The tiny “I agree” button has done some very heavy legal lifting. For years, companies have used consumer terms to require private arbitration not only for disputes about the product a customer bought, but sometimes for almost any dispute involving the company, its affiliates, or a future transaction. California Senate Bill 82, now Civil Code Section 1670.15, is designed to put that clause back on a sensible diet.
Effective January 1, 2026, California SB 82 limits dispute-resolution terms in a “consumer use agreement” to the use, payment, or provision of the specific good, service, money, or credit supplied by that agreement. The law does not abolish consumer arbitration. Instead, it challenges so-called infinite arbitration clausesprovisions drafted broadly enough to reach disputes that have little or nothing to do with the contract containing them.
That distinction matters to streaming platforms, retailers, banks, fintech companies, subscription businesses, marketplaces, gyms, travel companies, and practically any enterprise whose checkout process includes a terms-of-use box. It also matters to consumers who assumed that subscribing to an app was not the legal equivalent of signing a lifetime treaty with an entire corporate family.
What California SB 82 Actually Does
Governor Gavin Newsom approved SB 82 on October 6, 2025, and the measure became Chapter 350 of the Statutes of 2025. It added Section 1670.15 to the California Civil Code. Its central rule is short: dispute-resolution terms and conditions in a consumer use agreement must be limited to the use, payment, or provision of the good, service, money, or credit provided by that agreement.
The statute also says that a waiver of its protections is contrary to public policy, void, and unenforceable. Courts must interpret the section liberally for the purpose of protecting consumers, and the duties created by the law are cumulative with duties and remedies available under other laws.
A Broader Rule Than the Headline Suggests
Although SB 82 is usually discussed as a consumer arbitration law, the final text applies to “dispute resolution terms and conditions.” That phrase is broader than “arbitration agreement.” Depending on how courts interpret it, the statute could also influence forum-selection clauses, mediation requirements, jury-trial waivers, or other contractual provisions that tell consumers where and how a dispute must be handled.
The focus is not simply whether arbitration is good or bad. The focus is fit. A dispute-resolution clause should fit the transaction that produced it instead of spreading across unrelated future interactions like legal glitter.
Who Is Covered by California Civil Code Section 1670.15?
Section 1670.15 borrows California’s existing definition of “consumer”: an individual who seeks or acquires goods, services, money, or credit for personal, family, or household purposes. A “consumer use agreement” is a contract entered into so that the consumer can use, receive, or otherwise enjoy one of those things.
The language can cover familiar contracts such as mobile-phone plans, streaming subscriptions, checking accounts, personal loans, gym memberships, retail purchases, food-delivery apps, rewards programs, and digital-wallet services. It ordinarily does not describe a traditional business-to-business agreement or an employment contract, although mixed-purpose transactions may create difficult boundary questions.
Why “Infinite” Arbitration Clauses Became a Target
Traditional arbitration provisions generally cover disputes arising from a defined contract, service, or transaction. An infinite arbitration clause attempts to do much more. It may claim to govern every dispute between a consumer and a company, including claims involving affiliates, unrelated products, later purchases, statutory rights, torts, or conduct occurring years after the original click.
The political momentum behind SB 82 accelerated after a widely reported Florida wrongful-death case. Walt Disney Parks and Resorts initially sought arbitration of a widower’s lawsuit, relying in part on terms he had accepted while registering for a Disney+ trial in 2019 and while purchasing park tickets through a Disney website. The underlying claim concerned his wife’s fatal allergic reaction after dining at a restaurant at Disney Springs. Disney later withdrew its arbitration request following widespread public criticism.
California lawmakers cited the controversy as a warning about contract language that may travel far beyond the product a consumer believed was being purchased. The basic concern was intuitive: accepting a streaming subscription should not become a permanent arbitration passport covering every future disagreement with every company affiliate.
Examples of How SB 82 May Change Consumer Disputes
A Gym Membership Dispute
A gym may still require arbitration of billing, cancellation, membership access, personal-training, or equipment-use disputes connected to its membership contract. But suppose a vehicle owned by the gym operator later hits the member in an unrelated parking lot. Under Section 1670.15, the company may struggle to use the membership agreement as an all-purpose ticket to arbitration for the personal-injury claim.
A Financial Account and a Data Breach
A bank or fintech contract plainly concerns the provision and use of money or credit. Claims involving account fees, transfers, loan servicing, payment authorization, or account access are likely close to the core transaction. A cybersecurity or privacy claim is harder. The business may argue that protecting customer data is part of providing the account, while the consumer may characterize the data practices as separate conduct outside the statutory language.
This is where motion practice may flourish. Lawyers, after all, also enjoy cardio.
A Marketplace Offering Multiple Services
Imagine one app offering shopping, delivery, digital payments, rewards, insurance, event tickets, and travel bookings. A single arbitration provision claiming to cover every existing and future product may now face serious scrutiny. The company may need separate product terms, narrower affiliate language, clearer cross-references, or a carefully drafted umbrella agreement showing that the services genuinely form one integrated transaction.
