Bill Text: NY S00795 | 2023-2024 | General Assembly | Introduced

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Enacts the "consumer and small business protection act"; relates to standing for persons affected by prohibited or unlawful business practices; expands prohibited acts to include unfair, deceptive or abusive acts.

Spectrum: Partisan Bill (Democrat 30-1)

Status: (Introduced) 2024-06-03 - PRINT NUMBER 795A [S00795 Detail]

Download: New_York-2023-S00795-Introduced.html

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                STATE OF NEW YORK
        ________________________________________________________________________

                                           795

                               2023-2024 Regular Sessions

                    IN SENATE

                                     January 6, 2023
                                       ___________

        Introduced  by  Sens. COMRIE, BAILEY, BRISPORT, BROUK, CLEARE, GIANARIS,
          GOUNARDES, HINCHEY, HOYLMAN, JACKSON,  KAVANAGH,  KRUEGER,  LIU,  MAY,
          MYRIE,  PARKER,  RAMOS,  RIVERA,  SALAZAR, SANDERS, SKOUFIS, THOMAS --
          read twice and ordered printed, and when printed to  be  committed  to
          the Committee on Consumer Protection

        AN  ACT  to  amend the general business law, in relation to enacting the
          "Consumer and Small business Protection Act"

          The People of the State of New York, represented in Senate and  Assem-
        bly, do enact as follows:

     1    Section  1.  This act shall be known and may be cited as the "Consumer
     2  and Small business Protection Act (CSPA)".
     3    § 2. Legislative findings and intent. The  Legislature  declares  that
     4  the  State  has  a  responsibility to protect individuals and businesses
     5  within the State from unfair and abusive business  acts  and  practices.
     6  The  Legislature  further  declares  that the State's law, which guarded
     7  only against deceptive business acts and practices,  has  been  insuffi-
     8  cient  to  meet  this responsibility and has become out of date as other
     9  states' laws provide far greater protections. Consumers and small  busi-
    10  nesses have long been vulnerable to unscrupulous business practices that
    11  are unfair and abusive without being expressly deceptive. The State must
    12  not  allow  bad actors to peddle predatory products and services as long
    13  as they are clever enough not to get caught in a lie. To that  end,  and
    14  to  better  level  the  playing  field for the State's many honest busi-
    15  nesses, this legislation defines unfair and abusive acts  and  practices
    16  expansively.
    17    The  State  must  also  ensure that this protection covers small busi-
    18  nesses, which are frequent targets of predatory loans and other forms of
    19  exploitation, along with all  consumer  transactions.  This  legislation
    20  therefore  rejects  the  limitation,  imposed by courts, that prohibited
    21  conduct be "consumer oriented," have an impact on the public  at  large,
    22  or  be  part  of  a  broader pattern. Consumers and small businesses are

         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD02751-01-3
        S. 795                              2

