Relates to standing for persons affected by prohibited or unlawful business practices and expands prohibited acts to include unfair, deceptive or abusive acts.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A679C 12/09/2019
SPONSOR: Niou TITLE OF BILL:
An act to amend the general business law, in relation to standing for
persons affected by prohibited or unlawful business practices
PURPOSE OR GENERAL IDEA OF BILL:
To modernize general business law to clearly define prohibited acts and
practices in the conduct of business, trade or commerce or services.
SUMMARY OF PROVISIONS:
The Consumer and Small Business Protection Act defines prohibited acts
and practices as any unfair, deceptive or abusive acts or practices in
the conduct of business, trade or commerce or services. The general
business law (GBL) is amended to allow any person who has been injured
by violation of this section to bring an action to enjoin such unlawful
act or practice, an action to recover damages, or both regardless of
whether or not the underlying violation is consumer-oriented or has
public impact. The GBL is further amended to allow persons, if the
prohibited act or practice has caused damage to him/her or others, to
bring an action compliant with article nine of the civil practice law
and rules; an organization may seek the same remedies and damages that a
person.
DIFFERENCE BETWEEN ORIGINAL AND AMENDED VERSION (IF APPLICABLE):
JUSTIFICATION:
New York's business law is outdated and incapable of providing the
protections needed for modern commerce and service. Although New York
is a leader in many areas of consumer protections, it lacks the proper
protections against unfair, deceptive or abusive acts; consequently, our
state lags behind general business statutes in at least 39 other states.
The Consumer and Small Business Protection Act seeks to protect consum-
ers and small businesses against actions that are likely to cause
substantial injury, take advantage of vulnerable consumers and small
businesses, and defends them against practices that are likely to
mislead under reasonable circumstances. This bill also seeks to allow
persons to recover statutory damages of one thousand dollars in addition
to actual and punitive damages. Individual consumers and consumer attor-
neys are often reluctant to bring actions against violators due to the
prohibitive costs and time required to bring litigation against perpe-
trators; essentially creating an environment where, in practice, bad
actors are free to engage in disreputable conduct. Making attorney's
fees mandatory will increase access to justice for persons seeking legal
action against violators. This bill would bring New York's GBL in line
with most other state statutes by expanding consumer protections to
protect against unfair, deceptive or abusive acts while providing a
significant deterrent to REVISED 12/09/2019 dishonest and deceitful
business entities that seek to take advantage of consumers.
PRIOR LEGISLATIVE HISTORY:
2018: Senate Bill 8131-A COMRIE / Assembly Bill 9824-A Niou
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:
It is anticipated that the increased civil penalty. and widened
protections proposed in the bill would result in an increase in monies
remitted to the State by violators and perpetrators.
EFFECTIVE DATE:
This act shall take effect on the sixtieth day after it shall have
become law.
STATE OF NEW YORK
________________________________________________________________________
679--C
2019-2020 Regular Sessions
IN ASSEMBLY(Prefiled)
January 9, 2019
___________
Introduced by M. of A. NIOU, STECK, BARRON, KIM, DINOWITZ, EPSTEIN,
FRONTUS, RICHARDSON, D'URSO, FALL, REYES, SIMOTAS, MOSLEY, SIMON,
QUART, SOLAGES, BICHOTTE, BARNWELL, GOTTFRIED, JACOBSON, L. ROSENTHAL,
ABBATE, OTIS, CRUZ, BLAKE, MONTESANO, DeSTEFANO, JAFFEE, WEPRIN,
LAWRENCE, ORTIZ, TAYLOR, WALKER, REILLY, DICKENS, RIVERA -- Multi-
Sponsored by -- M. of A. ENGLEBRIGHT, LENTOL, SAYEGH -- read once and
referred to the Committee on Consumer Affairs and Protection --
committee discharged, bill amended, ordered reprinted as amended and
recommitted to said committee -- again reported from said committee
with amendments, ordered reprinted as amended and recommitted to said
committee -- reported and referred to the Committee on Codes --
reported and referred to the Committee on Rules -- Rules Committee
discharged, bill amended, ordered reprinted as amended and recommitted
to the Committee on Rules
AN ACT to amend the general business law, in relation to standing for
persons affected by prohibited or unlawful business practices
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Section 349 of the general business law, as added by chap-
2 ter 43 of the laws of 1970, subdivision (h) as amended by chapter 157 of
3 the laws of 1984, and subdivision (j) as added by section 6 of part HH
4 of chapter 55 of the laws of 2014, is amended to read as follows:
5 § 349. [Deceptive acts] Prohibited acts and practices unlawful. (a)
6 [Deceptive] This section prohibits any unfair, deceptive or abusive acts
7 or practices in the conduct of any business, trade or commerce or in the
8 furnishing of any service [in this state are hereby declared unlawful].