A Purchase Followed by an On-Site Injury
Suppose a consumer buys a concert ticket and later slips at the venue. Is the injury connected to the “use” or “provision” of the ticketed service? Business groups raised similar questions while opposing SB 82, arguing that the statutory terms could generate preliminary litigation over what is sufficiently related to a consumer transaction.
The statute supplies a principle, not a map with every pothole marked.
The Federal Arbitration Act Preemption Question
SB 82’s largest legal challenge is likely to involve federal preemption. Section 2 of the Federal Arbitration Act, or FAA, makes qualifying written arbitration agreements valid and enforceable, except on legal or equitable grounds that apply to the revocation of contracts generally. The U.S. Supreme Court has repeatedly said states may not single out arbitration for hostile treatment or create rules that interfere with fundamental features of arbitration.
Opponents argue that SB 82 is an arbitration restriction wearing a neutral “dispute resolution” name tag. In their view, California is limiting the parties’ ability to define the scope of arbitration, increasing litigation over arbitrability, and frustrating the FAA’s instruction to enforce arbitration agreements according to their terms. Business coalitions have also warned that the law may increase costs, encourage claim splitting, and create uncertainty for small businesses that depend on arbitration as an alternative to court litigation.
Supporters answer that Section 1670.15 does not prohibit arbitration and does not regulate arbitration alone. It applies to dispute-resolution provisions generally and uses ordinary contract principles to connect a provision to the transaction in which consent was obtained. The Senate Judiciary Committee also noted that the FAA itself refers to controversies arising out of the relevant contract or transaction.
Both positions present substantial arguments. California has lost previous FAA preemption battles, so legal certainty should be served in modest portions. Until courts settle the question, however, companies serving California consumers cannot safely treat Section 1670.15 as decorative wallpaper.
Contract-Specific Consent Was Already a Live Issue
The U.S. Supreme Court’s 2024 decision in Coinbase, Inc. v. Suski provides useful background, although it did not involve SB 82. Coinbase users had accepted one contract containing an arbitration and delegation clause, followed by sweepstakes rules containing a California forum-selection clause. The Supreme Court held that a court had to decide which contract controlled when the parties disputed which agreement governed the controversy.
The decision reinforces a basic concept: before sending a case to arbitration, someone must identify the agreement that actually governs the dispute. California SB 82 advances a related but distinct principle by restricting how far a dispute-resolution provision may reach beyond the transaction associated with its own consumer contract.
Important SB 82 Questions That Remain Unclear
Does the Law Affect Older or Renewed Contracts?
SB 82 became effective on January 1, 2026, but the final statutory language does not expressly explain its treatment of agreements accepted before that date. Many practitioners expect courts to apply the normal presumption against retroactivity. More difficult cases may involve automatically renewing subscriptions, amended terms, migrated accounts, or consumers who continue using a service after being presented with updated conditions.
How Closely Must a Claim Relate to the Transaction?
The words “use, payment, or provision” sound reasonably concrete until a real dispute arrives carrying several causes of action, two affiliates, a loyalty program, and a data incident. Courts may have to determine whether duties involving privacy, product safety, advertising, accessibility, cybersecurity, or premises conditions are part of providing the contracted service or legally separate from it.
Who Decides Whether a Clause Is Overbroad?
Many arbitration agreements contain delegation clauses assigning questions of arbitrability to an arbitrator. Because SB 82 declares waivers of its protections void as a matter of public policy, consumers may argue that a judge must first decide whether the clause reaches beyond the permitted transaction. The interaction among delegation, contract formation, statutory validity, and claim scope is likely to produce substantial front-loaded litigation.
Will Courts Narrow a Clause or Reject It?
The final statute does not provide a detailed remedy manual for every overbroad provision. Depending on the contract and existing severability principles, a court could narrow the clause to its lawful reach, sever offending language, or refuse to apply it to the dispute before the court. Drafting precision and severability language may therefore become unusually important.
SB 82 Compliance Steps for Consumer-Facing Businesses
Inventory Every Consumer Agreement
Businesses should review more than documents formally labeled “arbitration agreement.” The inventory should include website terms, mobile-app conditions, clickwrap screens, rewards rules, loan agreements, warranty documents, purchase flows, subscription renewals, privacy-related consents, and affiliate-service terms. The troublesome sentence may be hiding in a document nobody has opened since the company logo was teal.
Map Each Clause to a Specific Transaction
Identify the exact good, service, money, or credit provided under each agreement. Then test every covered claim, party, affiliate, and time period against that transaction. Phrases such as “any dispute whatsoever,” “all past or future dealings,” and “any parent, subsidiary, or affiliate” deserve immediate attention.
Use Narrower, Product-Specific Language
A more defensible consumer arbitration clause should describe the service and the categories of disputes connected to it. Companies operating integrated ecosystems may need a genuine master agreement supported by product-specific terms. Simply announcing that every corporate service is related to every other service will not necessarily make it so.
