What We Learned from … New York
As New York lawmakers consider legislation that would give the Attorney General broad new powers to target “unfair” trade practices, we brought the first installment of our 2024 Attorney General Webinar Series to the Empire State.
How does the New York Attorney General’s Office operate? And what are its enforcement priorities? Attorney General Letitia James joined Kelley Drye as a special guest along with two members her senior staff: Jane Azia, Chief of the Consumer Frauds and Protection Bureau, and Jarret Hova, a Senior Advisor in the Executive Division. Here’s what we learned:
About The New York AG’s Office
General James was elected in 2018, becoming the first woman of color to lead the New York Attorney General’s Office. Currently, Azia leads the office’s Consumer Protection Bureau, which is housed within the Economic Division alongside the Antitrust, Internet, and Taxpayer Protection Bureaus. Attorneys work across bureaus on matters of shared interest and New York, like many states, works across the country as leaders or members of multistate investigations into alleged misconduct that spreads across jurisdictions.
The Consumer Protection Bureau has two primary functions: mediation and litigation. It attempts to resolve consumer complaints through mediation, even when they may not constitute actual violations of the law. On the enforcement front, the office investigates potential unlawful conduct and brings investigations pursuant to a host of state laws, including its key consumer protection statutes: Executive Law §63(12) and the General Business Laws §349 and 350. It also enforces a number of consumer protection statutes targeting specific conduct.
According to Azia, the office particularly targets practices that affect vulnerable communities, especially those New Yorkers facing economic hardship. Enforcers also consider consumer complaints, general marketplace trends, issues arising in the media or among experts, and their own consumer experiences.
New York’s Core Consumer Protection Laws
The office’s broadest authority comes from Executive Law §63(12), a unique statute that empowers the AG to prosecute repeated or persistent illegal or fraudulent acts. Azia explained the office’s view that repeated or persistent violations of any federal, state, or local law come within the ambit of the AG’s enforcement powers pursuant to Executive Law §63(12).
Under §63(12), the AG may seek injunctive relief, restitution, and costs. Courts may also grant equitable relief (including disgorgement of profits), appoint a monitor or receiver over the business while litigation is ongoing, or even freeze a defendant’s assets to prevent the company from absconding with funds.
The breadth of the Executive Law makes it unique, especially compared to other states’ laws. It permits the AG to bring a “special proceeding” after 5 days’ notice, pursuing something akin to a summary judgment based on the state’s evidence.
The state’s UDAP statutes, General Business Laws §349 and §350, generally prohibit deceptive conduct and false advertising. Unlike the Executive Law, there is no requirement the conduct be repeated: Azia noted the AG’s office can take action before consumers have been harmed. Courts have interpreted the law to pertain only to “consumer oriented” conduct, though its definition has evolved over the years and may include businesses as consumers. Like the Executive Law, the statute permits injunctive relief and restitution. It also provides for penalties of up to $5,000 per violation.
Currently, this law only prohibits deception, not unfairness. (Many states prohibit both “unfair and deceptive” business practices.) The AG’s office is supporting current legislative reform that would add “unfair” practices to the General Business Law. More on that here.
Investigations and Settlements in New York
Under both statutes, like in many states, the office has broad pre-litigation investigative authority, including the ability to issue subpoenas and solicit testimony. While a defendant may attempt to quash a subpoena, according to Azia, there is a general presumption that the office’s subpoena is proper and objecting to it may be an uphill battle in court.
General James said she is not interested in “gotcha” politics and wants “open communication” with New York businesses. Azia described the office’s general practice as proceeding on a dual track: hoping for a settlement but preparing for litigation. In the settlement process, state enforcers will generally either negotiate an assurance of discontinuance or a consent order, depending on the severity and type of misconduct. If the office can’t settle, it heads to court.
Stay Tuned: Kelley Drye’s 2024 Attorney General Webinar Series
We’ll keep you up-to-date with possible changes to New York’s consumer protection laws. For now, revisit our conversations with Attorneys General in New Hampshire, Illinois, Colorado, Nebraska, Connecticut, and others here.
Next up, we’ll host a conversation Todd Leatherman, Director for the Center for Consumer Protection at the National Association of Attorneys General, on February 8th. Register here.