S T A T E O F N E W Y O R K
________________________________________________________________________
6414
2021-2022 Regular Sessions
I N S E N A T E
April 27, 2021
___________
Introduced by Sens. COMRIE, BAILEY, BIAGGI, GIANARIS, GOUNARDES, HOYL-
MAN, 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, the financial services law and
the insurance 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:
Section 1. This act shall be known and may be cited as the "Consumer
and Small business Protection Act (CSPA)".
§ 2. Legislative findings and intent. The Legislature declares that
the State has a responsibility to protect individuals and businesses
within the State from unfair and abusive business acts and practices.
The Legislature further declares that the State's law, which guarded
only against deceptive business acts and practices, has been insuffi-
cient to meet this responsibility and has become out of date as other
states' laws provide far greater protections. Consumers and small busi-
nesses have long been vulnerable to unscrupulous business practices that
are unfair and abusive without being expressly deceptive. The State must
not allow bad actors to peddle predatory products and services as long
as they are clever enough not to get caught in a lie. To that end, and
to better level the playing field for the State's many honest busi-
nesses, this legislation defines unfair and abusive acts and practices
expansively.
The State must also ensure that this protection covers small busi-
nesses, which are frequent targets of predatory loans and other forms of
exploitation, along with all consumer transactions. This legislation
therefore rejects the limitation, imposed by courts, that prohibited
conduct be "consumer oriented," have an impact on the public at large,
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD04637-05-1
S. 6414 2
or be part of a broader pattern. Consumers and small businesses are
entitled to redress whenever they are harmed by deceptive, unfair, or
abusive conduct.
Finally, for any of these protections to be meaningful, the State must
ensure that the remedies for prohibited conduct provide an effective
deterrent. This legislation therefore updates the statutory damages for
violations for the first time in decades, from $50 to $1,000, and allows
meaningful punitive damages for particularly egregious behavior. The
Legislature recognizes that unfair, deceptive, and abusive practices
have a particular impact on poor individuals, people of color, and those
affected by natural disasters and health emergencies, including the
COVID-19 pandemic. For this reason, the State must ensure that limited
resources not prevent individuals and small businesses from seeking
remedies. This legislation therefore opens access to justice by making
recovery of attorney's fees mandatory for a prevailing plaintiff and
authorizing class actions.
§ 3. Section 349 of the general business law, as added by chapter 43
of the laws of 1970, subdivision (h) as amended by chapter 157 of the
laws of 1984, and subdivision (j) as added by section 6 of part HH of
chapter 55 of the laws of 2014, is amended to read as follows:
§ 349. [Deceptive acts] PROHIBITED ACTS and practices unlawful. (a)
[Deceptive] THIS SECTION PROHIBITS ANY UNFAIR, DECEPTIVE OR ABUSIVE acts
or practices in the conduct of any business, trade or commerce or in the
furnishing of any service [in this state are hereby declared unlawful].
(1) FOR THE PURPOSES OF THIS SECTION, AN ACT OR PRACTICE IS UNFAIR
WHEN IT CAUSES OR IS LIKELY TO CAUSE SUBSTANTIAL INJURY, THE INJURY IS
NOT REASONABLY AVOIDABLE, AND THE INJURY IS NOT OUTWEIGHED BY COUNTER-
VAILING BENEFITS.
(2) FOR THE PURPOSES OF THIS SECTION, AN ACT OR PRACTICE IS DECEPTIVE
WHEN THE ACT OR PRACTICE MISLEADS OR IS LIKELY TO MISLEAD A PERSON AND
THE PERSON'S INTERPRETATION IS REASONABLE UNDER THE CIRCUMSTANCES.
(3) FOR THE PURPOSES OF THIS SECTION, AN ACT OR PRACTICE IS ABUSIVE
WHEN:
(I) IT MATERIALLY INTERFERES WITH THE ABILITY OF A PERSON TO UNDER-
STAND A TERM OR CONDITION OF A PRODUCT OR SERVICE; OR
(II) TAKES UNREASONABLE ADVANTAGE OF:
(A) A PERSON'S LACK OF UNDERSTANDING OF THE MATERIAL RISKS, COSTS, OR
CONDITIONS OF THE PRODUCT OR SERVICE;
(B) A PERSON'S INABILITY TO PROTECT HIS OR HER INTERESTS IN SELECTING
OR USING A PRODUCT OR SERVICE; OR
(C) A PERSON'S REASONABLE RELIANCE ON A PERSON COVERED BY THIS SECTION
TO ACT IN HIS OR HER INTERESTS.
