), Santa Clara (CA), Broward (FL), 

Philadelphia (PA), Sacramento (CA), Palm Beach (FL), and Hillsborough (FL). One county 

(Suffolk County, NY) met the criteria above but was excluded because it was already included in 

 

352 All population data retrieved from http://www.census.gov. New York state results exclude the population of the 

five boroughs of New York City. 

353 These 30 counties in order of population were as follows: Los Angeles, CA (9,818,605); Cook County, IL 

(5,194,675); Harris County, TX (4,092,459); Maricopa County, AZ (3,817,117); San Diego County, CA (3,095,313); 

Orange County, CA (3,010,232); Miami-Dade County, FL (2,496,435); Kings County, NY (2,504,700); Dallas County, 

TX (2,368,139); Queens County, NY (2,230,722); Riverside County, CA (2,189,641); San Bernardino County, CA 

(2,035,210); Clark County, NV (1,951,269); King County, WA (1,931,249); Tarrant County, TX (1,809,034); Santa 

Clara, CA (1,781,642); Wayne County, MI (1,820,584); Broward County, FL (1,748,066); Bexar County, TX 

(1,714,773); New York County, NY (1,585,873); Philadelphia County, PA (1,526,006); Alameda County, CA 

(1,510,271); Middlesex County, MA (1,503,085); Suffolk County, NY (1,493,350); Sacramento County, CA (1,418,788); 

Bronx County, NY (1,385,108); Nassau County, NY (1,339,532); Palm Beach County, FL (1,320,134); Cuyahoga 

County, OH (1,280,122); and Hillsborough County, FL (1,229,226). 
160 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

a state-level source (New York state). In addition to the online small claims court databases, we 

found county-level data from two other sources. First, we collected data in person from 

terminals in the small claims court clerk offices of New York, Queens and Kings Counties (the 

boroughs of Manhattan, Queens and Brooklyn). While not available online, these databases met 

all of the other county-level criteria. Second, Westlaw and Lexis’s Courtlink provided data for 

two counties not otherwise available online: Alameda and Riverside Counties (both CA).354

In all, these county-level sources added 17 jurisdictions to our dataset, or approximately 

35,160,801 persons all from states (California, Florida, Nevada, Pennsylvania, Texas, and 

Washington) or locations (New York City) not already included in our set of state-level sources. 

In total all our sources—state and county—together cover approximately 85 million people, and 

20 states (including the District of Columbia), either in whole or in part. 

In these 31 states and counties, the small claims jurisdictional limit (the maximum amount of 

money damages that a plaintiff may claim and still require a defendant to dispute in small 

claims court) ranged from $3,000 to $15,000, as shown below. 

TABLE 11: SMALL CLAIMS JURISDICTIONAL MONEY DAMAGES LIMITS 

State/County Small Claims Jurisdictional Limit 

Alaska $10,000 

Connecticut $5,000 

Delaware $15,000 

District of Columbia $5,000 

Iowa $5,000 

Minnesota $10,000 

New Jersey $3,000 ($5,000 if demand is for return of deposit) 

 

354 Other than these two counties, Westlaw and Lexis provided no unique additional jurisdictions that were not 

already present in our dataset; conversely, most of the jurisdictions in our dataset were not available on Westlaw and 

Lexis. (To the extent that Westlaw and Lexis offered data available independently online, our searches of Westlaw and 

Lexis either confirmed our results or showed that Westlaw and Lexis offered fewer results.) 
161 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

New Mexico $10,000 

New York (excluding NYC) $5,000 (additional jurisdictional limits for companies) 

North Dakota $10,000 

Oklahoma $7,500 

Oregon $10,000 

Utah $10,000 

Wisconsin $10,000 for replevin, $5,000 for tort, $25,000 for consumer credit transaction 

(for return of personal property subject to a lease or credit from a dealer) 

Alameda (CA) $10,000 (additional jurisdictional limits for companies) 

Broward (FL) $5,000 

Clark (NV) $7,500 

Harris (TX) $10,000 

Hillsborough (FL) $5,000 

King (WA) $5,000 

Kings (NY) $5,000 (additional jurisdictional limits for companies) 

New York (NY) $5,000 (additional jurisdictional limits for companies) 

Orange (CA) $10,000 (additional jurisdictional limits for companies) 

Palm Beach (FL) $5,000 

Philadelphia (PA) $12,000 

Queens (NY) $5,000 (additional jurisdictional limits for companies) 

