The Consumer Financial Protection Bureau recently signaled a retreat from its regulatory and enforcement posture by outlining its 2025 supervisory and enforcement priorities and rescinding 67 regulatory guidance documents. In light of this federal pullback, states are seeking to fill the void. On June 18, 2025, the New York legislature took one such step by passing the Fostering Affordability and Integrity Through Reasonable Business Practices Act,1 or the FAIR Business Practices Act (FAIR Act), a bill advanced by Attorney General Letitia James and designed to “protect consumers and small businesses from unfair, deceptive, and abusive practices.”2 The new legislation, if signed by Governor Kathy Hochul, would amend New York’s General Business Law (GBL) § 349 to give the Attorney General broad enforcement powers for “unfair” and “abusive” acts and practices, regardless of whether the acts or practices are consumer-oriented.
If enacted, the FAIR Act would significantly expand New York’s consumer protection framework and transform the legal environment for consumer-facing businesses across the state, including insurers.
Motivation
GBL § 349 applies broadly to “the conduct of any business, trade or commerce or in the furnishing of any service” in New York. Noting that it has not been updated in 45 years, Attorney General James has asserted that the existing GBL § 349 framework too narrowly focuses on “deceptive” acts and practices and is thus inadequate to protect New Yorkers.3 She is especially concerned with harms such as “deed theft, artificial intelligence (AI)-based schemes, online phishing scams, hard-to-cancel subscriptions, junk fees, [and] data breaches.”4 Other practices that the Attorney General seeks to regulate include “[h]ealth insurance companies[] that use long lists of in-network doctors who turn out not to accept insurance.”5 The FAIR Act as passed thus seeks to explicitly prohibit unfair and abusive practices, bringing New York’s consumer protection law in line with the laws of 47 other states that prohibit unfair practices, according to the sponsors’ memorandum.6 It also extends coverage to individuals, small businesses and nonprofits and eliminates a court-imposed7 limitation on application of the statute to “consumer-oriented” conduct, allowing redress for a broader range of harms.
Enhanced Scope and Application
The FAIR Act introduces several provisions aimed at more comprehensively protecting consumers, small businesses and nonprofits by empowering the Attorney General with enforcement for a broader range of conduct.
As discussed above, the FAIR Act enhances GBL § 349 to explicitly prohibit “unfair” and “abusive” acts and practices in addition to the existing “deceptive” practices. These practices are defined as follows:
Deceptive: The act or practice misleads or is likely to mislead a reasonable person in the relevant market acting reasonably under the circumstances.
Unfair: The act or practice “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.” (The term “substantial injury” has the same meaning as the term as defined in the Federal Trade Commission Act, 15 U.S.C. Section 41 et seq. (the FTC Act).)
Abusive: The act or practice is abusive if “(i) it materially interferes with the ability of a person to understand a term or condition of a product or service; or (ii) it 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.” (This mirrors the definition of “abusive” in the FTC Act, but unlike with the FTC Act, it is not limited to the sale of consumer financial products or services.)
The FAIR Act’s preamble states that the act eliminates atextual exceptions imposed by courts that have limited the Attorney General’s power to enforce GBL § 349 to acts or practices that are “consumer-oriented or that have an impact on the public at large.” However, the operative statutory language states that conduct made unlawful by the statute is actionable whether or not it is consumer-oriented with no mention of public impact. In all events, the amendments give the Attorney General broader enforcement power, enabling action against a wider range of misconduct – including conduct implicated in private transactions that may not be conventionally understood as involving consumers or having a public impact.
Broadened Enforcement
The FAIR Act broadly authorizes the Attorney General to commence actions against any entity conducting business or providing services in New York, regardless of whether the entity is physically located in New York or the business or service is conducted outside of New York. Unchanged from the current statute are the Attorney General’s broad powers to seek injunctive relief, restitution of money or property, and preliminary relief in connection with alleged violations.
Notably, only the Attorney General can bring an enforcement action regarding an unfair or abusive practice. The right of private action under the existing statute remains unchanged. It is limited to persons injured by deceptive acts or practices, and recovery authorized by the statute continues to be the greater of fifty dollars or actual damages.
Outlook
The New York legislative session ended June 18, and Governor Hochul has 30 days from when the enacted bill is sent to her in which to make a decision. Failure to act (a “pocket veto”) within that time has the same effect as a veto. As of this writing, 37 days remain for the Senate to present the bill to the Governor. If signed into law, the FAIR Act will significantly increase the range of business practices subject to Attorney General enforcement, including practices deemed to be “AI-based schemes.” And based upon the Attorney General’s articulated targets, we may expect insurers to be a focus of increased enforcement actions under the Act. In addition, it may result in an increase in class action litigation, as plaintiffs test the application of the unchanged private right of action provisions in a changed regulatory climate.
6 An act to amend the general business law, in relation to enacting the “fostering affordability and integrity through reasonable (FAIR) business practices act,” N.Y.S. A.B. A8427A, 2025-2026 (N.Y. May 15, 2025), https://nyassembly.gov/leg/?default_fld=&leg_video=&bn=A08427&term=2025&Memo=Y
7 Id. (“New York’s current law banning deceptive business practices has been interpreted to apply only to ‘consumer-oriented’ practices that ‘affect the public at large’ rather than ‘private contract disputes, unique to the parties’. . . . The underlying statute, however, does not require-or even reference- ‘consumer-oriented’ conduct. This rule was established in the early 1980s by courts concerned that complex high-value commercial negotiations might be distorted if consumer protection laws could be applied by the parties to those negotiations when the deal goes bad.”) (Internal citations omitted.)