(b) Whenever the attorney general shall believe from evidence satis-
factory to him OR HER that any person, firm, corporation or association
or agent or employee thereof has engaged in or is about to engage in any
of the acts or practices stated to be UNFAIR, unlawful, DECEPTIVE OR
ABUSIVE, he OR SHE may bring an action in the name and on behalf of the
people of the state of New York to enjoin such unlawful acts or prac-
tices and to obtain restitution of any moneys or property obtained
directly or indirectly by any such unlawful acts or practices. In such
action preliminary relief may be granted under article sixty-three of
the civil practice law and rules. SUCH ACTIONS MAY BE BROUGHT REGARD-
LESS OF WHETHER OR NOT THE UNDERLYING VIOLATION IS DIRECTED AT INDIVID-
UALS OR BUSINESSES, IS CONSUMER-ORIENTED, OR INVOLVES THE OFFERING OF
GOODS, SERVICES, OR PROPERTY FOR PERSONAL, FAMILY OR HOUSEHOLD PURPOSES.
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(c) Before any violation of this section is sought to be enjoined, the
attorney general shall be required to give the person against whom such
proceeding is contemplated notice by certified mail and an opportunity
to show in writing within five business days after receipt of notice why
proceedings should not be instituted against him OR HER, unless the
attorney general shall find, in any case in which he OR SHE seeks
preliminary relief, that to give such notice and opportunity is not in
the public interest.
(d) In any such action it shall be a complete defense that the act or
practice is, or if in interstate commerce would be, subject to and
complies with the rules and regulations of, and the statutes adminis-
tered by, the federal trade commission or any official department, divi-
sion, commission or agency of the United States as such rules, regu-
lations or statutes are interpreted by the federal trade commission or
such department, division, commission or agency or the federal courts.
(e) Nothing in this section shall apply to any television or radio
broadcasting station or to any publisher or printer of a newspaper,
magazine or other form of printed advertising, who broadcasts,
publishes, or prints the advertisement.
(f) In connection with any proposed proceeding under this section, the
attorney general is authorized to take proof and make a determination of
the relevant facts, and to issue subpoenas in accordance with the civil
practice law and rules.
(g) This section shall apply to all [deceptive] PROHIBITED acts [or]
AND practices [declared to be unlawful], whether or not subject to any
other law of this state, and shall not supersede, amend or repeal any
other law of this state under which the attorney general is authorized
to take any action or conduct any inquiry.
(h) (1) In addition to the right of action granted to the attorney
general pursuant to this section, any person who has been injured by
reason of any violation of this section may bring an action in his OR
HER own name to enjoin such unlawful act or practice, an action to
recover [his actual damages or fifty dollars, whichever is greater, or
both such actions] ONE THOUSAND DOLLARS AND HIS OR HER ACTUAL DAMAGES,
IF ANY, OR BOTH SUCH ACTIONS. SUCH ACTIONS MAY BE BROUGHT REGARDLESS OF
WHETHER OR NOT THE UNDERLYING VIOLATION IS CONSUMER-ORIENTED, HAS A
PUBLIC IMPACT OR INVOLVES THE OFFERING OF GOODS, SERVICES OR PROPERTY
FOR PERSONAL, FAMILY OR HOUSEHOLD PURPOSES. The court may, in its
discretion, increase the award of damages [to an amount not to exceed
three times the actual damages up to one thousand dollars,] if the court
finds the defendant willfully or knowingly violated this section. The
court [may] SHALL award reasonable attorney's fees AND COSTS to a
prevailing plaintiff.
[(j)] (I) FOR PURPOSES OF THIS SECTION, A "PERSON" IS DEFINED AS AN
INDIVIDUAL, FIRM, CORPORATION, PARTNERSHIP, COOPERATIVE, ASSOCIATION,
COALITION OR ANY OTHER ORGANIZATION'S LEGAL ENTITY, OR GROUP OF INDIVID-
UALS HOWEVER ORGANIZED;
(II) FOR PURPOSES OF THIS SECTION "NON-PROFIT ORGANIZATION" IS DEFINED
AS AN ORGANIZATION THAT IS (1) NOT AN INDIVIDUAL; AND (2) IS NEITHER
ORGANIZED NOR OPERATING IN WHOLE, OR IN SIGNIFICANT PART, FOR PROFIT;
(III) GIVEN THE REMEDIAL NATURE OF THIS SECTION, STANDING TO BRING AN
ACTION UNDER THIS SECTION, INCLUDING BUT NOT LIMITED TO ORGANIZATIONAL
STANDING AND THIRD-PARTY STANDING, SHALL BE LIBERALLY CONSTRUED AND
SHALL BE AVAILABLE TO THE FULLEST EXTENT OTHERWISE PERMITTED BY LAW.
