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A05248 Summary:

COSPNSRWeinstein, Sepulveda, Galef, Williams, Miller MG, Colton, Dickens, Gottfried, D'Urso, Seawright, Jaffee, Zebrowski, Mosley
Amd 399-c, Gen Bus L
Requires mandatory arbitration clauses in certain consumer contracts to be disclosed and explained to the consumer.
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A05248 Memo:

submitted in accordance with Assembly Rule III, Sec 1(f)
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 1 of the bill amends Section 399-c of the general business law to add a definition for the term "representative", and adds a new subdi- vision 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: 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.
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