9 (1) For the purposes of this section, an act or practice is unfair
10 when:
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD02255-09-9
A. 679--C 2
1 (i) it causes or is likely to cause substantial injury, the injury is
2 not reasonably avoidable, and the injury is not outweighed by counter-
3 vailing benefits; or
4 (ii) it takes unreasonable advantage of the inability of a person to
5 protect his or her interests because of the person's infirmity, illiter-
6 acy or inability to understand the language of an agreement.
7 (2) For the purposes of this section, an act or practice is deceptive
8 when the act or practice misleads or is likely to mislead a person and
9 the person's interpretation is reasonable under the circumstances.
10 (3) For the purposes of this section, an act or practice is abusive
11 when:
12 (i) it materially interferes with the ability of a person to under-
13 stand a term or condition of a product or service; or
14 (ii) takes unreasonable advantage of:
15 (A) a person's lack of understanding of the material risks, costs, or
16 conditions of the product or service;
17 (B) a person's inability to protect his or her interests in selecting
18 or using a product or service; or
19 (C) a person's reasonable reliance on a person covered by this section
20 to act in his or her interests.
21 (b) Whenever the attorney general shall believe from evidence satis-
22 factory to him or her that any person, firm, corporation or association
23 or agent or employee thereof has engaged in or is about to engage in any
24 of the acts or practices stated to be unfair, unlawful, deceptive or
25 abusive, he or she may bring an action in the name and on behalf of the
26 people of the state of New York to enjoin such unlawful acts or prac-
27 tices and to obtain restitution of any moneys or property obtained
28 directly or indirectly by any such unlawful acts or practices. In such
29 action preliminary relief may be granted under article sixty-three of
30 the civil practice law and rules. Such actions may be brought regard-
31 less of whether or not the underlying violation is directed at individ-
32 uals or businesses, is consumer-oriented, or involves the offering of
33 goods, services, or property for personal, family or household purposes.
34 (c) Before any violation of this section is sought to be enjoined, the
35 attorney general shall be required to give the person against whom such
36 proceeding is contemplated notice by certified mail and an opportunity
37 to show in writing within five business days after receipt of notice why
38 proceedings should not be instituted against him or her, unless the
39 attorney general shall find, in any case in which he or she seeks
40 preliminary relief, that to give such notice and opportunity is not in
41 the public interest.
42 (d) In any such action it shall be a complete defense that the act or
43 practice is, or if in interstate commerce would be, subject to and
44 complies with the rules and regulations of, and the statutes adminis-
45 tered by, the federal trade commission or any official department, divi-
46 sion, commission or agency of the United States as such rules, regu-
47 lations or statutes are interpreted by the federal trade commission or
48 such department, division, commission or agency or the federal courts.
49 (e) Nothing in this section shall apply to any television or radio
50 broadcasting station or to any publisher or printer of a newspaper,
51 magazine or other form of printed advertising, who broadcasts,
52 publishes, or prints the advertisement.