(2) ANY INDIVIDUAL OR NON-PROFIT ORGANIZATION ENTITLED TO BRING AN
ACTION UNDER THIS ARTICLE MAY, IF THE PROHIBITED ACT OR PRACTICE HAS
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CAUSED DAMAGE TO OTHERS SIMILARLY SITUATED, BRING AN ACTION ON BEHALF OF
HIMSELF OR HERSELF AND SUCH OTHERS TO RECOVER ACTUAL, STATUTORY AND/OR
PUNITIVE DAMAGES OR OBTAIN OTHER RELIEF AS PROVIDED FOR IN THIS ARTICLE.
STATUTORY DAMAGES UNDER THIS SECTION WILL BE LIMITED TO (I) SUCH AMOUNT
FOR EACH NAMED PLAINTIFF AS COULD BE RECOVERED UNDER PARAGRAPH ONE OF
THIS SUBDIVISION; AND (II) SUCH AMOUNT AS THE COURT MAY ALLOW FOR ALL
OTHER CLASS MEMBERS WITHOUT REGARD TO A MINIMUM INDIVIDUAL RECOVERY, NOT
TO EXCEED THE LESSER OF ONE MILLION DOLLARS OR TWO PER CENTUM OF THE NET
WORTH OF THE BUSINESS. THUS, ANY ACTION BROUGHT UNDER THIS SUBDIVISION
SHALL COMPLY WITH ARTICLE NINE OF THE CIVIL PRACTICE LAW AND RULES.
(3) A NON-PROFIT ORGANIZATION MAY BRING AN ACTION UNDER THIS SECTION,
ON BEHALF OF ITSELF OR ANY OF ITS MEMBERS, OR ON BEHALF OF THOSE MEMBERS
OF THE GENERAL PUBLIC WHO HAVE BEEN INJURED BY REASON OF ANY VIOLATION
OF THIS SECTION, INCLUDING A VIOLATION INVOLVING GOODS OR SERVICES THAT
THE NON-PROFIT ORGANIZATION PURCHASED OR RECEIVED IN ORDER TO TEST OR
EVALUATE QUALITIES PERTAINING TO USE FOR PERSONAL, HOUSEHOLD, OR FAMILY
PURPOSES. A NON-PROFIT ORGANIZATION MAY SEEK THE SAME REMEDIES AND
DAMAGES THAT A PERSON MAY SEEK UNDER PARAGRAPH ONE OF THIS SUBDIVISION.
(4) BEFORE ANY VIOLATION OF THIS SECTION IS SOUGHT TO BE ENJOINED, THE
PERSON BRINGING THE ACTION SHALL BE REQUIRED TO GIVE THE PERSON AGAINST
WHOM SUCH ACTION IS CONTEMPLATED NOTICE BY CERTIFIED MAIL, TO THE PLACE
WHERE THE TRANSACTION OCCURRED OR TO THE PRINCIPAL PLACE OF BUSINESS
WITHIN THE STATE OF THE PERSON AGAINST WHOM SUCH ACTION IS CONTEMPLATED,
AND AN OPPORTUNITY TO SHOW IN WRITING WITHIN TEN BUSINESS DAYS AFTER
MAILING OF NOTICE WHY PROCEEDINGS SHOULD NOT BE INSTITUTED AGAINST HIM
OR HER, UNLESS, IN ANY CASE IN WHICH THE PERSON SEEKS PRELIMINARY
RELIEF, THE GIVING OF SUCH NOTICE AND OPPORTUNITY WOULD CAUSE IMMEDIATE
AND IRREPARABLE INJURY, LOSS OR DAMAGES.
(I) Notwithstanding any law to the contrary, all monies recovered or
obtained under this article by a state agency or state official or
employee acting in their official capacity shall be subject to subdivi-
sion eleven of section four of the state finance law.
(J) THIS SECTION IS INTENDED TO EXPAND AND NOT TAKE AWAY EXISTING
CONSUMER RIGHTS.
§ 4. This act shall take effect on the sixtieth day after it shall
have become a law.
