New York Poised to Significantly Expand Consumer Protection Law and Adopt Federal Unfair and Abusive Standards
7 min read
In the wake of the federal government's pullback on consumer protection regulation and enforcement, the New York Legislature has passed an expansive overhaul of its principal consumer protection law.1
The Fostering Affordability and Integrity through Reasonable Business Practices Act ("FAIR Business Practices Act" or "the Act"), if signed into law by Governor Kathy Hochul, would be the first update to New York's General Business Law § 349 ("GBL § 349") in 45 years. Championed by New York Attorney General Letitia James, the FAIR Business Practices Act expands GBL § 349 to prohibit "unfair" and "abusive" practices, incorporates federal standards for these prohibitions, and extends GBL § 349's protections to businesses and non-profit organizations.
Key Changes to the Statute
1. Adding Prohibition of Unfair and Abusive Practices
While federal law and laws in 42 states have long prohibited unfair and deceptive acts and practices, New York's general consumer protection statute is unusually narrow.2 GBL § 349 prohibits only "[d]eceptive acts or practices in the conduct of any business, trade or commerce or in the furnishing of any service in this state."3
The FAIR Business Practices Act amends GBL § 349 to include a prohibition against unfairness—defined as an act or practice 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."4 In addition, the Act further prohibits "abusive" acts or practices. An "abusive" act or practice is one that (1) "materially interferes with the ability of a person to understand a term or condition of a product or service" or (2) "takes unreasonable advantage of (A) a lack of understanding on the part of a person of the material risks, costs, or conditions of a product or service; (B) the inability of a person to protect such person's interests in selecting or using a product or service; or (C) the reasonable reliance by a person on a person engaging in the act or practice to act in the relying person's interests."5
New York Attorney General James has identified several "unfair and abusive business acts" that the Act is intended to protect against:
- Student loan servicers steering borrowers into the most expensive repayment plans;
- Car dealers refusing to return a customer's photo ID until a deal is finalized and charging for add-on warranties that the customer did not purchase;
- Nursing homes routinely suing relatives of deceased residents for their unpaid bills despite not having any basis for liability;
- Companies taking advantage of consumers with limited English proficiency and obscuring pricing information and fees;
- Debt collectors taking Social Security benefits, even though they are exempt from debt collection; and
- Health insurance companies listing doctors as in-network who turn out not to accept the insurance.6
The prohibition on unfair or abusive acts and practices is only enforceable by the Attorney General, who is authorized to seek injunctive relief and restitution. GBL § 349's private right of action remains limited to causes of action for deception.
2. Incorporating Federal Consumer Protection Standards
The FAIR Business Practices Act's prohibition on unfair and abusive acts and practices is drawn from (and likely inspired by) longstanding federal standards.7
Since 1938, the Federal Trade Commission Act has prohibited "unfair" acts and practices that "cause[] or [are] likely to cause substantial injury to consumers which [are] not reasonably avoidable by consumers themselves and not outweighed by countervailing benefits to consumers or to competition."8 Almost a century later, Congress passed the Consumer Financial Protection Act of 2010 ("CFPA") and created a new agency—the Consumer Financial Protection Bureau ("the Bureau")—to enforce it.9 The CFPA prohibits unfair acts and practices in the consumer financial services industry and incorporates the Federal Trade Commission Act's unfairness standard.10
Critically, the CFPA also established a new prohibition on "abusive" acts or practices. The "abusive" conduct prohibited by the CFPA is identical to the standard adopted in the FAIR Business Practices Act.11
3. Eliminating the "Consumer-Oriented" Doctrine
New York courts have interpreted GBL § 349 to outlaw only "consumer-oriented" practices that have "a broad impact on consumers at large."12 The "consumer-oriented" doctrine limits consumers from seeking relief for single instances of harm and limits protections to consumers as opposed to other entities. The FAIR Business Practices Act explicitly eliminates this judicially-created limitation, stating that an "act or practice made unlawful by this section is actionable by the attorney general regardless of whether or not that act or practice is consumer-oriented."13 Additionally, the Act expressly expands the Attorney General's consumer protection responsibility "to protecting businesses and non-profits as well as individuals."14
This change significantly broadens the range of business practices that can be enforced against by the Attorney General, including those arising in private transactions and where there is direct harm to businesses but not to consumers.
