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Assembly Panel Advances Moriarty, Benson, Johnson Consumer Protection Measures Concerning Arbitration Proceedings

(TRENTON) – Moving forward on two measures addressing concerns surrounding forced arbitration, the Assembly Consumer Affairs Committee recently advanced legislation sponsored by Assembly Democrats Paul Moriarty, Daniel Benson and Gordon Johnson to establish consumer protections related to arbitration and bar the state from conducting business with those who use such procedures.

“Forced arbitration contracts require consumers to waive their right to access the court system if they are wronged,” said Moriarty (D-Gloucester, Camden), who serves as chair of the Assembly Consumer Affairs panel. “Many consumers today are unable to buy a car, cell phone, open a bank account or credit card, place a parent into a nursing home, or gain employment without entering into a forced arbitration contract. Most of the time, the term “mandatory arbitration” is buried in the small print of paperwork unknowingly to the consumer. We need more transparency and greater accountability on behalf of the businesses that use this method of resolving disputes.”

One bill (A-584) – sponsored by Moriarty, Benson and Johnson– would prohibit a State agency from entering into a contract or agreement with a business entity that requires any person or public entity, as a condition of doing business with them, to submit a dispute arising after the signing of the contract to binding arbitration.

“New Jersey can discourage the use of this type of arbitration in our state by limiting our dealings with businesses that require consumers to give up their rights to independently pursue legal action,” said Benson (D-Mercer, Middlesex). “Consumers deserve nothing less than a fair, transparent process to resolve their concerns.”

“Forced arbitration clauses bind the consumer, not the company,” said Johnson (D- Bergen). “For an employee, these arbitration clauses can make them more vulnerable to discrimination, harassment or retaliation. This is about accountability for companies that do business with New Jersey and standing up for the consumer.”

The second bill (A-4972) – sponsored by Moriarty– would establish certain consumer protections related to arbitration organizations such as prohibiting an arbitration organization from administering consumer arbitration, or providing any other related services if the company has a financial interest in any party or attorney for a party. The bill also puts into place a fair fee structure for low-wage income earning consumers who have been forced into binding arbitration through a standardized consumer contract and prohibits consumers from paying the fees of the opposing party should they lose their dispute.

Moriarty said the measures aim to encourage and empower consumers to pursue resolution to their disputes without fear of financial burden.

“Arbitration organizations have long gone under-regulated and concerns have been raised about forced arbitration proceedings and consumer fairness,” said Moriarty. “Any conficts of interest between arbitration organizations and the parties they’re judging is predjudicial toward the consumer who expects an impartial resolution to their grievance. Those consumers who have financial concerns should not be made to pay exorbitant fees for arbitration for themselves or the other party.”

Both measures were approved March 8 and will now go to the Assembly Speaker for further consideration.