     1  entitled to redress whenever they are harmed by  deceptive,  unfair,  or
     2  abusive conduct.
     3    Finally, for any of these protections to be meaningful, the State must
     4  ensure  that  the  remedies  for prohibited conduct provide an effective
     5  deterrent. This legislation therefore updates the statutory damages  for
     6  violations for the first time in decades, from $50 to $1,000, and allows
     7  meaningful  punitive  damages  for  particularly egregious behavior. The
     8  Legislature recognizes that unfair,  deceptive,  and  abusive  practices
     9  have a particular impact on poor individuals, people of color, and those
    10  affected  by  natural  disasters  and  health emergencies, including the
    11  COVID-19 pandemic. For this reason, the State must ensure  that  limited
    12  resources  not  prevent  individuals  and  small businesses from seeking
    13  remedies. This legislation therefore opens access to justice  by  making
    14  recovery  of  attorney's  fees  mandatory for a prevailing plaintiff and
    15  authorizing class actions.
    16    § 3. Section 349 of the general business law, as added by  chapter  43
    17  of  the  laws  of 1970, subdivision (h) as amended by chapter 157 of the
    18  laws of 1984, and subdivision (j) as added by section 6 of  part  HH  of
    19  chapter 55 of the laws of 2014, is amended to read as follows:
    20    §  349.  [Deceptive  acts] Prohibited acts and practices unlawful. (a)
    21  [Deceptive] This section prohibits any unfair, deceptive or abusive acts
    22  or practices in the conduct of any business, trade or commerce or in the
    23  furnishing of any service [in this state are hereby declared unlawful].
    24    (1) For the purposes of this section, an act  or  practice  is  unfair
    25  when  it  causes or is likely to cause substantial injury, the injury is
    26  not reasonably avoidable, and the injury is not outweighed  by  counter-
    27  vailing benefits.
    28    (2)  For the purposes of this section, an act or practice is deceptive
    29  when the act or practice misleads or is likely to mislead a  person  and
    30  the person's interpretation is reasonable under the circumstances.
    31    (3)  For  the  purposes of this section, an act or practice is abusive
    32  when:
    33    (i) it materially interferes with the ability of a  person  to  under-
    34  stand a term or condition of a product or service; or
    35    (ii) takes unreasonable advantage of:
    36    (A)  a person's lack of understanding of the material risks, costs, or
    37  conditions of the product or service;
    38    (B) a person's inability to protect his or her interests in  selecting
    39  or using a product or service; or
    40    (C) a person's reasonable reliance on a person covered by this section
    41  to act in his or her interests.
    42    (b)  Whenever  the attorney general shall believe from evidence satis-
    43  factory to him or her that any person, firm, corporation or  association
    44  or agent or employee thereof has engaged in or is about to engage in any
    45  of  the  acts  or  practices stated to be unfair, unlawful, deceptive or
    46  abusive, he or she may bring an action in the name and on behalf of  the
    47  people  of  the  state of New York to enjoin such unlawful acts or prac-
    48  tices and to obtain restitution  of  any  moneys  or  property  obtained
    49  directly  or  indirectly by any such unlawful acts or practices. In such
    50  action preliminary relief may be granted under  article  sixty-three  of
    51  the  civil  practice law and rules.  Such actions may be brought regard-
    52  less of whether or not the underlying violation is directed at  individ-
    53  uals  or  businesses,  is consumer-oriented, or involves the offering of
    54  goods, services, or property for personal, family or household purposes.
    55    (c) Before any violation of this section is sought to be enjoined, the
    56  attorney general shall be required to give the person against whom  such
        S. 795                              3