Key Takeaways
The FAIR Business Practices Act would be a significant expansion of consumer protections in New York, providing the Attorney General with powerful tools to bring enforcement actions against a wide range of industries and businesses practices. Of particular note:
- Expanded Abusiveness Prohibition. Even though the abusiveness prohibition included in the FAIR Business Practices Act is based on the CFPA, it has the potential to be far more disruptive than the current federal law. In general, the CFPA can only be enforced against companies offering or providing consumer financial products or services. The FAIR Business Practices Act is not so limited. It applies to (1) any person within New York conducting any business, regardless of whether that business is conducted or furnished outside of New York, and (2) any out-of-state person that conducts business in New York.15
- "Federalization" of New York Law? The New York Legislature's adoption of federal unfair and abusiveness standards comes against the backdrop of less stringent regulatory and enforcement efforts at the federal level. In January 2025, the Bureau issued a statement encouraging states to expand their consumer protection laws, including by adding an abusiveness prohibition to existing state consumer protection statutes.16 Federal regulators also have issued numerous guidance documents on what constitutes unfair and abusive practices.17 Even in the wake of a federal enforcement pullback, we expect that this well-established body of federal guidance will influence the Attorney General's interpretation and application of the FAIR Business Practices Act. Notably, a former senior enforcement official from the Bureau was named head of enforcement at the New York Department of Financial Services.18 Given that New York is poised to adopt federal standards for its new consumer protection law, we expect this trend to continue.
- Disrupting Commercial Expectations. Given the inclusion of businesses within the scope of protection provided by the Act, should it pass, businesses should take care when reviewing commercial agreements. Carefully negotiated risk-shifting provisions like indemnification, limitations of liability and warranty disclaimers, among others, may now be called into question as "unfair" or "abusive." The same is true of fundamental provisions such as pricing, scope of services, and other fundamental business terms.
The FAIR Business Practices Act would take effect on the 60th day after it is signed into law. We will continue to monitor the progress of this legislation and provide updates on its impact on consumer protection enforcement in New York.
1 Attorney General James Applauds Passage of Legislation to Protect Consumers and Small Businesses, N.Y. State Att'y Gen. (June 18, 2025), available at link.
2 Attorney General James Takes Action to Protect New York Consumers and Small Businesses, N.Y. State Att'y Gen. (Mar. 13, 2025).
3 NY GBL § 349(a).
4 FAIR Business Practices Act § 349(a)(1), available at link.
5 Id. § 349(a)(2).
6 Attorney General James Applauds Passage of Legislation to Protect Consumers and Small Businesses.
7 12 U.S.C. § 5531.
8 See Consumer Fin. Prot. Bureau, Strengthening State-Level Consumer Protections: Promoting Consumer Protection Federalism 3–4 & n.6, available at link; 15 U.S.C. § 45(n) (defining unfairness).
9 Pub. L. No. 111-203, 124 Stat. 1955 (2010).
10 See 12 U.S.C. § 5531(c).
11 Id. § 5531(d).
12 New York Univ. v. Cont'l Ins., 662 N.E.2d 763, 770 (N.Y. 1995).
13 FAIR Business Practices Act § 349(b)(3).
14 Id. § 348.
15 FAIR Business Practices Act § 349(b)(2).
16 Seth Frotman & Brian Shearer, Strengthening State-Level Consumer Protections, Consumer Fin. Prot. Bureau (Jan. 14, 2025), available at link.
17 Statement of Policy Regarding Prohibition on Abusive Acts or Practices, 88 Fed. Reg. 21883 (Apr. 12, 2023); Bulletin 2022-06: Unfair Returned Deposited Item Fee Assessment Practices, 87 Fed. Reg. 66940 (Nov. 7, 2022); Rule on Unfair or Deceptive Fees, 16 C.F.R. Part 464.
18 Jon Hill, NY Taps Ex-CFPB Official For Top Financial Enforcement Role, Law360 Pulse (Mar. 13, 2025), available at link.
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