Beach, Scutari Bill to Enhance Consumer Protections for Arbitration Becomes Law

Trenton – Legislation sponsored by Senator James Beach and Senator Nicholas Scutari, which would establish certain consumer protections related to arbitration organizations, was signed into law.

“Unlike administrative or judicial proceedings, arbitration proceedings are not made public, making it difficult for the State to monitor these cases to ensure they are being carried out fairly,” said Senator Beach (D-Burlington/Camden). “More often than not, a private arbitrator is chosen by the company involved in the dispute, giving them an unfair advantage over the consumer. This law will increase the transparency of these proceedings, and help the State to ensure consumers are being treated fairly.”

The law will prevent arbitration organizations from administering cases in which the organization has, or has had, a financial interest.  It also applies to any arbitration administrator who provides their services for any disputes that may arise and result in forced arbitration between a consumer and a company.

“It is overtly advantageous for companies involved in arbitration proceedings to have the ability to choose a private arbitrator,” said Senator Scutari (D-Middlesex/Somerset/Union). “An arbitrator should not have a financial interest at stake while administrating a proceeding and this law provides needed transparency in situations pertaining to consumer protections.”

Under the law, any arbitration organization that is involved in more than 50 consumer arbitration cases per year would be required to collect and publish information regarding each consumer arbitration within the previous five years.

The law prohibits an arbitrator from requiring a consumer to pay the fees and costs incurred by an opposing party if the consumer does not prevail in the arbitration.