NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A1161
SPONSOR: Dinowitz (MS) 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 decep-
tive 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 unpro-
tected.
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 signif-
icant 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:
2013-14: A.312-A - Third Reading Calendar No. 589/S.56-A - Referred to
Consumer Protection
2011-12: A.8381/S.74 - Referred to Consumer Protection
2009-10: A.10306 - Referred to codes
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.
