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McKeon, Benson, Muoio, Pinkin & Moriarty Bill to Reform Consumer Arbitration Process Clears Assembly

Legislation Assembly Democrats John F. McKeon, Daniel Benson, Elizabeth Muoio, Nancy Pinkin and Paul Moriarty sponsored to make the consumer arbitration process more accessible and more transparent cleared the Assembly on Monday.

The bill (A-1515) would prohibit terms and conditions in a consumer contract that require the dispute be resolved in a venue, forum or jurisdiction outside of the state of New Jersey. This requirement can only be waived upon the advice of counsel.

Holding litigation or arbitration outside of New Jersey can make dispute resolution costly and burdensome for consumers, McKeon noted.

“Oftentimes these contracts are offered on a take-it-or-leave-it basis, putting a consumer who needs a product or service at a major disadvantage,” said McKeon (D-Essex/Morris). “Forcing someone to travel to another state to resolve a dispute makes the process inaccessible, in effect, and ultimately increases the likelihood that a consumer who’s been wronged will forgo the pursuit of restitution altogether.”

“Consumer arbitration is expected to give New Jersey consumers a voice in resolving disputes,” said Benson (D-Mercer/Middlesex). “However, when the matter is addressed outside of the state, consumers are more likely to be dissuaded by a costly process and their voice never heard. New Jersey consumers have a right to settle disputes in the state in which they live.”

“Arbitration organizations play an important role in giving consumers a platform for bringing forth grievances, and in the interest of making the arbitration process more fair and transparent, New Jersey must introduce some regulations,” said Muoio (D-Mercer/Hunterdon). “The provisions outlined in this bill will help the state make arbitration more accessible for more individuals.”

“Many consumers with grievances have been silenced by an intimidating arbitration process,” said Pinkin (D-Middlesex). “New Jersey consumers should never feel they cannot resolve a dispute with a company and, more importantly, they should not have to pay additional costs for traveling out-of-state to settle those disputes.”

“A consumer who believes that he or she has been a victim of wrongdoing should be able to have confidence in the arbitration process,” said Moriarty (D-Camden/Gloucester), chair of the Assembly Consumer Affairs Committee. “This legislation is aimed at leveling the playing field in arbitration cases.”

A New York Times series highlighting the proliferation of arbitration agreements in consumer contracts over the past decade revealed that businesses often insert provisions limiting the adjudication of medical malpractice, sexual harassment, fraud, wrongful death and other matters to private arbitration forums, which often are out-of-state and tend to favor businesses. Such provisions have made bringing class action claims more difficult.

The Assembly passed the bill 49-20. It now awaits further Senate consideration.