NY State Senate Bill 2021-S2748

Senate Bill S2748

2021-2022 Legislative Session

Relates to requiring mandatory arbitration clauses in certain consumer contracts to be disclosed to the consumer

download bill text pdf

Archive: Last Bill Status - In Senate Committee Consumer Protection Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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Actions

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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 05, 2022	referred to consumer protection
Jan 25, 2021	referred to consumer protection

2021-S2748 (ACTIVE) - Details

See Assembly Version of this Bill:: A1450
Current Committee:: Senate Consumer Protection
Law Section:: General Business Law
Laws Affected:: Amd §399-c, Gen Bus L
Versions Introduced in Other Legislative Sessions:: 2015-2016: A9545
2017-2018: A5248
2019-2020: S3581, A2608
2023-2024: S6248, A2157

2021-S2748 (ACTIVE) - Summary

Requires mandatory arbitration clauses in certain consumer contracts to be disclosed and explained to the consumer.

2021-S2748 (ACTIVE) - Sponsor Memo

                                
 
BILL NUMBER: S2748

SPONSOR: COMRIE
 
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 effec-
tive 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 appropriate to clearly disclose the existence of an
arbitration clause in a contract and ensure that the consumer under-
stands the meaning and ramification of the clause before agreeing to
sign the contract.

 
PRIOR LEGISLATIVE HISTORY:

2019-20: A.2608 - Reported referred to Rules / S.3581 - REFERRED TO
CONSUMER 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.

2021-S2748 (ACTIVE) - Bill Text download pdf

                            
 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   2748
 
                        2021-2022 Regular Sessions
 
                             I N  S E N A T E
 
                             January 25, 2021
                                ___________
 
 Introduced  by  Sen.  COMRIE -- read twice and ordered printed, and when
   printed to be committed to the Committee on Consumer Protection
 
 AN ACT to amend the general  business  law,  in  relation  to  requiring
   notice of mandatory arbitration clauses in certain consumer contracts

   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. Section 399-c of the general  business  law,  as  added  by
 chapter 946 of the laws of 1984, is amended to read as follows:
   §  399-c.  Mandatory arbitration clauses in certain consumer contracts
 [prohibited]. 1. Definitions.
   a. The term "consumer" shall mean a natural person  residing  in  this
 state.
   b. The term "consumer goods" shall mean goods, wares, paid merchandise
 or  services  purchased  or  paid  for by a consumer, OR EMPLOYMENT, the
 intended use or benefit of which is intended for the personal, family or
 household purposes of such consumer.
   c. The term "mandatory  arbitration  clause"  shall  mean  a  term  or
 provision  contained  in  a written contract for the sale or purchase of
 consumer goods  OR  EMPLOYMENT,  which  requires  the  parties  to  such
 contract  to  submit  any  controversy  thereafter  arising  under  such
 contract to arbitration prior to the commencement of any legal action to
 enforce the provisions of such contract and which also further  provides
 language  to  the effect that the decision of the arbitrator or panel of
 arbitrators in its application to the consumer party shall be final  and
 not subject to court review.
   d.  The  term  "arbitration"  shall  mean the use of a decision making
 forum conducted by an arbitrator or  panel  of  arbitrators  within  the
 meaning  and  subject  to  the provisions of article seventy-five of the
 civil practice law and rules.
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD05294-01-1

 S. 2748                             2
 
   E. THE TERM "REPRESENTATIVE" SHALL MEAN AN  EMPLOYEE  OR  AGENT  OF  A
 COMPANY  WHO  IS  RESPONSIBLE  FOR ADMINISTERING A CONTRACT FOR CONSUMER
 GOODS, SERVICES, OR EMPLOYMENT TO A CONSUMER.
   2.  a.  Prohibition.  No  written contract for the sale or purchase of
 consumer goods, entered into on or after  the  effective  date  of  this
 section, to which a consumer is a party, shall contain a mandatory arbi-
 tration  clause. Nothing contained herein shall be construed to prohibit
 a non-consumer party from incorporating a provision within such contract
 that such non-consumer party agrees that the decision of the  arbitrator
 or  panel  of arbitrators shall be final in its application to such non-
 consumer party and not subject to court review.
   b. Mandatory arbitration clause null and void.  The  provisions  of  a
 mandatory  arbitration  clause  shall be null and void. The inclusion of
 such clause in a written contract for the sale or purchase  of  consumer
 goods  shall  not  serve  to  impair  the  enforceability  of  any other
 provision of such contract.
   3. IN THE EVENT THAT A CONSUMER IS REQUIRED TO  SIGN  A  CONTRACT  FOR
 CONSUMER  GOODS,  SERVICES,  OR  EMPLOYMENT CONTAINING A MANDATORY ARBI-
 TRATION CLAUSE THE REPRESENTATIVE SHALL  DISCLOSE  THE  MANDATORY  ARBI-
 TRATION  CLAUSE  TO THE CONSUMER AND CLEARLY EXPLAIN, IN PLAIN LANGUAGE,
 WHAT AN ARBITRATION CLAUSE IS. IF THE CONSUMER IS AGREEING TO A CONTRACT
 BY ANY FORM OF CONTACT THAT IS NOT PERSONAL, INCLUDING BUT  NOT  LIMITED
 TO,  ELECTRONICALLY,  USING  THE  INTERNET  OR  THROUGH  THE  MAIL, SUCH
 CONTRACT SHALL HAVE, AT THE END OF SUCH CONTRACT, INFORMATION  INFORMING
 THE CONSUMER THAT THEY ARE SIGNING A MANDATORY ARBITRATION CLAUSE AND AN
 INTERNET  LINK TO A VALID AND PLAIN WRITTEN EXPLANATION OF WHAT AN ARBI-
 TRATION CLAUSE IS.
   § 2. This act shall take effect on the one hundred eightieth day after
 it shall have become a law.

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