S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   6414
 
                        2021-2022 Regular Sessions
 
                             I N  S E N A T E
 
                              April 27, 2021
                                ___________
 
 Introduced  by  Sens. COMRIE, BAILEY, BIAGGI, GIANARIS, GOUNARDES, HOYL-
   MAN, JACKSON, KAVANAGH,  KRUEGER,  LIU,  MAY,  MYRIE,  PARKER,  RAMOS,
   RIVERA,  SALAZAR,  SANDERS,  SKOUFIS, THOMAS -- read twice and ordered
   printed, and when printed to be committed to the Committee on Consumer
   Protection

 AN ACT to amend the general business law, the financial services law and
   the insurance law, in relation to enacting  the  "Consumer  and  Small
   business Protection Act"
 
   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. This act shall be known and may be cited as  the  "Consumer
 and Small business Protection Act (CSPA)".
   §  2.  Legislative  findings and intent. The Legislature declares that
 the State has a responsibility to  protect  individuals  and  businesses
 within  the  State  from unfair and abusive business acts and practices.
 The Legislature further declares that the  State's  law,  which  guarded
 only  against  deceptive  business acts and practices, has been insuffi-
 cient to meet this responsibility and has become out of  date  as  other
 states'  laws provide far greater protections. Consumers and small busi-
 nesses have long been vulnerable to unscrupulous business practices that
 are unfair and abusive without being expressly deceptive. The State must
 not allow bad actors to peddle predatory products and services  as  long
 as  they  are clever enough not to get caught in a lie. To that end, and
 to better level the playing field for  the  State's  many  honest  busi-
 nesses,  this  legislation defines unfair and abusive acts and practices
 expansively.
   The State must also ensure that this  protection  covers  small  busi-
 nesses, which are frequent targets of predatory loans and other forms of
 exploitation,  along  with  all  consumer transactions. This legislation
 therefore rejects the limitation, imposed  by  courts,  that  prohibited
 conduct  be  "consumer oriented," have an impact on the public at large,

  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
              

                                                            LBD04637-05-1

 S. 6414                             2
 
 or be part of a broader pattern.  Consumers  and  small  businesses  are
 entitled  to  redress  whenever they are harmed by deceptive, unfair, or
 abusive conduct.
   Finally, for any of these protections to be meaningful, the State must
 ensure  that  the  remedies  for prohibited conduct provide an effective
 deterrent. This legislation therefore updates the statutory damages  for
 violations for the first time in decades, from $50 to $1,000, and allows
 meaningful  punitive  damages  for  particularly egregious behavior. The
 Legislature recognizes that unfair,  deceptive,  and  abusive  practices
 have a particular impact on poor individuals, people of color, and those
 affected  by  natural  disasters  and  health emergencies, including the
 COVID-19 pandemic. For this reason, the State must ensure  that  limited
 resources  not  prevent  individuals  and  small businesses from seeking
 remedies. This legislation therefore opens access to justice  by  making
 recovery  of  attorney's  fees  mandatory for a prevailing plaintiff and
 authorizing class actions.
   § 3. Section 349 of the general business law, as added by  chapter  43
 of  the  laws  of 1970, subdivision (h) as amended by chapter 157 of the
 laws of 1984, and subdivision (j) as added by section 6 of  part  HH  of
 chapter 55 of the laws of 2014, is amended to read as follows:
   §  349.  [Deceptive  acts] PROHIBITED ACTS and practices unlawful. (a)
 [Deceptive] THIS SECTION PROHIBITS ANY UNFAIR, DECEPTIVE OR ABUSIVE acts
 or practices in the conduct of any business, trade or commerce or in the
 furnishing of any service [in this state are hereby declared unlawful].
   (1) FOR THE PURPOSES OF THIS SECTION, AN ACT  OR  PRACTICE  IS  UNFAIR
 WHEN  IT  CAUSES OR IS LIKELY TO CAUSE SUBSTANTIAL INJURY, THE INJURY IS
 NOT REASONABLY AVOIDABLE, AND THE INJURY IS NOT OUTWEIGHED  BY  COUNTER-
 VAILING BENEFITS.
   (2)  FOR THE PURPOSES OF THIS SECTION, AN ACT OR PRACTICE IS DECEPTIVE
 WHEN THE ACT OR PRACTICE MISLEADS OR IS LIKELY TO MISLEAD A  PERSON  AND
 THE PERSON'S INTERPRETATION IS REASONABLE UNDER THE CIRCUMSTANCES.
   (3)  FOR  THE  PURPOSES OF THIS SECTION, AN ACT OR PRACTICE IS ABUSIVE
 WHEN:
   (I) IT MATERIALLY INTERFERES WITH THE ABILITY OF A  PERSON  TO  UNDER-
 STAND A TERM OR CONDITION OF A PRODUCT OR SERVICE; OR
   (II) TAKES UNREASONABLE ADVANTAGE OF:
   (A)  A PERSON'S LACK OF UNDERSTANDING OF THE MATERIAL RISKS, COSTS, OR
 CONDITIONS OF THE PRODUCT OR SERVICE;
   (B) A PERSON'S INABILITY TO PROTECT HIS OR HER INTERESTS IN  SELECTING
 OR USING A PRODUCT OR SERVICE; OR
   (C) A PERSON'S REASONABLE RELIANCE ON A PERSON COVERED BY THIS SECTION
 TO ACT IN HIS OR HER INTERESTS.
   (b)  Whenever  the attorney general shall believe from evidence satis-
 factory to him OR HER that any person, firm, corporation or  association
 or agent or employee thereof has engaged in or is about to engage in any
 of  the  acts  or  practices stated to be UNFAIR, unlawful, DECEPTIVE OR
 ABUSIVE, he OR SHE may bring an action in the name and on behalf of  the
 people  of  the  state of New York to enjoin such unlawful acts or prac-
 tices and to obtain restitution  of  any  moneys  or  property  obtained
 directly  or  indirectly by any such unlawful acts or practices. In such
 action preliminary relief may be granted under  article  sixty-three  of
 the  civil  practice law and rules.  SUCH ACTIONS MAY BE BROUGHT REGARD-
 LESS OF WHETHER OR NOT THE UNDERLYING VIOLATION IS DIRECTED AT  INDIVID-
 UALS  OR  BUSINESSES,  IS CONSUMER-ORIENTED, OR INVOLVES THE OFFERING OF
 GOODS, SERVICES, OR PROPERTY FOR PERSONAL, FAMILY OR HOUSEHOLD PURPOSES.

