What Happened?
On March 13, New York state legislators introduced new legislation called the Fostering Affordability and Integrity Through Reasonable (FAIR) Business Practices Act. The bill, supported by New York Attorney General Letitia James, aims to strengthen New York’s existing consumer protection law and would expand the law’s scope from only covering “deceptive” acts or practices to also include “unfair” and “abusive” practices. It would apply in the consumer, as well as the small business context.
Why Is It Important?
The FAIR Act comes at a time when consumer protection at the federal level has stalled, particularly with respect to the activities of the Consumer Financial Protection Bureau (CFPB). State attorneys general have promised to step in to address any resulting gaps in consumer protection.
The FAIR Act defines unfair and abusive acts and practices expansively, to reach conduct that could be considered unfair or abusive, but arguably not deceptive. Additionally, it provides for enhanced civil penalties for unfair, deceptive, or abusive practices against “vulnerable persons,” including those under 18 or over 65, active duty servicemembers and veterans, physically or mentally impaired persons, and individuals with limited English proficiency. The legislation provides for civil penalties of: (a)$5,000 per violation; or (b) for knowing or willful violations, the greater of $15,000 or three times the amount of restitution for each violation.
What To Do Now?
Businesses operating in New York can prepare for potential changes by reviewing current practices to identify those that might be considered unfair or abusive under the broader scope of the FAIR Act. Additionally, they can:
- Monitor the progress of this legislation and be prepared to adjust business practices accordingly, especially as state-level enforcement of consumer protection laws is likely to increase in response to reduced federal action; and
- Pay particular attention to practices that might affect “vulnerable persons” as defined in the legislation, as these could result in enhanced civil penalties.
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