The Center Square: New York business groups rip attorney general’s consumer protection bill

By: Chris Wade

New York business groups are blasting Attorney General Letitia James' sweeping consumer protection bill they argue would lead to a wave of “legal shakedowns” targeting small employers.

The Fostering Affordability and Integrity through Reasonable Business Practices, or FAIR Business Practices Act, is intended to strengthen consumer protections against deceptive practices like junk fees, deed theft and hard-to-cancel subscriptions. 

James said the proposal, which requires legislative approval, will protect businesses from "predatory" lenders, shield homeowners from bad mortgage servicers and patients from abusive debt collection, among other reforms.

“As the federal government steps back from protecting consumers and small businesses, New York must step up to help working families and Main Street businesses,” James, a Democrat, said in a Wednesday statement. "This legislation will strengthen New York’s consumer protection laws to stop businesses from taking advantage of New Yorkers." 

But business groups are pushing back against the plan, arguing the legislation would gut legal safeguards and open the floodgates to costly, frivolous lawsuits.

"The so-called FAIR Act would be anything but fair to New York's business community, especially Main Street businesses," Tom Stebbins, executive director of the Lawsuit Reform Alliance of New York, said in a statement. "It strips away long standing legal safeguards and due process protections — like ensuring that claims are consumer-oriented or that plaintiffs actually have standing to sue — and replaces them with a system that invites abuse." 

In a letter to legislative leaders, the Business Council of New York and other business groups urged lawmakers to reject the plan, saying it would "weaken New York’s reputation as a commercial and innovation hub and reduce job creation, capital investment, and disincentivize entrepreneurship."  

"Companies of all sizes would be exposed to limitless liabilities and ordinary business conduct would be transformed into protracted legal battles," the groups said. "The FAIR Act will lead to higher prices for consumers and more small businesses shutting down or fleeing to neighboring states with less hostile legal climates."

New York state's legal system is consistently ranked among the worst in the nation in the American Tort Reform Association's annual "Judicial Hellholes" reports. New York, New York City or Albany have been included among those named "Judicial Hellholes" for nearly 15 years, according to the association.

The proposal would empower the attorney general's office to target fraud related to student loans, data breaches and misleading health insurance information. However, the business groups say the legislation’s vague language makes it ripe for exploitation.

"That’s a recipe for a cottage industry of legal shakedowns, where small businesses are targeted not for wrongdoing, but because they lack the resources to fight back," Stebbins said. "This isn’t consumer protection – it’s a gift to the trial lawyer lobby and a threat to every sector of the economy."