S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   5431
 
                        2025-2026 Regular Sessions
 
                           I N  A S S E M B L Y
 
                             February 14, 2025
                                ___________
 
 Introduced  by M. of A. VANEL -- read once and referred to the Committee
   on Consumer Affairs and Protection
 
 AN ACT to amend the general business law,  in  relation  to  prohibiting
   deceptive automatic gratuities
 
   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:

   Section 1. The general business law is amended by adding a new section
 349-h to read as follows:
   § 349-H. RESTRICTIONS ON AUTOMATIC GRATUITIES. 1. DEFINITIONS. AS USED
 IN THIS SECTION, THE FOLLOWING TERMS SHALL HAVE THE FOLLOWING MEANINGS:
   (A) "AUTOMATIC GRATUITY" SHALL MEAN A GRATUITY THAT IS CHARGED TO  THE
 CONSUMER'S  BILL  AUTOMATICALLY,  REGARDLESS  OF  THE CONSUMERS RIGHT OR
 ABILITY TO REDUCE OR INCREASE SUCH GRATUITY.
   (B) "ESTABLISHMENT" SHALL MEAN A PLACE OF BUSINESS THAT IS OPEN TO THE
 PUBLIC IN THE STATE OF NEW YORK.
   (C) "POINT-OF-SALE TERMINAL" SHALL MEAN AN ELECTRONIC  DEVICE  THROUGH
 WHICH A CONSUMER MAY INITIATE PAYMENT TRANSACTIONS.
   2.  DECEPTIVE  AUTOMATIC  GRATUITIES.  AN  AUTOMATIC GRATUITY SHALL BE
 DEEMED TO BE DECEPTIVE WHERE:
   (A) THE ESTABLISHMENT DOES NOT TAKE REASONABLE STEPS  TO  ENSURE  THAT
 THE  CONSUMER IS MADE AWARE OF THE AUTOMATIC GRATUITY PRIOR TO MAKING AN
 ORDER WHILE ON THE PREMISES OF THE ESTABLISHMENT;
   (B) THE AUTOMATIC GRATUITY IS BASED ON TAXES, FEES, OR  CHARGES  OTHER
 THAN THE ITEMIZED CHARGES FOR SERVICES RENDERED OR GOODS RECEIVED;
   (C)  THE  OPTION  TO  ADD  AN  ADDITIONAL GRATUITY IS PRESENTED TO THE
 CONSUMER AND THE STATEMENT "A TIP HAS ALREADY BEEN ADDED TO  YOUR  BILL"
 IS  NOT  CONSPICUOUSLY  PLACED NEAR SUCH OPTION WITH NO ADDITIONAL WORDS
 ADDED TO SUCH STATEMENT; AND
   (D) THE ATTORNEY GENERAL PROMULGATES RULES OR  REGULATIONS  PERTAINING
 TO AUTOMATIC GRATUITIES AND SUCH RULES OR REGULATIONS ARE VIOLATED.
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD08428-01-5
 A. 5431                             2
              

