NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A2157
SPONSOR: Dinowitz TITLE OF BILL:
An act to amend the general business law, in relation to requiring
notice of mandatory arbitration clauses in certain consumer contracts
PURPOSE OR GENERAL IDEA OF BILL:
This bill would require representatives of companies responsible for
administering a contract for consumer goods, services, or employment to
a consumer to disclose the existence of any mandatory arbitration clause
contained within the contract, and clearly explain what a mandatory
arbitration clause is.
SUMMARY OF SPECIFIC PROVISIONS:
Section one of the bill amends § 399-c of the general business law to
add a definition for the term "representative", and adds a new subdivi-
sion 3 to require companies to disclose to the consumer any mandatory
arbitration clause in a contract for consumer goods, services, or
employment and clearly explain, in writing, what an arbitration clause
is. If a consumer is agreeing to a contract by a means that is not in
person, they must be provided information informing them that they are
signing a mandatory arbitration clause and a web link to a clear expla-
nation of what an arbitration clause is.
Section 2 provides the effective date.
JUSTIFICATION:
As mandatory arbitration clauses in contracts for consumer goods,
services, and employment have become more and more commonplace, consum-
ers are increasingly forced to resolve disputes via arbitration. In many
cases, consumers are unaware that the contract they are signing requires
them to resolve disputes through arbitration, and not through the court
system. They are in effect unknowingly signing away the right to their
"day in court."
Questions continue to be raised about the fairness of the arbitration
process, due to studies finding that arbiters tend to disproportionately
rule in favor of businesses over the consumers. Private arbitration
companies have a financial incentive to rule in favor of the business
that is paying for their services. Given these questions, it is appro-
priate to clearly disclose the existence of an arbitration clause in a
contract and ensure that the consumer understands the meaning and
ramification of the clause before agreeing to sign the contract. PRIOR
LEGISLATIVE HISTORY:
2021-22:A.1450- Passed Assembly / S.2748 -Referred to Consumer
Protection
2019-20:A.2608- Reported referred to Rules/ S.3581 - Referred to Consum-
er Protection
2017-18:A.5248- Third Reading Calendar
2015-16:A.9545- Passed Assembly
FISCAL IMPLICATIONS:
None to the state.
EFFECTIVE DATE:
This act shall take effect on the one hundred eightieth day after it
shall have become a law.
