New York is poised to bolster its consumer protection laws with the introduction of the FAIR Business Practices Act, spearheaded by Attorney General Letitia James. The proposed legislation, currently championed in the state legislature by Senator Leroy Comrie and Assemblymember Micah Lasher, aims to modernize and expand existing consumer safeguards, aligning New York’s standards with those of most other states.
According to Attorney General James, the current General Business Law §349 inadequately addresses unfair and abusive business tactics, as it only focuses on deceptive acts. The FAIR Business Practices Act seeks to rectify this by tackling a range of predatory practices, including:
- Predatory lending
- Hidden fees
- Misleading subscription policies
- Deceptive healthcare billing
- Online scams
The legislation would also grant the Attorney General’s office greater authority to levy penalties against businesses engaging in such harmful conduct. A central objective of the bill is to specifically curb predatory lending by auto lenders, mortgage companies, and student loan servicers. It also aims to regulate aggressive debt collection practices, particularly those targeting senior citizens. Additionally, the proposed law mandates greater transparency in online transactions, provides protections for consumers with limited English proficiency, and ensures fair business practices for small businesses.
Attorney General Letitia James has emphasized the urgency of the bill, noting that many New Yorkers struggle with unfair business practices such as confusing cancellation policies, deceptive loan agreements, and exploitative fees. She argues that the legislation will help prevent these issues and hold businesses accountable for their actions.
The legislation has garnered support from several national and local experts. Former Federal Trade Commission chair Lina Khan has noted the necessity of strong state protections to combat deceptive financial schemes. Rohit Chopra, a former head of the Consumer Financial Protection Bureau, highlighted the importance of states stepping up consumer protections in the face of declining federal oversight.
Senator Comrie has stressed the need for the legislation to protect small businesses and working-class families, many of whom have fallen victim to unfair financial practices. Assembly Member Lasher added that stronger consumer protections would directly contribute to affordability by preventing companies from taking advantage of unsuspecting customers.
New York’s consumer protection laws haven’t undergone significant updates since 1970, despite the evolution of digital fraud, hidden fees, and predatory financial tactics. The FAIR Business Practices Act aims to fill the void by giving regulators more robust enforcement tools and ensuring consumers have legal options against unethical businesses. The bill specifically addresses several common predatory practices:
- Difficult-to-cancel subscriptions
- Car dealerships withholding customer identification until a deal is finalized
- Nursing homes suing family members for unpaid bills without legal grounds
- Debt collectors improperly seizing Social Security benefits
- Health insurance companies misleading patients about in-network coverage
The legislation has been introduced in both the New York Senate and Assembly and is expected to be reviewed in committee before a full vote. Attorney General James has committed to advocating for its passage, arguing that stronger state-level protections are necessary as federal consumer safeguards weaken.
Offenses under the FAIR Business Practices Act
- Unfair, deceptive, or abusive business practices: Includes misleading advertisements, hidden fees, and deceptive contracts. Covers financial institutions, subscription services, auto dealerships, and healthcare providers.
- Failure to provide transparent pricing and fees: Businesses must clearly disclose all fees upfront. Prohibits misleading or hidden charges, including junk fees in transactions.
- Predatory lending practices: Student loan servicers, mortgage lenders, and auto loan providers are barred from steering borrowers into higher-cost repayment plans.
- Hard-to-cancel subscriptions: Prohibits companies from making subscription cancellations overly complex or requiring excessive steps.
- Debt collection abuses: Debt collectors are banned from unlawfully seizing protected government benefits, such as Social Security payments.
- Nursing home debt collection scams: Prohibits nursing homes from suing family members of deceased residents for unpaid bills unless they are legally liable.
- False or misleading claims about health insurance coverage: Health insurers must accurately represent their network of in-network doctors and services.
- Exploitation of non-English speakers: Businesses cannot use deceptive contracts or misleading terms that take advantage of consumers with limited English proficiency.
- Failure to notify consumers of data breaches: Companies must disclose data breaches that could expose consumers to fraud or identity theft.
Penalties under the FAIR Business Practices Act
- Civil penalties for violations: Businesses found guilty of violating the law may face fines of up to $5,000 per violation. If the violation is willful or occurs during an “abnormal market disruption” (such as during a natural disaster), the penalty increases to the greater of $15,000 or three times the value of restitution.
- Restitution for consumers: Consumers harmed by unfair or deceptive business practices can sue for: $1,000 per violation in statutory damages; Actual damages if the financial harm exceeds the statutory minimum; Triple damages if the violation is found to be willful or knowing.
- Attorney General’s enforcement powers: The Attorney General may seek injunctions to stop unlawful business practices; Can initiate investigations, issue subpoenas, and take legal action against repeat offenders.
- Additional penalties for offenses against vulnerable populations: If the victim is a senior (65+), veteran, person with a disability, or non-English speaker, an additional penalty of $5,000 to $10,000 per violation applies.
- Class action lawsuits: Consumers can file class action lawsuits for widespread violations, with total damages capped at $1 million or 2% of a business’s gross revenue, whichever is lower.
- Failure to report violations: Companies that fail to comply with notice and reporting requirements may be fined $500 per day until they fulfill their obligations.