 
   3.  MANUFACTURER'S  DUTIES  AND  LIABILITY.  A  MANUFACTURER, SOFTWARE
 PROVIDER, OR ANY ENTITY RESPONSIBLE FOR DEVELOPING OR PROVIDING SOFTWARE
 FOR POINT-OF-SALE TERMINALS:
   (A)  SHALL  ENSURE THAT ALL TERMINALS SOLD AFTER THE EFFECTIVE DATE OF
 THIS SECTION DO NOT INCLUDE OR HAVE IMPLEMENTED ANY DESIGN OR  FUNCTION,
 OR  ANY ABILITY FOR AN ESTABLISHMENT TO ADD A DESIGN OR FUNCTION, WITHIN
 A POINT-OF-SALE TERMINAL THAT VIOLATES THIS SECTION;
   (B) WHICH HAS THE ABILITY TO  FURNISH  SOFTWARE  UPDATES  TO  EXISTING
 POINT-OF-SALE  TERMINALS,  SHALL  UPDATE  SUCH  TERMINALS TO EXCLUDE ANY
 PROHIBITED DESIGNS OR FUNCTIONS THAT VIOLATE THIS SECTION BY THE  EFFEC-
 TIVE  DATE  OF  THIS  SECTION OR, AT SUCH TIME WHEN THE ATTORNEY GENERAL
 PROMULGATES RULES AND REGULATIONS PERTAINING  TO  AUTOMATIC  GRATUITIES,
 SHALL  BRING  THEIR  POINT-OF-SALE  TERMINALS  INTO COMPLIANCE WITH SUCH
 RULES AND REGULATIONS WITHIN A REASONABLE PERIOD OF TIME  AS  PRESCRIBED
 BY THE ATTORNEY GENERAL.
   4. ESTABLISHMENT'S DUTIES AND LIABILITY. AN ESTABLISHMENT:
   (A)  SHALL  NOT  ADD  AN AUTOMATIC GRATUITY TO A CONSUMER'S BILL WHERE
 SUCH ADDITION SHALL VIOLATE THE PROVISIONS OF SUBDIVISION  TWO  OF  THIS
 SECTION;
   (B)  THAT  HAS  A  POINT-OF-SALE TERMINAL IN USE THAT MAKES COMPLIANCE
 POSSIBLE, THE ESTABLISHMENT SHALL BRING SUCH  TERMINAL  INTO  COMPLIANCE
 WITH  THIS SECTION BY THE EFFECTIVE DATE OF THIS SECTION. WHERE A TERMI-
 NAL DOES NOT PROVIDE THE ABILITY TO MAKE COMPLIANCE POSSIBLE, THE ESTAB-
 LISHMENT SHALL NOT BE LIABLE FOR  FAILING  TO  BRING  THE  POINT-OF-SALE
 TERMINAL  INTO COMPLIANCE. WHERE THE MANUFACTURER, SOFTWARE PROVIDER, OR
 ENTITY RESPONSIBLE FOR THE POINT-OF-SALE SYSTEM UPDATES  THE  SYSTEM  TO
 PROVIDE THE OPTIONS TO BRING THE POINT-OF-SALE TERMINAL INTO COMPLIANCE,
 THE ESTABLISHMENT SHALL BRING THE TERMINAL INTO COMPLIANCE BY THE EFFEC-
 TIVE DATE OF THIS SECTION. WHERE THE UPDATES TO THE POINT-OF-SALE TERMI-
 NAL  ARE  PROVIDED  WITHIN  SIXTY  DAYS  OF  THE  EFFECTIVE DATE OF THIS
 SECTION, THE ESTABLISHMENT SHALL HAVE AN ADDITIONAL SIXTY DAYS TO  BRING
 THE POINT-OF-SALE TERMINAL INTO COMPLIANCE;
   (C)  SHALL,  AT  SUCH TIME WHEN THE ATTORNEY GENERAL PROMULGATES RULES
 AND REGULATIONS PERTAINING TO AUTOMATIC  GRATUITIES,  COMPLY  WITH  SUCH
 RULES  AND  REGULATIONS WITHIN A REASONABLE PERIOD OF TIME AS PRESCRIBED
 BY THE ATTORNEY GENERAL; AND
   (D) THAT MANUFACTURES OR DESIGNS ITS OWN POINT-OF-SALE TERMINALS SHALL
 HAVE THE SAME  RESPONSIBILITIES  AND  LIABILITY  AS  A  MANUFACTURER  AS
 PROVIDED BY SUBDIVISION THREE OF THIS SECTION.
   §  2. This act shall take effect one year after it shall have become a
 law. Effective immediately, the addition, amendment and/or repeal of any
 rule or regulation necessary for the implementation of this act  on  its
 effective date are authorized to be made and completed on or before such
 effective date.