New York Lawmakers Approve FAIR Business Conduct Legislation
The passage of the Fostering Affordability and Integrity through Reasonable Business Practices Act (FAIR Business Practices Act) in New York marks a significant milestone in the state's efforts to expand its consumer protection laws. If signed by Governor Hochul, the Act will broaden the powers of the New York Attorney General to take action against a wider range of business practices deemed deceptive, unfair, or abusive.
The key changes in the FAIR Act include the expansion of General Business Law § 349 (GBL § 349) to prohibit not only "deceptive" but also "unfair" and "abusive" business practices, incorporating federal standards for these terms. This move enables the New York Attorney General to use stronger enforcement tools against a broader spectrum of harmful business behaviors.
One of the most significant aspects of the FAIR Act is the elimination of the "consumer-oriented" doctrine, a judicially-created requirement that previously limited protections to practices broadly impacting consumers at large. Under the new law, the Attorney General can now take action against unfair or abusive practices regardless of whether they affect a broad consumer base, and protections are extended explicitly to businesses and nonprofit organizations as well as individual consumers.
The FAIR Act represents the first major update to New York's consumer protection laws in 45 years and aligns the state's laws more closely with federal consumer protection standards. This shift could lead to a more robust enforcement environment in New York, where unfair or abusive practices that harm entities beyond traditional individual consumers—such as small businesses or nonprofits—can be challenged.
Potential examples of unfair and abusive acts 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. This could lead to a more comprehensive approach to consumer and business protections, potentially reducing costs or harms associated with abusive commercial behavior.
If enacted, the FAIR Business Practices Act will make New York one of a few states with a statute this broad, along with California and Washington. As the legislation progresses, monitoring its implementation and providing broader state AG and consumer protection client alerts and analysis will continue to be essential.
The FAIR Act's expansion of General Business Law § 349 allows the New York Attorney General to initiate litigation against businesses engaging in abusive practices, such as mortgage servicers charging excessive fees or student loan servicers steering borrowers into costly repayment plans. In addition, the Act may lead to antitrust litigation when there's direct harm to businesses, but not consumers, emphasizing a broader approach to business and consumer protections in finance and other industries.
