California SB 82 and the End of “Infinite” Consumer Arbitration Clauses (Maybe)
California has added a new and very practical constraint on consumer dispute-resolution provisions. Senate Bill 82, effective January 1, 2026, enacted Civil Code § 1670.15, aimed at stopping what critics have labeled “infinite arbitration” — the idea that a consumer’s click-through arbitration clause for one product or service can be invoked later to force arbitration of an unrelated dispute.
Whether SB 82 ultimately sticks (in whole or in part) will likely turn on federal preemption fights under the Federal Arbitration Act (FAA). But as of now, it is the law in California, and it is poised to change the drafting and litigation posture of consumer arbitration provisions nationwide.
What SB 82 actually does (and why the wording matters)
SB 82 is often summarized as an “arbitration” statute, but the enacted text is broader: it addresses “dispute resolution terms and conditions” in a “consumer use agreement.” At a high level, § 1670.15 limits dispute-resolution provisions to disputes tied to the specific consumer transaction in that agreement:
Dispute-resolution terms in a consumer use agreement “shall be limited to the use, payment, or provision of the good, service, money, or credit provided by that consumer use agreement.”
Any waiver of the statute’s protections is void as against public policy.
The statute directs that it be liberally construed to protect consumers — language that will show up in briefing immediately.
Many secondary summaries also emphasize that an arbitration clause must be limited to claims “arising out of and relating to” the contract containing the arbitration agreement, and that nonconforming clauses are void/unenforceable. In practice, the “use, payment, or provision” phrasing in the codified section is likely to be the litigation focal point because it frames the statute as a scope limitation tied to the transaction itself, not merely a contract interpretation rule.
The problem SB 82 is trying to solve: “infinite arbitration”
Supporters argue that consumers increasingly face arbitration clauses drafted so broadly that they can be invoked well beyond the consumer’s reasonable expectations — including for later, unrelated disputes. Legislative analyses and commentary have pointed to highly publicized examples where a business attempted to use an arbitration clause from one consumer relationship as a shield in a very different dispute.
California Senator Tom Umberg’s public statements about SB 82 lean heavily into this fairness narrative: arbitration should apply to the contract the consumer actually agreed to for the specific product or service, not every future dispute a corporation can connect by creative lawyering.
What this will change in consumer arbitration disputes
1) Expect more threshold litigation about “scope”
SB 82 is designed to narrow scope. That means the first fight in many cases will be whether the claim truly involves the “use, payment, or provision” of the good/service/money/credit “provided by” the consumer use agreement.
So, rather than (or in addition to) classic gateway issues like formation, delegation clauses, and unconscionability, counsel should expect front-loaded motion practice on:
What “transaction” is covered
Whether the dispute is sufficiently tied to the covered “use, payment, or provision”
Whether multiple consumer relationships can be aggregated under one “consumer use agreement” (for companies with bundled services, unified accounts, or ecosystem logins)
Even proponents of the law acknowledge this will likely shift disputes into the courts at the outset, at least until a body of precedent emerges.
2) Overbroad arbitration clauses become a liability, not an advantage
For many businesses, the “belt-and-suspenders” approach has been to define “Dispute” or “Claim” as broadly as possible (“any and all claims between us,” “related to any relationship,” “including tort, statutory, and equitable claims,” etc.). SB 82 flips the risk: an overbroad clause can invite an argument that the dispute-resolution provision violates § 1670.15 and should not be enforced as written.
That sets up several practical consequences:
Severability fights: Will a court sever the offending “infinite” scope language and compel arbitration of only the transaction-related portion, or will the business be stuck litigating because the clause is deemed unenforceable? (Expect this to vary with drafting and forum.)
Re-drafting pressure: Businesses will be pushed toward transaction-specific arbitration language and away from “any relationship” formulations.
3) Plaintiffs will frame SB 82 as consumer-protective and court-directed
The “liberally construed” directive is a gift to consumer-side briefing. It signals that close calls on scope may tilt toward court litigation instead of arbitration, at least under California law.
4) Multi-state and nationwide programs now face California-specific carveouts
Even if a company prefers one national set of consumer terms, California increasingly forces customization. SB 82 joins other California efforts that regulate consumer dispute resolution, including limits affecting arbitration location provisions and other consumer-contract terms.