     1  proceeding  is  contemplated notice by certified mail and an opportunity
     2  to show in writing within five business days after receipt of notice why
     3  proceedings should not be instituted against  him  or  her,  unless  the
     4  attorney  general  shall  find,  in  any  case  in which he or she seeks
     5  preliminary relief, that to give such notice and opportunity is  not  in
     6  the public interest.
     7    (d)  In any such action it shall be a complete defense that the act or
     8  practice is, or if in interstate  commerce  would  be,  subject  to  and
     9  complies  with  the  rules and regulations of, and the statutes adminis-
    10  tered by, the federal trade commission or any official department, divi-
    11  sion, commission or agency of the United States  as  such  rules,  regu-
    12  lations  or  statutes are interpreted by the federal trade commission or
    13  such department, division, commission or agency or the federal courts.
    14    (e) Nothing in this section shall apply to  any  television  or  radio
    15  broadcasting  station  or  to  any  publisher or printer of a newspaper,
    16  magazine  or  other  form  of  printed  advertising,   who   broadcasts,
    17  publishes, or prints the advertisement.
    18    (f) In connection with any proposed proceeding under this section, the
    19  attorney general is authorized to take proof and make a determination of
    20  the  relevant facts, and to issue subpoenas in accordance with the civil
    21  practice law and rules.
    22    (g) This section shall apply to all [deceptive] prohibited  acts  [or]
    23  and  practices  [declared to be unlawful], whether or not subject to any
    24  other law of this state, and shall not supersede, amend  or  repeal  any
    25  other  law  of this state under which the attorney general is authorized
    26  to take any action or conduct any inquiry.
    27    (h) (1) In addition to the right of action  granted  to  the  attorney
    28  general  pursuant  to  this  section, any person who has been injured by
    29  reason of any violation of this section may bring an action  in  his  or
    30  her  own  name  to  enjoin  such  unlawful act or practice, an action to
    31  recover [his actual damages or fifty dollars, whichever is  greater,  or
    32  both  such  actions] one thousand dollars and his or her actual damages,
    33  if any, or both such actions. Such actions may be brought regardless  of
    34  whether  or  not  the  underlying  violation is consumer-oriented, has a
    35  public impact or involves the offering of goods,  services  or  property
    36  for  personal,  family  or  household  purposes.   The court may, in its
    37  discretion, increase the award of damages [to an amount  not  to  exceed
    38  three times the actual damages up to one thousand dollars,] if the court
    39  finds  the  defendant  willfully or knowingly violated this section. The
    40  court [may] shall award  reasonable  attorney's  fees  and  costs  to  a
    41  prevailing plaintiff.
    42    [(j)]  (i)  For  purposes of this section, a "person" is defined as an
    43  individual, firm, corporation,  partnership,  cooperative,  association,
    44  coalition or any other organization's legal entity, or group of individ-
    45  uals however organized;
    46    (ii) For purposes of this section "non-profit organization" is defined
    47  as  an  organization  that  is (A) not an individual; and (B) is neither
    48  organized nor operating in whole, or in significant part, for profit;
    49    (iii) Given the remedial nature of this section, standing to bring  an
    50  action  under  this section, including but not limited to organizational
    51  standing and third-party standing,  shall  be  liberally  construed  and
    52  shall be available to the fullest extent otherwise permitted by law.
    53    (2)  Any  individual  or  non-profit organization entitled to bring an
    54  action under this article may, if the prohibited  act  or  practice  has
    55  caused damage to others similarly situated, bring an action on behalf of
    56  himself  or  herself and such others to recover actual, statutory and/or
        S. 795                              4

     1  punitive damages or obtain other relief as provided for in this article.
     2  Statutory damages under this section will be limited to (i) such  amount
     3  for  each  named  plaintiff as could be recovered under paragraph one of
     4  this  subdivision;  and  (ii) such amount as the court may allow for all
     5  other class members without regard to a minimum individual recovery, not
     6  to exceed the lesser of one million dollars or two per centum of the net
     7  worth of the business.  Thus, any action brought under this  subdivision
     8  shall comply with article nine of the civil practice law and rules.
     9    (3)  A non-profit organization may bring an action under this section,
    10  on behalf of itself or any of its members, or on behalf of those members
    11  of the general public who have been injured by reason of  any  violation
    12  of  this section, including a violation involving goods or services that
    13  the non-profit organization purchased or received in order  to  test  or
    14  evaluate  qualities pertaining to use for personal, household, or family
    15  purposes.   A non-profit organization may seek  the  same  remedies  and
    16  damages that a person may seek under paragraph one of this subdivision.
    17    (4) Before any violation of this section is sought to be enjoined, the
    18  person  bringing the action shall be required to give the person against
    19  whom such action is contemplated notice by certified mail, to the  place
    20  where  the  transaction  occurred  or to the principal place of business
    21  within the state of the person against whom such action is contemplated,
    22  and an opportunity to show in writing within  ten  business  days  after
    23  mailing  of  notice why proceedings should not be instituted against him
    24  or her, unless, in any  case  in  which  the  person  seeks  preliminary
    25  relief,  the giving of such notice and opportunity would cause immediate
    26  and irreparable injury, loss or damages.
    27    (i) Notwithstanding any law to the contrary, all monies  recovered  or
    28  obtained  under  this  article  by  a  state agency or state official or
    29  employee acting in their official capacity shall be subject to  subdivi-
    30  sion eleven of section four of the state finance law.
    31    (j)  This  section  is  intended  to expand and not take away existing
    32  consumer rights.
    33    § 4. This act shall take effect on the sixtieth  day  after  it  shall
    34  have become a law.