Review Amendments, Renewals, and Assent Records
Companies should track when each version of an agreement was displayed, accepted, revised, or renewed. Version control is no longer administrative housekeeping. It may determine which contract governs, whether the terms were reasonably presented, and whether a relevant post-2026 agreement exists.
Prepare for Split Proceedings
Some claims may remain subject to arbitration while other claims proceed in court. Businesses should plan for stays, overlapping discovery, inconsistent decisions, venue disputes, and the added cost of litigating arbitrability before anyone reaches the underlying merits. Reed Smith and other practitioners have identified claim splitting and threshold scope disputes as major practical risks under the new law.
What California Consumers Should Know
SB 82 does not guarantee that every consumer dispute can proceed in court. A properly limited arbitration agreement may still be enforceable for claims connected to the product, service, money, or credit identified in the contract. The law instead gives consumers a stronger argument when a company relies on an old or unrelated agreement to force a new controversy into arbitration.
A consumer questioning an arbitration demand should preserve the exact version of the terms accepted, receipts, renewal notices, screenshots, account records, and communications concerning later updates. In clickwrap litigation, the glamorous star of the case is frequently a timestamp.
Practical Experience: What an SB 82 Contract Review Feels Like
The following composite experience illustrates the operational problems businesses may encounter. Consider a California-facing app that began as a grocery-delivery service. Over several years, it added a digital wallet, prescription delivery, a rewards card, event tickets, and travel discounts offered through affiliates. Its original terms required individual arbitration of “any dispute between you and the company or any related entity, whether arising before or after acceptance of these terms.”
Before SB 82, the enormous scope may have looked like efficient risk management: one agreement, one forum, and no loose ends. During a 2026 review, however, the legal team realizes that “efficient” and “enforceable” are not synonyms.
The first experience is organizational embarrassment. Nobody can immediately explain which terms govern which feature. Product managers believe the digital wallet has separate conditions. Marketing insists that the rewards card is part of the grocery program. The affiliate team points to a hyperlink that stopped working two redesigns ago. The lawyers eventually discover that the company does not have one consumer relationship. It has six overlapping relationships wearing the same app icon.
The team creates a transaction map. Grocery disputes involve substitutions, delivery charges, spoiled food, refunds, and account access. Wallet disputes involve stored value, transfers, payment authorization, and fraud controls. Prescription delivery introduces pharmacy and health-information concerns. Event tickets involve cancellations, venue entry, and seating. Travel discounts are supplied by a separate affiliate.
Once those products are mapped, it becomes difficult to defend a clause claiming that accepting grocery-delivery terms automatically governs a later injury at a concert venue or a data-privacy claim involving the travel affiliate.
The second experience is drafting restraint. The company does not need to abandon arbitration. Instead, it rewrites the grocery provision to cover disputes arising from ordering, paying for, delivering, refunding, or using the grocery service. The wallet and ticket products receive their own terms. Affiliate references are limited to entities genuinely involved in providing the covered product. The company also removes language suggesting that consumers have surrendered court rights for every future interaction until the sun burns out.
The third experience is operational rather than purely legal. Customer-support teams need scripts explaining which dispute process applies. Engineers must preserve acceptance records by product, consumer, date, and version. Litigation counsel needs a protocol for cases containing both covered and uncovered claims. Marketing must stop launching supposedly “seamless” cross-product experiences without checking whether the contractual structure is equally seamless.
The review may also reveal that legal compliance cannot be solved by swapping three words in a template. A narrow clause is only credible when it matches the actual product architecture. When an app treats payment processing, delivery, insurance, ticketing, and travel as separate services for operational purposes but as one universal service during litigation, a judge may notice the sudden burst of corporate togetherness.
The lasting lesson is that SB 82 turns contract scope into a product-design question. A business cannot reliably draft one sentence broad enough to repair a confusing service structure. The strongest compliance approach aligns the agreement, the consumer’s reasonable understanding, and the transaction that actually occurred.
That work is less dramatic than a courtroom battle over FAA preemption, but it is generally more useful. It can reduce enforcement disputes, improve assent records, help customer-service teams answer questions, and produce terms that a human being might understand without snacks and a flashlight.
Conclusion
California SB 82 does not end consumer arbitration. It targets the theory that one click can authorize arbitration for unrelated disputes across different products, years, and corporate affiliates. Civil Code Section 1670.15 now requires dispute-resolution terms to remain connected to the good, service, money, or credit supplied under the consumer use agreement in which they appear.
The law’s practical effect will depend on how courts define that connection, handle older and renewed contracts, apply delegation provisions, select remedies for overbreadth, and resolve challenges under the Federal Arbitration Act. Businesses should identify the relevant transaction, draft to that transaction, preserve evidence of assent, and resist the temptation to make a single arbitration clause rule the entire corporate universe.
Even legal language needs boundaries.