Practically, many companies will consider:
California addenda that narrow dispute-resolution scope
Separate transaction-specific dispute-resolution terms for discrete services
Re-thinking “account-wide” arbitration clauses for platforms that span many products or services
Criticisms of SB 82 (what opponents are likely to argue)
“This will increase litigation costs and delay resolution” — Business groups argue that narrowing arbitration scope pushes more cases into court and increases motion practice over arbitrability and the definition of the covered “transaction.” Even where arbitration remains available, litigating the threshold scope issue can eliminate the speed and cost advantages arbitration is supposed to provide.
“It undermines freedom of contract by re-writing agreed-upon terms” — Critics see SB 82 as a legislative override of the parties’ chosen dispute-resolution framework. They will argue that consumers already receive disclosures and an opportunity to assent (and sometimes opt out), and that the statute substitutes a Sacramento policy preference for negotiated risk allocation.
“FAA preemption is likely” — This is the headline critique: the FAA generally requires courts to enforce arbitration agreements according to their terms, and it preempts state rules that single out arbitration for disfavored treatment or interfere with fundamental attributes of arbitration.
Several commentators predict SB 82 will face serious preemption challenges.
The best arguments supporting SB 82 (and why it may survive in some form)
“This is not an ‘anti-arbitration’ law — it applies to dispute-resolution terms generally” — The codified language addresses “dispute resolution terms and conditions,” not “arbitration clauses” alone. Supporters will argue it is a general consumer-protection rule about scope and consent, and that arbitration remains fully permissible for transaction-related disputes.
“It matches consumer expectations and reduces abusive overreach” — Supporters frame SB 82 as a basic assent-and-scope fix: consumers should not be deemed to have agreed to arbitrate a later, unrelated dispute simply because they clicked “I agree” for a different product or service years earlier.
“It can be defended as a rule about the outer boundary of the bargain” — A key pro-SB 82 framing will be that the statute does not attack arbitration’s core features (speed, informality, bilateral proceedings), but instead addresses what disputes are within the parties’ bargain for this particular consumer transaction. That distinction is exactly where the FAA battle will be fought.
How FAA preemption challenges may play out
A realistic near-term forecast is split outcomes, depending on how a particular challenge is framed and how a court characterizes § 1670.15:
If a court views SB 82 as a rule that effectively disfavors arbitration by invalidating broad arbitration agreements, challengers will cite FAA preemption precedents emphasizing equal-treatment and enforcing arbitration agreements “according to their terms.”
If a court accepts the argument that SB 82 is a neutral scope/consent rule applicable to “dispute resolution terms” generally, California will argue it is not singling out arbitration and is instead policing the bounds of consumer assent.
Even if preemption challenges succeed, partial survival is possible. For example, courts might:
Preempt application of the statute only as to arbitration (if they conclude it burdens arbitration uniquely), while leaving other dispute-resolution provisions untouched; or
Preserve a narrower interpretation that functions like a contract-construction principle rather than a categorical invalidation tool.
Could other states follow California’s lead?
California rarely legislates in a vacuum. Other states watch California consumer statutes because:
California’s market size incentivizes national businesses to adopt compliant terms across the board (or at least to build templates that can be localized).
Legislators in other jurisdictions often borrow the “shape” of California consumer-protection ideas, especially when a high-profile story gives the issue momentum.
That said, SB 82’s exportability depends on two things:
What happens in the courts. If FAA preemption defeats SB 82, copycat statutes become less likely. If SB 82 survives (even partially), it becomes a model bill.
How businesses respond. If companies proactively narrow scope and make consent clearer, the political energy behind similar bills may dissipate. If “infinite arbitration” efforts continue, more states may try to regulate scope, even if they draft the statute more carefully to avoid FAA pitfalls.
What attorneys and in-house teams should do now
Audit consumer dispute-resolution provisions used with California consumers for scope language that reaches beyond the specific transaction.
Re-draft with precision: tie the covered disputes to “use, payment, or provision” of the specific good/service/money/credit at issue in that agreement.
Plan for early motion practice: build an evidentiary record on what the “transaction” is and how the claim relates (or does not relate) to that transaction.
Watch for the first wave of published decisions interpreting § 1670.15, especially on severability and the meaning of “provided by that consumer use agreement.”
For counsel litigating consumer disputes, this is also a good moment to think strategically about forum. When arbitration is appropriate, a well-drafted clause can still deliver real efficiencies. When arbitration is contested, early neutral evaluation or mediation can reduce the cost of fighting about where the fight will happen.
Nationwide ADR regularly helps parties and counsel evaluate dispute-resolution pathways early — arbitration where it fits, mediation where it moves the needle, and hybrid approaches when the procedural terrain is shifting. That kind of front-end clarity is often the difference between a fast resolution and a year of threshold motion practice.