Relates to standing for persons affected by prohibited or unlawful business practices and expands prohibited acts to include unfair, unlawful, deceptive or abusive acts.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A9824A
SPONSOR: Niou TITLE OF BILL: An act to amend the general business law, in relation
to standing for persons affected by prohibited or unlawful business
practices
PURPOSE:
To modernize general business law to clearly define prohibited acts and
practices in the conduct of business, trade or commerce or services.
SUMMARY OF SPECIFIC PROVISIONS:;
Section 1- Defines prohibited acts and practices as any unfair, unlaw-
ful, abusive or deceptive acts or practices in the conduct of business,
trade or commerce or services. The general business law (GBL) is further
amended by allowing any person who has been injured by violation of this
section to bring an action to enjoin such unlawful act or practice, an
action to recover damages, or both regardless of whether or not the
underlying violation is consumer-oriented or has public impact.
Section 2- Allows persons, if the prohibited act or practice has caused
damage to him/her or others, to bring an action compliant with article
nine of the civil practice law and rules; an
Section 3 - Allows organization to seek the same remedies and damages
that a person as defined in section 2 in addition to allowing an organ-
ization to bring action on behalf of the general public, itself, or
members of an organization under certain conditions.
JUSTIFICATION:
New York's general business law is outdated and incapable of providing
the protections needed for modern commerce and service. Although New
York is a leader in many areas of consumer protections, it lacks the
proper protections against unfair and unlawful acts, which lags behind
general business statutes in at least 39 other states. This bill seeks
to protect consumers against actions that are likely to cause substan-
tial injury, take advantage of vulnerable consumers, and defends consum-
ers against practices that are likely to mislead under reasonable
circumstances.
This bill also seeks to allow persons to recover statutory damages of
two thousand dollars in lieu of his or her actual damages, whichever is
greater. Individual consumers and consumer attorneys are often reluctant
to bring action against violators due to the prohibitive costs and time
required to bring litigation to perpetrators. Increasing the minimum
amount of monies recoverable will provide potential support for persons
in seeking legal action against violators.
This bill would bring New York's GBL in line with most other state stat-
utes by expanding consumer protections to protect against unfair and
unlawful acts while providing a significant deterrent to dishonest and
deceitful business entities that seek to take advantage of consumers.
LEGISLATIVE HISTORY
None
FISCAL IMPLICATIONS
It is anticipated that the increased civil penalty and widened
protections proposed in the bill would result in an increase in monies
remitted to the State by violators and perpetrators.
EFFECTIVE DATE
This act shall take effect immediately.
STATE OF NEW YORK
________________________________________________________________________
9824--A
IN ASSEMBLY
February 14, 2018
___________
Introduced by M. of A. NIOU -- read once and referred to the Committee
on Consumer Affairs and Protection -- committee discharged, bill
amended, ordered reprinted as amended and recommitted to said commit-
tee
AN ACT to amend the general business law, in relation to standing for
persons affected by prohibited or unlawful business practices
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Section 349 of the general business law, as added by chap-
2 ter 43 of the laws of 1970, subdivision (h) as amended by chapter 157 of
3 the laws of 1984, and subdivision (j) as added by section 6 of part HH
4 of chapter 55 of the laws of 2014, is amended to read as follows:
5 § 349. [Deceptive acts] Prohibited acts and practices [unlawful]. (a)
6 [Deceptive] This section prohibits any unfair, unlawful, deceptive or
7 abusive acts or practices in the conduct of any business, trade or
8 commerce or in the furnishing of any service [in this state are hereby
9 declared unlawful].
10 (1) For the purposes of this section, an act or practice is unfair
11 when:
12 (i) it causes or is likely to cause substantial injury, the injury is
13 not reasonably avoidable, and the injury is not outweighed by counter-
14 vailing benefits; or
15 (ii) it takes unreasonable advantage of the inability of a person to
16 protect his or her interests because of the person's infirmity, illiter-
17 acy or inability to understand the language of an agreement.
18 (2) For the purposes of this section, an act or practice is unlawful
19 when it violates any law be it civil or criminal, federal, state, munic-
20 ipal, statutory, administrative or any other law applicable in this
21 state.
22 (3) For the purposes of this section, an act or practice is deceptive
23 when the act or practice misleads or is likely to mislead a person and
24 the person's interpretation is reasonable under the circumstances.
25 (4) For the purposes of this section, an act or practice is abusive
26 when:
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD14112-02-8
A. 9824--A 2
1 (i) it materially interferes with the ability of a person to under-
2 stand a term or condition of a consumer financial product or service; or
3 (ii) takes unreasonable advantage of:
4 (A) a person's lack of understanding of the material risks, costs, or
5 conditions of the product or service;
6 (B) a person's inability to protect his or her interests in selecting
7 or using a consumer financial product or service; or
8 (C) a person's reasonable reliance on a person covered by this section
9 to act in his or her interests.