53 (f) In connection with any proposed proceeding under this section, the
54 attorney general is authorized to take proof and make a determination of
55 the relevant facts, and to issue subpoenas in accordance with the civil
56 practice law and rules.
A. 679--C 3
1 (g) This section shall apply to all [deceptive] prohibited acts [or]
2 and practices [declared to be unlawful], whether or not subject to any
3 other law of this state, and shall not supersede, amend or repeal any
4 other law of this state under which the attorney general is authorized
5 to take any action or conduct any inquiry.
6 (h) (1) In addition to the right of action granted to the attorney
7 general pursuant to this section, any person who has been injured by
8 reason of any violation of this section may bring an action in his or
9 her own name to enjoin such unlawful act or practice, an action to
10 recover his or her actual damages [or fifty] and statutory damages of
11 one thousand dollars, [whichever is greater,] or both such actions. Such
12 actions may be brought regardless of whether or not the underlying
13 violation is consumer-oriented or has a public impact. The court may, in
14 its discretion, increase the award of damages [to an amount not to
15 exceed three times the actual damages up to one thousand dollars,] if
16 the court finds the defendant willfully or knowingly violated this
17 section. The court [may] shall award reasonable attorney's fees and
18 costs to a prevailing plaintiff.
19 [(j)] (i) For purposes of this section, a "person" is defined as an
20 individual, firm, corporation, partnership, cooperative, association,
21 coalition or any other organization's legal entity, or group of individ-
22 uals however organized;
23 (ii) For purposes of this section "non-profit organization" is defined
24 as an organization that is (1) not an individual; and (2) is neither
25 organized nor operating in whole, or in significant part, for profit;
26 (iii) Given the remedial nature of this section, standing to bring an
27 action under this section, including but not limited to organizational
28 standing and third-party standing, shall be liberally construed and
29 shall be available to the fullest extent otherwise permitted by law.
30 (2) Any individual or non-profit organization entitled to bring an
31 action under this article may, if the prohibited act or practice has
32 caused damage to others similarly situated, bring an action on behalf of
33 himself or herself and such others to recover actual, statutory and/or
34 punitive damages or obtain other relief as provided for in this article.
35 Statutory damages under this section will be limited to (i) such amount
36 for each named plaintiff as could be recovered under paragraph one of
37 this subdivision; and (ii) such amount as the court may allow for all
38 other class members without regard to a minimum individual recovery, not
39 to exceed the lesser of one million dollars or two per centum of the net
40 worth of the business. Thus, any action brought under this subdivision
41 shall comply with article nine of the civil practice law and rules.
42 (3) A non-profit organization may bring an action under this section,
43 on behalf of itself or any of its members, or on behalf of those members
44 of the general public who have been injured by reason of any violation
45 of this section, including a violation involving goods or services that
46 the non-profit organization purchased or received in order to test or
47 evaluate qualities pertaining to use for personal, household, or family
48 purposes. A non-profit organization may seek the same remedies and
49 damages that a person may seek under paragraph one of this subdivision.
50 (4) Before any violation of this section is sought to be enjoined, the
51 person bringing the action shall be required to give the person against
52 whom such action is contemplated notice by certified mail, to the place
53 where the transaction occurred or to the principal place of business
54 within the state of the person against whom such action is contemplated,
55 and an opportunity to show in writing within ten business days after
56 mailing of notice why proceedings should not be instituted against him
A. 679--C 4
1 or her, unless, in any case in which the person seeks preliminary
2 relief, the giving of such notice and opportunity would cause immediate
3 and irreparable injury, loss or damages.
4 (i) Notwithstanding any law to the contrary, all monies recovered or
5 obtained under this article by a state agency or state official or
6 employee acting in their official capacity shall be subject to subdivi-
7 sion eleven of section four of the state finance law.
8 § 2. This act shall take effect on the sixtieth day after it shall
9 have become a law.
