What's happening
This bill requires that mandatory arbitration clauses in consumer contracts be printed in large font and imposes penalties for noncompliance.
Why it matters
Improved transparency and consumer awareness. By requiring that any mandatory arbitration clause be printed in a large font (16 points or larger), the bill makes it harder for businesses to hide these clauses in the fine print, ensuring consumers are more likely to notice and understand them before signing.
Accountability through penalties. The introduction of specific civil penalties ($250 for a first offense, $500 for subsequent offenses) creates a financial deterrent for businesses that might otherwise ignore the new formatting requirement, thereby encouraging consistent compliance.
Potential impact on contract practices. Businesses may revisit their use of arbitration clauses altogether, knowing that these provisions must now be conspicuous and may attract more consumer scrutiny or pushback, potentially shifting the balance in contract negotiations.
Consumer protection and legal recourse. By focusing on the presentation and enforceability of arbitration clauses, the bill aims to protect consumers from unwittingly waiving their right to court proceedings, which can significantly affect their ability to resolve disputes on fair terms.
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Who cares
Businesses selling goods or services to consumers
They would have to give consumers copies of initial contracts displaying any arbitration clause in type of at least 16 points.
New York consumers
They would receive more prominently printed arbitration clauses, while the existing prohibition on mandatory arbitration clauses in covered consumer contracts would remain in place.
Businesses facing compliance penalties
Violating the new disclosure requirement would carry civil penalties of up to $250 for a first offense and up to $500 for each subsequent offense.
Headline styles
Make Arbitration Clauses Big
Plain English, a few words. Used as the page title.
Sponsors
No co-sponsors yet.
History
- Referred to consumer protection
Companion bills
The same bill in the other chamber. A bill becomes law when one version passes both houses and the governor signs it, so either number can carry it.
Make Arbitration Clauses Big
Assembly Floor Calendar · Sponsor Jeffrey Dinowitz
Make Arbitration Clauses Obvious
In Senate Committee · Consumer Protection · Sponsor Leroy Comrie
Full text
2 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
6073
2017-2018 Regular Sessions
IN SENATE
May 10, 2017
Introduced by Sen. SQUADRON -- 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 mandatory arbitration clauses in certain consumer contracts to be printed in large font type
The People of the State of New York, represented in Senate and Assembly, 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, 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 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.
LBD03789-01-7
S. 6073 2
e. The term "large print format" shall mean a printed font size of sixteen points or larger.
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 arbitration 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 nonconsumer 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. Large print arbitration clauses in contracts. Each and every business shall, in each initial contract for goods or services, which contains an arbitration clause provide the consumer with a copy of the contract in which the arbitration clause is displayed in large print format.
4. A violation by any person or business of subdivision three of this section, if such violation constitutes the first such offense by such person, is punishable by a civil penalty not to exceed two hundred fifty dollars. A second offense and any offense committed thereafter is punishable by a civil penalty not to exceed five hundred dollars.
§ 2. This act shall take effect on the one hundred eightieth day after it shall have become a law.
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act to amend the general business law, in relation to requiring mandatory arbitration clauses in certain consumer contracts to be printed in large font type
Purpose or general idea of bill
The purpose of this bill is to require that when a company issues a contract that contains a mandatory to a consumer for signature, that the arbitration clause be in a large font.
Summary of specific provisions
Section 1 amends section 399-c of the General Business Law as follows:
Subdivision 1: Adds "large print format" to the definitions listed in § 399-c of the General Business Law
Subdivision 3: Specifies that each initial contract for goods or services provided by a company to a consumer, which contains an arbitration clause, will display the arbitration clause in a large print format.
Subdivision 4: Sets a first offense penalty of $250 and a maximum penalty thereafter at $500 for violation of subdivision 3 of this section.
Section 2 is the effective date.
Justification
There are many instances of consumers signing a contract for a good or service containing a mandatory and in many cases nonnegotiable arbitration clause. These clauses take away the right of a consumer to dispute a claim in a court of law and instead move any dispute with the business to an arbitration proceeding. In many cases these mandatory arbitration clauses are buried in the fine print of contracts and go unnoticed by the average consumer.
This legislation is intended to ensure that all New Yorkers are capable of making informed decisions regarding how they will be able to dispute a claim when signing contracts for goods and services.
Prior legislative history
2015-16: A.9544 - Passed Assembly
Fiscal implications
None to the State
Effective date
This act shall take effect on the one hundred eightieth day after it shall become law.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.