Vermont Lawmakers Pass Controversial Consumer Contract Law

May 10, 2018

The Vermont Legislature has passed a bill that advocates say will protect consumers from what they say are unfair contract clauses but opponents fear will have dire consequences on the economy.

Lawmakers in Vermont gave final approval to S.105, a bill that targets contract terms that supporters say are unfair to consumers.  The bill targets so-called objectionable terms such as requiring that disputes be adjudicated out of state, limiting the statute of limitations; prohibiting an individual's right to seek remedies or punitive damages provided by the court; and requiring an individual to pay fees to file a claim.  Many such terms are standard clauses in items such as car rental, cell phone or waiver contracts.
Bill sponsor Senator Chris Pearson, a Democrat from the Chittenden district, explains that the aim is to protect consumers from what he calls unfair yet ubiquitous clauses in everyday contracts.  “Anytime you rent a car or agree to the terms of an app or even push ‘I Agree’ on a credit card terminal you are signing a contract.  And in just about every contract where you don’t actually help write the contract you will find what we’re deeming unconscionable terms and they are broadly waiving basic rights. So we’re deeming those kinds of practices ‘unconscionable’. In other words it would not be valid in contracts signed in Vermont. And so it’s a basic consumer protection.”

AARP Vermont was among the groups pressing for passage. Spokesman David Reville says it is a complex bill that’s about contracts drafted to benefit business rather than consumers. “A lot of folks just routinely check off ‘accept’ when they’ve read these terms and you know the average citizen really has a difficult time navigating and understanding the legaleze that’s often part of these terms in these lengthly, lengthly contracts.  So it’s really important to try to educate the public on this and we’re pleased that that’s a component in the bill.”

The bill was opposed by business and industry groups.  Concerns were also expressed by Special Olympics and Run Vermont, the host organization for the Vermont City Marathon.  Republican House Representative Heidi Scheuermann says the bill will impact a wide breadth of industry and non-profits and she fears it will harm a key economic sector in Vermont – the outdoor recreation industry.  “This proposal would put in the presumption of a particular item in a contract being unconscionable.  This would essentially preclude those entities from including in their contracts things that they have historically included. This is a gift to the trial attorneys.  This whole bill opens up to a wide array of additional legal claims in terms of lawsuits, consumer fraud claims, fines and costly liability insurance increases. And Vermont would be the first state in the country to impose these kinds of requirements on the recreation industry and entities that provide recreation services.”

Republican Governor Phil Scott has not indicated whether he will sign or veto the measure.