Relates to consumer protection from deceptive acts and practices

BILL NUMBER:S74 REVISED 01/09/12

Title of bill

An act to amend the general business law, in relation to consumer protection from deceptive acts and practices

Purpose

The purpose of this bill is to enhance the effectiveness of New York's Consumer Protection Law and deter the use of unconscionable and deceptive acts and practices

Summary of provisions

New York's Consumer Protection Law (Article 22-A of the General Business Law) prohibits the use of deceptive acts and practices in the conduct of any business, trade, or commerce in the furnishing of any service. This bill would expand the law to include unconscionable acts and practices, authorize the court to award punitive damages to a prevailing consumer, specifically authorize class actions, and provide enhanced penalties for entities that intentionally violate an injunction issued pursuant to the law. The bill would also increase the law's recoverable damages and penalty amounts as follows:

Section 349: Increase minimum damages from $50 to $500; increase maximum treble damage award from $1,000 to $10,000; and provide that the court may award the costs of the action to a prevailing plaintiff.

Section 349-c: Increase the maximum civil penalty for acts perpetrated against the elderly from $10,000 to $20,000.

Section 350-d: Increase the maximum civil penalty from $5,000 to $10,000.

Section 350-e: Provide that the court shall award reasonable attorney's fees and costs to a prevailing plaintiff.

Justification

New York's landmark prohibition against deceptive acts and practices (Section 349 of the General Business Law) was enacted in 1970. In 1980, the statute was significantly improved when a provision providing aggrieved consumers with a right of action was added. Since that time, the minimum recoverable damages and maximum treble damages amounts have not been raised. Individual consumers and consumer attorneys are often disinclined to bring an action against a violator for $50, or up to $1,000 for knowing or willful violations, due to the imbalance between the amount that may be recovered and the costs of litigation, and, as such, violators are not brought to justice and consumers are left unprotected.

New York's law has not kept pace with other state consumer protection statutes. According to the National Consumer Law Center's February

2009 report entitled "Consumer Protection in the States: A 50-State Report on Unfair and Deceptive Acts and Practices Statutes", the effectiveness of New York's statute is hampered by the fact that it does not allow private individuals to bring an action for unconscionable practices and contains treble damages remedies that are "undermined by outdated caps".

At the Consumer Affairs and Protection and Aging Committees' joint public hearing on consumers scams affecting senior citizens held on December 1, 2008, four witnesses strongly recommended that New York strengthen and modernize the statute. One witness commented that New York's statute is widely recognized by consumer advocates as one of the weakest in the nation.

This bill would bring New York's consumer protection statute in line with the most protective state statutes by enhancing damages remedies and civil penalties. These improvements would serve to provide a significant deterrent to unscrupulous entities that seek to perpetrate fraud against consumers and ensure that consumers who are victimized are able to obtain justice and be made whole.

Legislative history

2010: S.7301/A.10306

Fiscal implications

It is anticipated that the increased civil penalty amounts proposed in the bill would result in an increase in monies remitted to the State by violators.

Effective date

This act shall take effect on the ninetieth day after it shall have become a law.