New York Seeks to Beef up Consumer Protection Framework

By Leonard L. Gordon, Jonathan L. Pompan, Ellis McKennie & Eden Caliendo

New York attorney general Leticia James is the latest state-level actor to respond to the Trump administration’s efforts to shrink federal consumer protection agencies. James has championed the FAIR Business Practices Act, a bill introduced in the New York state legislature aimed at expanding the New York consumer protection statutes to include unfair and abusive practices.

According to James, the FAIR Business Practices Act would “close loopholes” in New York’s current consumer protection scheme and enhance the enforcement capabilities of the Office of the Attorney General. If enacted, the bill would enable the attorney general to pursue civil penalties and restitution for violations of the act, such as:

• Companies making it difficult to cancel subscriptions
• Student loan services steering borrowers to the most expensive repayment plans
• Car dealers refusing to return a customer’s ID until a deal is finalized
• Nursing homes suing relatives of deceased residents for unpaid bills
• Companies taking advantage of consumers with limited English proficiency

New York’s current consumer protection law, enacted in 1970, only prohibits “deceptive” business acts and practices. The FAIR Business Practice Act would broaden the scope of the law by adding “unfair and abusive” business practices. According to bill proponents, this addition would allow the attorney general to protect consumers against phishing, junk fees, data breaches, and other abusive practices.

Proponents of the FAIR Business Practices Act describe it as a direct response to the Trump administration’s deregulatory stance on consumer protection. State Assembly member Micah Lasher, a lead sponsor of the bill, emphasized the urgency of state-level action, stating, “New York is going to fight back with the FAIR Business Practices Act. Making sure that the Attorney General has the tools she needs to look out for New Yorkers is one of the best ways we can stop the damage Trump is trying to do.” Much of the authority granted to the New York AG appears aimed at filling the reduced role of the Consumer Financial Protection Bureau.

Notably, the FAIR Business Practices Act has garnered support from several former federal consumer protection advocates and officials. Former CFPB director Rohit Chopra and former FTC chairwoman Lina Khan have both expressed their support for the bill and its importance in defending the pocketbooks of New Yorkers.

Furthermore, last week the state announced the hiring of former CFPB official Gabriel O’Malley to head the New York State Department of Financial Services, Consumer Protection, and Financial Enforcement Division. The Trump administration’s change in federal consumer protection priorities may push other states to follow New York’s lead and strengthen their own state consumer protection capabilities.

Download the new, 13th annual Advertising Law Tool Kit, and secure your seat for Venable’s 11th Advertising Law Symposium on March 20 in Washington, DC. Be sure to check out Season 2 of the Ad Law Tool Kit Show, our podcast that examines the increasingly complex regulatory landscape. For more insights into advertising law, bookmark our All About Advertising Law blog and subscribe to our monthly newsletter. To learn more about Venable’s Advertising Law services, click here or contact one of the authors.