New York's Legislature approves the FAIR Business Practices legislation
New York's FAIR Business Practices Act Expands Consumer Protection
New York is set to strengthen its consumer protection laws with the passage of the FAIR (Fair and Equitable Regulation) Business Practices Act. If signed by Governor Hochul, this legislation will mark the first major update to the state's primary consumer protection statute, General Business Law § 349, in over 40 years.
The FAIR Act aims to address a wide range of unfair and abusive business practices that have significant public consequences, even if they are not traditionally consumer-oriented. By broadening liability beyond solely "deceptive" acts to explicitly include "unfair" and "abusive" practices, the Act will empower the New York Attorney General to take action against a broader range of business practices.
Key changes include the expansion of the scope of prohibited practices, the enhancement of enforcement authority, and the elimination of the "consumer-oriented" limitation. The Act incorporates federal standards by defining "unfair" practices according to the Federal Trade Commission (FTC) framework and adds "abusive" practices aligned with the Consumer Financial Protection Bureau (CFPB) criteria. This expansion will allow the Attorney General to address practices that materially impede consumers’ understanding or exploit vulnerabilities such as limited financial literacy or language barriers.
The Act also grants the New York Attorney General broader powers to enforce these prohibitions, including against unfair and abusive practices—not just deceptive ones. This enhancement will allow for civil penalties and restitution claims, particularly in consumer finance lending, debt settlement, and other industries with historically exploitative issues.
Individuals, small businesses, and non-profits will have greater avenues to challenge harmful business conduct, including practices that exploit vulnerabilities or cause substantial harm without being overtly deceptive. New York’s Attorney General will have stronger tools to target and remediate a wider range of unfair or abusive business conduct, potentially filling gaps left by retrenchment in federal consumer protection enforcement.
Examples of unfair and abusive acts that the Act is intended to address include mortgage servicers charging unnecessary high fees, debt collectors stealing Social Security benefits, health insurance companies using unfair billing practices, student loan servicers steering borrowers into the most expensive repayment plans, and companies taking advantage of consumers with limited English proficiency and obscure pricing information and fees.
The FAIR Act may also result in the Attorney General bringing claims that do not fit within traditional antitrust frameworks where there is direct harm to businesses, but not to consumers.
As the passage of the FAIR Business Practices Act is being monitored, broader state AG and consumer protection client alerts and analysis will be provided.
The FAIR Act, upon Governor Hochul's signature, will update New York's consumer protection laws, empowering the Attorney General to pursue litigation against businesses engaging in unfair and abusive practices, such as debt collectors stealing Social Security benefits or companies taking advantage of consumers with limited English proficiency. This expansion might lead to antitrust litigation against businesses, even if there's no direct harm to consumers.