Riverside (CA) $10,000 (additional jurisdictional limits for companies) 

Sacramento (CA) $10,000 (additional jurisdictional limits for companies) 

San Bernardino (CA) $10,000 (additional jurisdictional limits for companies) 

San Diego (CA) $10,000 (additional jurisdictional limits for companies) 

Santa Clara (CA) $10,000 (additional jurisdictional limits for companies) 
162 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

Institutions 

Our search for disputes in small claims court involving consumer financial products focused on 

credit card issuers. The industry is concentrated, so searches for relatively few issuers cover 

most of the market.355 To come up with our list, we started with the list of the largest issuers 

with pre-dispute arbitration clauses in their agreements at year-end 2012.356 We ranked the top 

15 by consolidated volume of credit card loans outstanding at year end 2012, based on call 

report data, as reported by SNL.357 This is shown below. 

TABLE 12: SUMMARY OF LARGE ISSUERS BY SMALL CLAIMS COURT ARBITRATION CARVE-OUT STATUS 

Credit Card Issuer 2012 Loans Outstanding 

($ 000s)

Small Claims Court 

Carve-Out? 

1. Citibank 107,126,000 Yes – Mutual 

2. American Express 56,714,000 Yes – Consumer only 

3. Discover 50,927,790 Yes – Consumer only 

4. GE 26,349,553 Yes – Mutual 

5. Wells Fargo 24,651,342 Yes – Mutual 

6. U.S. Bank 17,120,000 Yes – Mutual 

7. USAA 15,879,574 Yes – Mutual 

8. Barclays 14,281,456 Yes – Mutual 

9. Comenity 7,245,336 Yes – Consumer only 

 

355 The credit card market is concentrated; the 10 credit card issuers we selected make up an overwhelming share of 

the market, as measured by outstandings. See supra note 310. 

356 See section 3, supra. 

357 We adjusted two loans outstanding figures where SNL’s automated data via Excel appeared to be inconsistent with 

our independent check of the regulatory filings. 
163 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

10. First National Bank of 

Omaha 4,229,188 Yes – Claims < $25,000

11. Fifth Third 2,085,601 No 

12. BB&T 1,744,138 Yes – Consumer Only 

13. Merrick 1,323,392 Yes – Consumer Only 

14. Regions 899,929 Yes – Mutual

15. KeyBank 729,151 Yes – Mutual 

We first selected the top four issuers from this list that had “mutual” small claims court carveouts. Excluding GE, this gave us Citibank, Wells Fargo, U.S. Bank, and USAA. We excluded GE 

because its credit card business is exclusively private label, meaning that it issues no GE cards, 

only cards for other businesses.358 We then added American Express and Discover, as the largest 

issuers with non-mutual small claims court carve-outs (meaning that consumers may require 

the resolution of a dispute in small claims court, but the issuer may not do so), and Fifth Third, 

as the largest issuer with an arbitration provision with no small claims court carve-out. The 

resulting issuers are shown in bold above. 

As a further comparison, we selected the largest issuers with no arbitration clauses at all. The 

top three issuers with no arbitration clause, by consolidated credit card loans outstanding at 

year end 2012, were (in order) Chase ($117.6 billion), Bank of America ($94.8 billion), and 

Capital One ($77.8 billion).359 Altogether, the 10 issuers we selected had nearly $564.8 billion in 

credit card loans outstanding at year end 2012. 

 

358 With private label credit cards, the actual credit card issuer may not be named on the card or in materials the 

account holder might see, such as the credit card agreement, or the monthly credit card statements. As a result, such 

an account holder might only know to file against the merchant listed on the credit card rather than the actual issuer. 

Given the lengthy list of companies issuing cards through GE, a search for consumer-initiated claims against GE likely 

would have been difficult, time consuming and still potentially inaccurate. 

359 We adjusted one figure reported by SNL. As to Bank of America, the SNL reported number included foreign credit 

card loans. We added the domestic FIA Card Services, National Association credit card loans (94,832,485,000) to the 
164 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

Searching for cases 

To search the 31 databases meeting our criteria, we formulated search terms to find disputes in 

small claims courts initiated by individuals against credit card issuers (“consumer-filed cases”) 

and by issuers against individuals (“issuer-filed cases”). 