10 (b) Whenever the attorney general shall believe from evidence satis-
11 factory to him or her that any person, firm, corporation or association
12 or agent or employee thereof has engaged in or is about to engage in any
13 of the acts or practices stated to be unfair, unlawful, deceptive or
14 abusive, he or she may bring an action in the name and on behalf of the
15 people of the state of New York to enjoin such unlawful acts or prac-
16 tices and to obtain restitution of any moneys or property obtained
17 directly or indirectly by any such unlawful acts or practices. In such
18 action preliminary relief may be granted under article sixty-three of
19 the civil practice law and rules.
20 (c) Before any violation of this section is sought to be enjoined, the
21 attorney general shall be required to give the person against whom such
22 proceeding is contemplated notice by certified mail and an opportunity
23 to show in writing within five business days after receipt of notice why
24 proceedings should not be instituted against him or her, unless the
25 attorney general shall find, in any case in which he or she seeks
26 preliminary relief, that to give such notice and opportunity is not in
27 the public interest.
28 (d) [In any such action it shall be a complete defense that the act or
29 practice is, or if in interstate commerce would be, subject to and
30 complies with the rules and regulations of, and the statutes adminis-
31 tered by, the federal trade commission or any official department, divi-
32 sion, commission or agency of the United States as such rules, regu-
33 lations or statutes are interpreted by the federal trade commission or
34 such department, division, commission or agency or the federal courts.
35 (e)] Nothing in this section shall apply to any television or radio
36 broadcasting station or to any publisher or printer of a newspaper,
37 magazine or other form of printed advertising, who broadcasts,
38 publishes, or prints the advertisement.
39 [(f)] (e) In connection with any proposed proceeding under this
40 section, the attorney general is authorized to take proof and make a
41 determination of the relevant facts, and to issue subpoenas in accord-
42 ance with the civil practice law and rules.
43 [(g)] (f) This section shall apply to all [deceptive] prohibited acts
44 [or] and practices [declared to be unlawful], whether or not subject to
45 any other law of this state, and shall not supersede, amend or repeal
46 any other law of this state under which the attorney general is author-
47 ized to take any action or conduct any inquiry.
48 [(h)] (g) (1) In addition to the right of action granted to the attor-
49 ney general pursuant to this section, any person who has been injured by
50 reason of any violation of this section may bring an action in his or
51 her own name to enjoin such unlawful act or practice, an action to
52 recover his or her actual damages [or fifty] and statutory damages of
53 two thousand dollars, [whichever is greater,] or both such actions. Such
54 actions may be brought regardless of whether or not the underlying
55 violation is consumer-oriented or has a public impact. The court may, in
56 its discretion, increase the award of damages [to an amount not to
A. 9824--A 3
1 exceed three times the actual damages up to one thousand dollars,] if
2 the court finds the defendant willfully or knowingly violated this
3 section. The court [may] shall award reasonable attorney's fees and
4 costs to a prevailing plaintiff.
5 (i) For purposes of this section, a "person" is defined as an individ-
6 ual, firm, corporation, partnership, cooperative, association, coalition
7 or any other organization's legal entity, or group of individuals howev-
8 er organized;
9 (ii) Given the remedial nature of this section, standing to bring an
10 action under this section, including but not limited to organizational
11 standing and third-party standing, shall be liberally construed and
12 shall be available to the fullest extent otherwise permitted by law.
13 (2) Any person entitled to bring an action under this article may, if
14 the prohibited act or practice has caused damage to others similarly
15 situated, bring an action on behalf of himself or herself and such
16 others to recover actual, statutory and/or punitive damages or obtain
17 other relief as provided for in this article. Thus, any action brought
18 under this subdivision shall comply with article nine of the civil prac-
19 tice law and rules.
20 (3) An organization may bring an action under this section, on behalf
21 of itself or any of its members, or on behalf of those members of the
22 general public who have been injured by reason of any violation of this
23 section, including a violation involving goods or services that the
24 organization purchased or received in order to test or evaluate quali-
25 ties pertaining to use for personal, household, or family purposes. An
26 organization may seek the same remedies and damages that a person may
27 seek under paragraph one of this subdivision.
28 [(j)] (h) Notwithstanding any law to the contrary, all monies recov-
29 ered or obtained under this article by a state agency or state official
30 or employee acting in their official capacity shall be subject to subdi-
31 vision eleven of section four of the state finance law.
32 § 2. Section 389-c of the general business law, as added by chapter
33 309 of the laws of 1996, is amended to read as follows:
34 § 389-c. Special application of section three hundred forty-nine of
35 this chapter. In addition to the power set forth in subdivision (b) of
36 section three hundred forty-nine of this chapter, the attorney general
37 shall have the power to assess a fine of up to one thousand dollars for
38 each violation of this article[; and the defense under subdivision (d)
39 of section three hundred forty-nine of this chapter shall not be avail-
40 able in connection with any violation of this article].
41 § 3. This act shall take effect on the sixtieth day after it shall
42 have become a law.
