New York Attorney General Letitia James joined Kelley Drye for its January State AG webinar to discuss consumer protection in the Empire State and her support for legislative reform that would grant the AG’s Office new powers to target unfair” business practices.

Consumer Protection for the Modern Attorney General

General James heralded New York as the first modern attorney general’s office, largely because it was the first to instate a consumer protection division and the first to create a civil rights bureau. Consumer protection is the backbone” of the modern AG’s office and a centerpiece” of her office’s work, she said.

She celebrated the thousands of lawsuits New York AGs have brought under the state’s consumer protection laws, noting that the office has targeted deception in a range of industries from home improvement to car repair to healthcare billing and has taken a major role” in real estate, particularly on behalf of tenants. However, she said legislative reform is needed to expand and modernize” the state’s consumer protection authority.

Proposed Legislative Reform

Currently, New York’s law governing general trade practices (General Business Law §349) prohibits only deception, not unfairness. According to the Attorney General, new legislation would bring New York in line with other states that ban both unfair” and deceptive” business practices. It’s not an abstract concept to ban unfairness; people are hurt every day,” she said.

What’s the difference? From the Attorney General’s vantage, reforms would allow her office to target practices that enforcers have long considered unfair” but don’t meet the threshold for deception. She explained unfair practices would include things like steering student loan borrowers to the most expensive repayment options when others are available, harassing relatives to pay nursing home bills, manipulating seniors out of protected income or home deeds, or landlords pushing out tenants in the midst of a hot New York real estate market.

Is reform likely? In years past, such reforms have failed. However, Governor Hochul included the Consumer Protection Act (CPA) in her state budget this year. Jarret Hova, a Senior Advisor in the Executive Division of the New York AG’s Office, said this is a strong indication that the Governor wants the bill passed this session.

The CPA is contending with the Consumer and Small Business Protection Act (CSBPA) sponsored by Assemblywoman Helene Weinstein and Senator Leroy Comrie. Both bills would add unfair and abusive” practices to the General Business Law, include a private right of action, and increase the statutory penalty for those violations, among other changes.

There are a few key differences, which will be up for debate. This includes whether private defendants would need to provide notice and an opportunity to cure before a lawsuit, the total statutory damages available, and authority for class actions. Hova said he expects to know the outcome of the legislative process by April or early June. The office did not express support for one bill over the other.

General James’ Enforcement Priorities

General James said her guiding principle” is protecting the most vulnerable and all New Yorkers. She highlighted some recent cases as successes for her office:

  • A judgment against a predatory lender” requiring it to cancel the debt of thousands of small businesses and refund excessive fees.
  • A settlement providing more than $740,000 from the online mental health provider Cerebral for its long and burdensome cancellation process, which General James said was particularly notable given the crisis” of individuals struggling with mental health in New York.
  • With the FTC, a $1.6 million consent order from the online apartment search platform Roomster for positing unverified apartment listings and fake reviews.
  • Litigation against SiriusXM Radio alleging that the company employs lengthy and burdensome cancellation processes that make it difficult for consumers to cancel subscriptions.

These actions reflect greater trends we’ve seen in AG enforcement. We’ve previously covered the rise in attention around fake reviews, telehealth, junk fees,” and consumer subscriptions.

We have also discussed the importance of early and open communication with state enforcers. General James said she is not interested in gotcha” politics and maintains an open-door policy” with business on issues of consumer protection.

The 2024 State Attorneys General Webinar Series

This conversation was part of our 2024 State Attorneys General Webinar Series. Subscribe to Kelley Drye’s AdLaw Access for invitations to join future webinars featuring state attorneys general and other key players in the consumer protection space. To learn more about our State Attorneys General practice, contact practice Co-Chair Paul Singer, Special Counsel Abby Stempson, or Senior Associate Beth Chun.