To develop search terms for the consumer-filed cases, we started with the names of the parent 

companies for our sample of issuers. We added all their subsidiaries included in the credit card 

agreement database or reported by SNL as holding credit card loans as of year-end 2012. The 

resulting list of names is in column 2 of Table 13 below. From this list, we developed search 

terms. We selected the minimum number of common words or phrases that would still capture 

every legal entity related to the 10 issuers we identified (e.g., “American Express” was intended 

to capture both “American Express Centurion Bank” and “American Express Travel Related 

Services, Inc.”; “Citi” was intended to capture “Citibank, National Association” and “Citigroup, 

Inc.”). 

We added other terms likely to be used by consumers as plaintiffs, based on the assumption that 

consumers (or the court employees entering case information in small claims court databases) 

may not always list the correct credit card-issuing legal entity in their suits. They may 

erroneously list, instead, the corporate parent (“American Express Co.”), a truncated and 

informal version of the name (“American Express” or “AmEx”), alternate spellings (e.g., “Capitol 

One” for “Capital One”), or spacings (“J. P. Morgan” rather than the now-official “JPMorgan”). 

They may also use trade names that would not be found in a search for the main entity (e.g., 

“BankAmericard”). 

The full list of search terms is below in Columns 3 and 4.

 

domestic Bank of America, National Association credit card loans (2,822,000). After the top three issuers, the next 

three issuers without arbitration clauses had significantly smaller volumes of loans outstanding: Navy Federal Credit 

Union ($6.777 billion), PNC Bank, National Association ($3.821 billion), and World’s Foremost Bank ($3.852 billion). 
165 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

TABLE 13: CREDIT CARD ISSUING ENTITIES AND SEARCH TERMS 

Corporate 

Parent 

Subsidiary holding credit card loans as of 

YE 2012 per SNL 

Search Term 

Based on Issuing 

Entities + Parents 

Other Terms 

(Abbreviation, 

Misspellings, 

Trade Names) 

American 

Express 

Co. 

American Express Bank, FSB 

American Express Centurion Bank 

American Express Travel Related 

Services Company, Inc. 

American Express Credit Corporation 

“American 

Express” 

“AmEx” 

“Am Ex” 

Citigroup, 

Inc.* 

Banamex USA 

Citibank, National Association 

“Banamex” 

“Citibank” 

“Citicorp” 

“Citigroup” 

“Citi” 

Discover 

Financial 

Services 

Discover Bank “Discover” N/A 

Fifth Third 

Bancorp Fifth Third Bank “Fifth Third” 

“Fifth 3rd" 

“5th Third” 

“5th 3rd” 

“5/3rd" 

U.S. 

Bancorp 

U.S. Bank National Association 

Elan Financial Services 

“U.S. Bancorp” 

“U.S. Bank” 

“Elan” 

“US Bancorp” 

“US Bank” 

“U S Bancorp” 

“U S Bank” 

“U. S. Bancorp” 

“U. S. Bank” 

USAA 

Insurance 

Group 

USAA Federal Savings Bank 

USAA Savings Bank 

“United Services” 

“USAA” n/a 

Wells 

Fargo 

& Co. 

Wells Fargo Bank Northwest, National 

Association 

Wells Fargo Bank, National Association 

Wells Fargo Financial National Bank 

“Wells Fargo” “WellsFargo” 

JPMorgan 

Chase 

& Co. 

JPMorgan Chase Bank, National Association 

Chase Bank USA, National Association 

“JPMorgan” 

“Chase” 

“JP Morgan” 

“J P Morgan” 

“J.P.Morgan” 

“J.P. Morgan” 

“J. P. Morgan” 

Bank of 

America 

Corp. 

Bank of America, National Association 

FIA Card Services, National Association 

“Bank of America” 

“FIA” 

“BoA” 

“BofA” 

“BankAmericard” 
166 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

Capital 

One 

Financial 

Corporation 

Capital One, National Association 

Capital One Bank (USA), National Association “Capital One” 

“Capital 1” 

“Cap One” 

“Cap 1” 

“Capitol One” 

* Note: Department Stores National Bank is a subsidiary of Citigroup, Inc. that reported some credit card loans on its 

balance sheet. It has no arbitration clause and, as such, it was excluded from Citibank’s loan volume and search 

terms. 

