Contracts: consumer goods and services: agreements to arbitrate.

Senator Umberg's consumer contract legislation narrows the scope of arbitration agreements in California, limiting them solely to claims directly arising from the contract containing the arbitration clause. The measure, which applies to contracts for consumer goods and services entered into after January 1, 2026, establishes boundaries around when arbitration can be required in consumer disputes.

Under the bill's provisions, arbitration agreements extending beyond matters directly related to the underlying contract become void and unenforceable. The legislation explicitly prohibits any attempts to waive these new restrictions, declaring such waivers contrary to public policy. This builds upon existing state law governing consumer contracts, which already restricts certain waivers of consumer rights and places limits on service contract terms.

The measure maintains the availability of arbitration as a dispute resolution mechanism while defining its permissible reach in consumer transactions. Companies offering consumer goods and services in California will need to review their standard contracts to ensure arbitration provisions align with the new parameters before the January 2026 effective date.