Rochester Beacon: New York can’t afford Letitia James’ FAIR Act
By: Justin Wilcox
As the cost of living climbs, New York policymakers have begun to talk a lot about affordability. And they should—the Empire State is one of the most expensive places in the country to live or operate a business. Unfortunately, as often happens, well intended but poorly crafted legislative proposals bring with them unintended consequences that create legal uncertainty and drive up costs for both struggling families and local businesses.
One glaring example is Attorney General Letitia James’ proposed Fostering Affordability and Integrity through Reasonable Business Practices, or FAIR Act. It was portrayed by the attorney general as a measure to protect New Yorkers from gaps in enforcement created by the Trump administration’s overhaul of federal agencies. Yet rather than just increasing the attorney general’s powers to take on bad actors, it has the potential to stack the deck against small businesses and hands sweeping powers to private, profit-motivated lawyers, a move which is sure to increase questionable lawsuits and drive up insurance costs––ultimately making New York less affordable for everyone.
The primary concern is that the FAIR Act would dramatically expand the types of business conduct that could lead to a lawsuit. Instead of limiting claims to deceptive practices, which are already prohibited under New York law, the bill introduces the broader and more nebulous terms “unfair” and “abusive.” These terms don’t come with clear legal definitions, which makes it difficult for businesses to know what conduct might trigger a lawsuit. Courts will have to work through how to define these terms, leading to costly litigation and years of dockets clogged with cases filed by lawyers looking to push the limits of the law as they recently did with employment definitions and pay frequency, which cost businesses millions of dollars for simply paying their employees every other week.
Other states that include “unfair” in their statutes do not also name “abusive,” and enforcement is limited to the state’s attorney general. Private lawsuits are only allowed for deceptive activity. The latest bills in Albany offer no such guardrails, deputizing every law firm with the power of the government.
Worse, the bill writes into law a demand letter process that requires no judge or jury, just an attorney trolling for typos in refund policies, rebates, or advertised promotions. These lawyers could allege a violation—even without clear evidence that any consumer was harmed or misled—and demand a settlement. For small businesses that don’t have in-house counsel or lawyers on retainer, this process would pressure them to settle rather than defend themselves. It doesn’t matter if they’ve actually done anything wrong. They would pay to make the lawyer go away. Once a settlement is accepted, these notices would be filed with the attorney general’s office, but there is no indication that any agency will review whether the claims are valid at all.
In addition to appointing every private litigator to enforce the law, the bill also delegates the power of the attorney general’s office to nonprofit organizations with political agendas. If this provision is enacted, the courts will not only become a center of profit for avaricious attorneys but a political battlefield where left- and right-wing advocacy groups will attempt to subvert democratic processes and create new laws and regulations through litigation.
There’s no question that protecting consumers is important and the business community supports strong laws to punish fraudsters and criminal outfits. But there is little evidence that the real world issues––predatory lending, scams targeting the elderly, or discriminatory practices––that the legislation aims to resolve can’t be stopped with existing state and federal laws. Rather than deputizing every billboard law firm to extort settlements from businesses, the right path forward should be to ensure government agencies have the right resources, not just for enforcement but for guidance and education, too.
The reality is, New York’s existing consumer protection law, and its already permissive private right of action, is a preferred legal route for class action attorneys. Only California courts see more consumer class action filings. So, before creating new avenues for private litigation––and allowing advocacy groups to file lawsuits without even needing to find an aggrieved plaintiff––we should carefully consider the potential impact on the state’s economy.
A stable and equitable legal framework based on constitutional principles can support consumers, empower businesses, and promote a more affordable future for all New Yorkers. As written, the proposed FAIR Business Practices Act would create legal chaos. The business community stands ready to collaborate with both lawmakers and enforcement agencies to get this right.
Justin Wilcox is executive director of Upstate United, a nonpartisan business and taxpayer advocacy coalition focused on growing and protecting the economic vitality of Upstate New York.