What's happening
This bill prohibits non-disparagement clauses in consumer contracts in New York and sets penalties for violations.
Why it matters
Empowers consumers to share honest opinions. By prohibiting non-disparagement clauses, the bill ensures consumers can freely review and discuss their experiences with products or services without fear of contractual retaliation.
Creates meaningful penalties for businesses. Companies that include, threaten to enforce, or actually try to enforce banned clauses face escalating civil penalties—up to $1,000 per violation and $5,000 for attempts to enforce—providing a real deterrent.
Allows consumers to seek damages in court. Consumers harmed by these illegal contract terms can sue for up to three times their actual damages, plus attorney’s fees, making legal action more accessible and worthwhile.
Clarifies limits for online platforms. The bill specifically states that it doesn’t prevent businesses that host consumer reviews from removing content if they are otherwise legally allowed to do so, balancing free speech with platform moderation rights.
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Who cares
New York consumers
The bill would protect their right to comment on sellers, lessors, goods and services and let consumers harmed by violations sue for up to three times actual damages plus reasonable attorney’s fees.
Retailers, lessors and service providers
The bill would bar non-disparagement clauses in consumer contracts and proposed contracts, prohibit enforcement threats and penalties against consumers, and leave other contract provisions enforceable.
New York attorney general
The bill would authorize civil actions to collect penalties of up to $500 for a first violation, $1,000 for subsequent violations and $5,000 for seeking enforcement or penalizing protected statements.
Online review platforms
The bill would preserve their ability to remove consumer reviews or comments when removal is otherwise lawful.
Headline styles
Ban Gag Clauses in Contracts
Plain English, a few words. Used as the page title.
Sponsors
No co-sponsors yet.
History
- Referred to consumer affairs and protection
Companion bill
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.
Ban Gag Clauses in Contracts
In Senate Committee · Consumer Protection · Sponsor James Skoufis
Full text
2 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
10331
IN ASSEMBLY
April 29, 2020
Introduced by M. of A. DenDEKKER -- read once and referred to the Committee on Consumer Affairs and Protection
AN ACT to amend the general business law, in relation to the prohibition of the use of non-disparagement clauses in consumer contracts
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. The general business law is amended by adding a new section 399-k to read as follows:
§ 399-k. Non-disparagement clauses in consumer contracts or services 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 "consumer services" shall mean services provided to consumers including, but not limited to, legal services, medical services or cleaning services.
d. The term "non-disparagement clause" shall mean a provision waiving the consumer's right to make any statement regarding a seller or lessor or its employees or agents, or concerning the goods or services.
2. Prohibition. a. A contract or proposed contract for the sale or lease of consumer goods or services may not include a non-disparagement clause. The inclusion of such clause in a contract or proposed contract for the sale or lease of consumer goods or services shall not serve to impair the enforceability of any other provision of such contract.
b. It shall be unlawful to threaten or to seek to enforce a non-disparagement clause made unlawful under this section, or to otherwise penalize a consumer for making any statement protected under this section. 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.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD07331-01-9
A. 10331 2
c. Any waiver of the provisions of this section is contrary to public policy, and is void and unenforceable.
3. Penalty. a. Any person who violates this section shall be subject to a civil penalty not to exceed five hundred dollars for the first violation, and one thousand dollars for the second and for each subsequent violation, to be assessed and collected in a civil action brought by the attorney general.
b. Any person who seeks to enforce a non-disparagement clause made unlawful under this section or otherwise penalize a consumer for making any statement protected under this section shall be subject to a civil penalty not to exceed five thousand dollars to be assessed and collected in a civil action by the attorney general.
c. Any consumer damaged by a violation of this section may bring an action for recovery of damages. Judgment may be entered in an amount not to exceed three times the actual damages plus reasonable attorney's fees. The penalty provided by this section is not an exclusive remedy, and does not affect any other relief or remedy provided by law. This section shall not be construed to prohibit or limit a person or business that hosts online consumer reviews or comments from removing a statement that is otherwise lawful to remove.
§ 2. This act shall take effect on the ninetieth day after it shall have become a law.
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.