 S. 6414                             3
 
   (c) Before any violation of this section is sought to be enjoined, the
 attorney general shall be required to give the person against whom  such
 proceeding  is  contemplated notice by certified mail and an opportunity
 to show in writing within five business days after receipt of notice why
 proceedings  should  not  be  instituted  against him OR HER, unless the
 attorney general shall find, in any  case  in  which  he  OR  SHE  seeks
 preliminary  relief,  that to give such notice and opportunity is not in
 the public interest.
   (d) In any such action it shall be a complete defense that the act  or
 practice  is,  or  if  in  interstate  commerce would be, subject to and
 complies with the rules and regulations of, and  the  statutes  adminis-
 tered by, the federal trade commission or any official department, divi-
 sion,  commission  or  agency  of the United States as such rules, regu-
 lations or statutes are interpreted by the federal trade  commission  or
 such department, division, commission or agency or the federal courts.
   (e)  Nothing  in  this  section shall apply to any television or radio
 broadcasting station or to any publisher  or  printer  of  a  newspaper,
 magazine   or   other  form  of  printed  advertising,  who  broadcasts,
 publishes, or prints the advertisement.
   (f) In connection with any proposed proceeding under this section, the
 attorney general is authorized to take proof and make a determination of
 the relevant facts, and to issue subpoenas in accordance with the  civil
 practice law and rules.
   (g)  This  section shall apply to all [deceptive] PROHIBITED acts [or]
 AND practices [declared to be unlawful], whether or not subject  to  any
 other  law  of  this state, and shall not supersede, amend or repeal any
 other law of this state under which the attorney general  is  authorized
 to take any action or conduct any inquiry.
   (h)  (1)  In  addition  to the right of action granted to the attorney
 general pursuant to this section, any person who  has  been  injured  by
 reason  of  any  violation of this section may bring an action in his OR
 HER own name to enjoin such unlawful  act  or  practice,  an  action  to
 recover  [his  actual damages or fifty dollars, whichever is greater, or
 both such actions] ONE THOUSAND DOLLARS AND HIS OR HER  ACTUAL  DAMAGES,
 IF ANY, OR BOTH SUCH ACTIONS.  SUCH ACTIONS MAY BE BROUGHT REGARDLESS OF
 WHETHER  OR  NOT  THE  UNDERLYING  VIOLATION IS CONSUMER-ORIENTED, HAS A
 PUBLIC IMPACT OR INVOLVES THE OFFERING OF GOODS,  SERVICES  OR  PROPERTY
 FOR  PERSONAL,  FAMILY  OR  HOUSEHOLD  PURPOSES.  The  court may, in its
 discretion, increase the award of damages [to an amount  not  to  exceed
 three times the actual damages up to one thousand dollars,] if the court
 finds  the  defendant  willfully or knowingly violated this section. The
 court [may] SHALL award  reasonable  attorney's  fees  AND  COSTS  to  a
 prevailing plaintiff.
   [(j)]  (I)  FOR  PURPOSES OF THIS SECTION, A "PERSON" IS DEFINED AS AN
 INDIVIDUAL, FIRM, CORPORATION,  PARTNERSHIP,  COOPERATIVE,  ASSOCIATION,
 COALITION OR ANY OTHER ORGANIZATION'S LEGAL ENTITY, OR GROUP OF INDIVID-
 UALS HOWEVER ORGANIZED;
   (II) FOR PURPOSES OF THIS SECTION "NON-PROFIT ORGANIZATION" IS DEFINED
 AS  AN  ORGANIZATION  THAT  IS (1) NOT AN INDIVIDUAL; AND (2) IS NEITHER
 ORGANIZED NOR OPERATING IN WHOLE, OR IN SIGNIFICANT PART, FOR PROFIT;
   (III) GIVEN THE REMEDIAL NATURE OF THIS SECTION, STANDING TO BRING  AN
 ACTION  UNDER  THIS SECTION, INCLUDING BUT NOT LIMITED TO ORGANIZATIONAL
 STANDING AND THIRD-PARTY STANDING,  SHALL  BE  LIBERALLY  CONSTRUED  AND
 SHALL BE AVAILABLE TO THE FULLEST EXTENT OTHERWISE PERMITTED BY LAW.
   (2)  ANY  INDIVIDUAL  OR  NON-PROFIT ORGANIZATION ENTITLED TO BRING AN
 ACTION UNDER THIS ARTICLE MAY, IF THE PROHIBITED  ACT  OR  PRACTICE  HAS