Once we identified cases that named entities responsive to these search terms, we eliminated 

duplicate entries because different search terms sometimes retrieved the same case. We also 

removed cases in which the responsive entity was not the defendant (e.g., a garnishee) because 

in such cases the issuer is not involved in a dispute with a consumer. We culled cases in which 

the responsive entity was by its name alone identifiably not a credit card or checking-related 

subsidiary. (For instance, we cut results in which “mortgage,” “home loan,” “insurance,” 

“casualty,” “auto,” “investment,” or “securities” appeared in the entity name.) Finally, we also 

removed cases in which the filing party was not a natural person. 

For issuer-filed cases, we included only disputes in which the named plaintiff was one of the 

legal entities issuing credit cards identified in Table 13. In other words, we used column 2 for 

our search, not columns 3 and 4. In most jurisdictions we could not tell from available 

documents if a credit card was involved in the dispute. We assumed that companies would file 

credit card-related disputes only in the name of credit card-issuing legal entities and not in the 

name of other subsidiaries, including the parent company. Finally, we removed cases in which 

the party being sued was not a natural person. 

Consumer Checking Account Volume 

The search terms used for consumer-filed cases will also identify a number of cases against large 

retail banks within the same corporate families. Many of the issuers covered by our sample also 

offer checking account and other retail banking products. In addition, our operative search 

terms for credit card issuer will identify other subsidiaries in the same corporate family that do 

not issue credit cards, but do offer checking account and other retail banking products. As a 

result, we should expect our outer limit estimate for credit card consumer-filed cases to include 

a significant share of any checking account and other retail banking product cases filed in these 

small claims courts. 
167 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

APPENDIX F 

Defined terms 

We set out below a number of defined terms as used in this presentation: 

DEFINED TERM 

AAA American Arbitration Association, an arbitration administrator 

AAA DATA Electronic case records provided voluntarily by the AAA to the Bureau 

for all AAA-administered consumer arbitration filings since 2010 

AAA CASE DATA A subset of AAA Data pertaining only to credit card, checking 

account, or payday loan disputes for 2010, 2011 and 2012 

ADMINISTRATIVE FEES Administrative fees payable to an arbitration administrator 

ARBITRATION CLAUSE A provision in a consumer contract that provides for binding arbitrated 

resolution of claims that arise between the parties 

ARBITRATOR FEES Fees payable to an arbitrator to resolve claims that arise between the 

parties 

BUREAU Consumer Financial Protection Bureau 

CLASS ACTION A form of litigation in which a party seeks to or does represent a 

“class” of similarly-situated parties 

CONSUMER DUE 

PROCESS PROTOCOL 

AAA-adopted principles directed to the fairness of consumer 

arbitrations 

COMPANY-FILED 

ARBITRATION 

Arbitration recorded on AAA claim form as being filed by a company 

against a consumer 

CONSUMER-FILED 

ARBITRATION 

Arbitration recorded on AAA claim form as being filed by a consumer 

against a company 
168 CONSUMER FINANCIAL PROTECTION BUREAU, ARBITRATION STUDY PRELIMINARY RESULTS 

DEBT COLLECTION 

ARBITRATION 

Company-filed arbitration seeking debt, or consumer-filed or mutually 

submitted arbitration made after court collection proceedings; see 

Section 4.2.2 for more details 

FAA Federal Arbitration Act, 9 U.S.C. §§ 1-16 

FLESCH READABILITY 

SCORE 

Readability tests designed to indicate the difficulty of comprehension 

of text. The tests are a widely used standard in plain language 

analysis. Scores range from 0.0 to 100.0, with a higher number 

indicating greater readability. 

FLESCH-KINCAID 

GRADE LEVEL 

Measure that translates readability of a text into the grade level 

required to understand the text. A lower grade level indicates greater 

readability. 

FORMAL DISPUTE 

RESOLUTION 

Litigation or arbitration mechanism that can effect binding resolution 

of a dispute 

GPR PREPAID CARD General purpose reloadable prepaid card 

INITIAL FEES Administrative and arbitrator fees assessed at the beginning of a 

consumer arbitration 

JAMS JAMS, Inc. (formerly known as Judicial Arbitration and Mediation 

Services), an arbitration administrator 

MUTUALLY 

SUBMITTED 

ARBITRATION 

Arbitration recorded on claim form as being submitted by both parties 

NAF National Arbitration Forum, previously a significant consumer 

arbitration administrator 

PRIVATE LABEL 

CREDIT CARD 

Credit card issued and/or managed by a financial institution on behalf 

of a merchant or a wholesale manufacturer for use only in that 

merchant establishment. 

SUPPLEMENTARY 

PROCEDURES AAA rules applicable to consumer arbitration