Months after the CFPB—under departing chair Rohit Chopra—released a playbook encouraging states to toughen their consumer protection laws and enforcement, New York has responded, passing the Fostering Affordability and Integrity through Reasonable (FAIR) Business Practices Act. While the legislature has approved the bill, it has yet to be transmitted to Gov. Kathy Hochul while business stakeholders are still pressing for changes.
The measure was pushed by Attorney General Latitia James, in what is seemingly a direct response to Director Chopra’s call to action. The new law significantly expands the scope of New York’s General Business Law Section 349 by, among other things, explicitly expanding statutory prohibitions to include not just deceptive practices but also unfair and abusive business practices. As we predicted, this is in line with the CFPB’s earlier guidance to states and expands its application to businesses and nonprofits It also empowers both the Attorney General’s Office and individuals to seek civil penalties and restitution for such practices and targets a wide range of issues.
Expanded Scope of Prohibited Business Practices and Enforcement Authority
Under current law, GBL Section 349 only prohibits deceptive business practices. The FAIR Business Practices Act significantly broadens this by also incorporating bans on “unfair” and “abusive” practices that both mirror federal law and go much further.
Unfair practices are defined in the new law similarly to the Federal Trade Commission’s standard as an action that “causes or is likely to cause substantial injury which is not reasonably avoidable and is not outweighed by countervailing benefits to consumers or to competition.”
Abusive practices are similarly modeled after the Consumer Financial Protection Act—but with a wider scope. The federal definition of abusive practices includes any actions that “materially interferes with the ability of a consumer to understand a term or condition of a consumer financial product or service.” New York’s proposed definition includes the federal definition and expands it by including any practice that “takes unreasonable advantage” of a consumer’s “lack of understanding” of the material risks, costs or conditions of products or services; inability to protect their own interests in selecting or using a product or service; or “reasonable reliance” on another person engaging in the act or practice to act in their interests.
According to the AG’s office press release about the bill, the proposed statutory definitions cover a wide scope of conduct, including those fueled by emerging technology:
- junk fees and hidden charges
- predatory lending
- AI-driven scams and phishing
- hard-to-cancel subscriptions
- data breaches
- exploitative billing practices
Along with the expanded scope of conduct covered under the bill—not to mention the extension to a larger consumer class—allowing civil penalties and restitution in more cases, it also increases those penalties as well as available damages. It also allows for treble damages for a plaintiff if the defendant knowingly or willfully violated the law and collection of attorneys’ fees.
Removal of the “Consumer-Oriented” Requirement for AG Enforcement
Importantly, the bill also applies these protections to other businesses and nonprofits, not just consumers. Previously, courts required that deceptive practices under GBL Section 349 be “consumer-oriented,” meaning they had to broadly affect the public. The FAIR Act eliminates this requirement, meaning regulators can now pursue cases even if the unfair, deceptive or abusive practice occurs in a private transaction, as long as it has broader public consequences.
This change aligns New York with states like California and Washington, and this expansion could allow the attorney general to challenge business practices that harm other businesses or nonprofits—even if those harms don’t fit traditional consumer protection frameworks and focus on individuals.
Parallels to the CFPB’s Playbook
In sum, these changes mirror explicit recommendations from the CFPB’s January guidance, including:
- Inclusion of “abusive” in statutory definitions: The bill expressly adds “abusive” as well as “unfair” to New York’s consumer protection law, which previously has only covered “deceptive” acts or practices. In fact, the bill’s “abusive” definition mirrors the CFPB’s recommended language almost word for word.
- Provision of stronger remedies and tools for investigation and enforcement: While the proposed law does not include all of the CFPB’s specific recommendations here, it does provide more remedies for individuals, such as allowing lawsuits based on a single transaction and increasing civil penalties and available damages. It also creates a new protected class of “vulnerable persons,” which includes minors, adults 65 and older, active-duty military or veterans, people with disabilities, and those with limited English proficiency.
- Removal requirements to prove financial injury: The new law does not incorporate the specific language suggested by the CFPB defining “burden of proof” but broadens the definition of “substantial injury” to match the FTC Act’s and extends it to non-consumers. Substantial injury is understood as harm to consumers that outweighs any consumer or competition benefit and cannot reasonably be avoided, which covers monetary harms but also covers non-economic injuries like reputational damage or emotional distress.
- Extension of consumer protections to other businesses: As outlined above, the law gets rid of New York’s historic “consumer-oriented” requirement for enforcement and allows the state’s consumer protections to apply to businesses and nonprofits. The bill clarifies the legislative intent of the bill to protect “businesses and nonprofits as well as individuals” and expressly calls them “a class of consumers” themselves.
- Revitalization of private enforcement: While the proposed law does not mirror the CFPB’s specific recommendations here, it does add the ability to file class actions when outlining limits on statutory damages and the allowance for plaintiff attorneys’ fees awarded to a prevailing party, which could incentivize enforcement through private lawsuits.
- A brightline rule about junk fees: Although the bill does not include a specific prohibition on junk fees, AG James has publicly included the practice in her interpretation of prohibited conduct under the bill.
What Businesses Need to Know
This new law is part of a larger trend toward more aggressive state-level enforcement by legislatures and state attorneys general, as blue states look to fill perceived gaps and shifting regulatory policies at the federal level—and perhaps a more complicated patchwork of state regulations in lieu of federal cohesion. It also appears to incorporate at least some of the recommendations from the CFPB’s playbook released earlier this year to encourage states to take up the mantle of consumer advocacy. This could mean broader liability exposure for businesses, including class-action risk.
Specific to New York’s new law, it means broader liability exposure for a wider range of corporate conduct—from pricing and lending practices and subscription models to AI-driven consumer communications. It also expands the attorney general’s enforcement authority to seek civil penalties and restitution and enhances private rights of action in ways that could increase the risk of class-action litigation.
We recommend that clients with operations or consumer-facing services in New York conduct a compliance review to assess potential exposure under the new standards, especially if day-to-day business includes AI use for customer service or marketing, autorenewals for subscriptions and cancellation policies, fee disclosures and billing transparency, and data protection and breach protocols.
We will continue to monitor this bill as well as other states attempts to step up consumer protection enforcement.
