BILL NUMBER: S2151
SPONSOR: COMRIE
 
TITLE OF BILL:
An act to amend the general business law, in relation to prohibited
mandatory arbitration agreements; and to repeal section 399-c of such
law relating to prohibiting mandatory arbitration clauses in certain
consumer contracts
 
PURPOSE OR GENERAL IDEA OF BILL:
The purpose of this bill is to comprehensively update the General Busi-
ness Law's section regarding mandatory arbitration clauses and the way
in which they are regulated in New York State.
 
SUMMARY OF SPECIFIC PROVISIONS:
Section one of the bill repeals the current section 399-c of the General
Business Law and replaces it with a new section 399-c. The terms
"consumer dispute", "employment dispute", and "mandatory arbitration
agreement" are defined in this section. The section bans mandatory arbi
tration clauses in New York State and declares them unenforceable much
like the original section 399-c did. The section bans mandatory arbi-
tration clauses from being included in insurance contracts. The section
would ban workers exempted from the Federal Arbitration Act from being
forced to sign mandatory arbitration clauses resulting from an employ-
ment contract. The section would also ban any mandatory arbitration
agreement that is not enforceable under federal law. Section two
contains 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 appropriate to amend the state law to make sure that
every New Yorker knows their rights when it comes to agreeing to arbi-
tration clauses in contracts.
 
PRIOR LEGISLATIVE HISTORY:
2024: S684 Comrie/ A683 Dinowitz
2022: S2752- Consumer Protection
2019 - A.2301 - Reported Referred to Rules / S.3208 - Referred to
Consumer Protection
2017-18 - A.5240 - Third Reading Calendar / S.7924 - Referred to Consum-
er Protection
2015-16 - A.9956A - Third Reading Calendar
 
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.

Statutes affected:
S2151: 399-c general business law