 S. 6414                             4
 
 CAUSED DAMAGE TO OTHERS SIMILARLY SITUATED, BRING AN ACTION ON BEHALF OF
 HIMSELF  OR  HERSELF AND SUCH OTHERS TO RECOVER ACTUAL, STATUTORY AND/OR
 PUNITIVE DAMAGES OR OBTAIN OTHER RELIEF AS PROVIDED FOR IN THIS ARTICLE.
 STATUTORY  DAMAGES UNDER THIS SECTION WILL BE LIMITED TO (I) SUCH AMOUNT
 FOR EACH NAMED PLAINTIFF AS COULD BE RECOVERED UNDER  PARAGRAPH  ONE  OF
 THIS  SUBDIVISION;  AND  (II) SUCH AMOUNT AS THE COURT MAY ALLOW FOR ALL
 OTHER CLASS MEMBERS WITHOUT REGARD TO A MINIMUM INDIVIDUAL RECOVERY, NOT
 TO EXCEED THE LESSER OF ONE MILLION DOLLARS OR TWO PER CENTUM OF THE NET
 WORTH OF THE BUSINESS.  THUS, ANY ACTION BROUGHT UNDER THIS  SUBDIVISION
 SHALL COMPLY WITH ARTICLE NINE OF THE CIVIL PRACTICE LAW AND RULES.
   (3)  A NON-PROFIT ORGANIZATION MAY BRING AN ACTION UNDER THIS SECTION,
 ON BEHALF OF ITSELF OR ANY OF ITS MEMBERS, OR ON BEHALF OF THOSE MEMBERS
 OF THE GENERAL PUBLIC WHO HAVE BEEN INJURED BY REASON OF  ANY  VIOLATION
 OF  THIS SECTION, INCLUDING A VIOLATION INVOLVING GOODS OR SERVICES THAT
 THE NON-PROFIT ORGANIZATION PURCHASED OR RECEIVED IN ORDER  TO  TEST  OR
 EVALUATE  QUALITIES PERTAINING TO USE FOR PERSONAL, HOUSEHOLD, OR FAMILY
 PURPOSES.   A NON-PROFIT ORGANIZATION MAY SEEK  THE  SAME  REMEDIES  AND
 DAMAGES THAT A PERSON MAY SEEK UNDER PARAGRAPH ONE OF THIS SUBDIVISION.
   (4) BEFORE ANY VIOLATION OF THIS SECTION IS SOUGHT TO BE ENJOINED, THE
 PERSON  BRINGING THE ACTION SHALL BE REQUIRED TO GIVE THE PERSON AGAINST
 WHOM SUCH ACTION IS CONTEMPLATED NOTICE BY CERTIFIED MAIL, TO THE  PLACE
 WHERE  THE  TRANSACTION  OCCURRED  OR TO THE PRINCIPAL PLACE OF BUSINESS
 WITHIN THE STATE OF THE PERSON AGAINST WHOM SUCH ACTION IS CONTEMPLATED,
 AND AN OPPORTUNITY TO SHOW IN WRITING WITHIN  TEN  BUSINESS  DAYS  AFTER
 MAILING  OF  NOTICE WHY PROCEEDINGS SHOULD NOT BE INSTITUTED AGAINST HIM
 OR HER, UNLESS, IN ANY  CASE  IN  WHICH  THE  PERSON  SEEKS  PRELIMINARY
 RELIEF,  THE GIVING OF SUCH NOTICE AND OPPORTUNITY WOULD CAUSE IMMEDIATE
 AND IRREPARABLE INJURY, LOSS OR DAMAGES.
   (I) Notwithstanding any law to the contrary, all monies  recovered  or
 obtained  under  this  article  by  a  state agency or state official or
 employee acting in their official capacity shall be subject to  subdivi-
 sion eleven of section four of the state finance law.
   (J)  THIS  SECTION  IS  INTENDED  TO EXPAND AND NOT TAKE AWAY EXISTING
 CONSUMER RIGHTS.
   § 4. This act shall take effect on the sixtieth  day  after  it  shall
 have become a law.