Relates to consumer protection from deceptive acts and practices; increases damages and directs consumers on bringing an action for such deceptive acts and practices.

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S74-2011 Actions

• Mar 12, 2012: COMMITTEE DISCHARGED AND COMMITTED TO RULES
• Mar 8, 2012: NOTICE OF COMMITTEE CONSIDERATION - REQUESTED
• Jan 4, 2012: REFERRED TO CONSUMER PROTECTION
• Jan 5, 2011: REFERRED TO CONSUMER PROTECTION

S74-2011 Memo

BILL NUMBER:S74                 REVISED 01/09/12

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
deceptive 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 unprotected.

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
significant 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:
2010: S.7301/A.10306

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.

S74-2011 Text

                      S T A T E   O F   N E W   Y O R K
  ________________________________________________________________________

                                     74

                         2011-2012 Regular Sessions

                              I N  SENATE

                                 (PREFILED)

                               January 5, 2011
                                 ___________

  Introduced  by  Sen. PERALTA -- 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,  in  relation  to  consumer
    protection from deceptive acts and practices

    THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
  BLY, DO ENACT AS FOLLOWS:


    Section 1. Subdivisions (a) and (h) of  section  349  of  the  general
  business law, subdivision (a) as added by chapter 43 of the laws of 1970
  and  subdivision  (h) as amended by chapter 157 of the laws of 1984, are
  amended and a new subdivision (i) is added to read as follows:

    (a) [Deceptive] UNCONSCIONABLE OR DECEPTIVE 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.
    (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  own
  name  to  enjoin such unlawful act or practice, an action to recover his
  actual damages or [fifty] FIVE HUNDRED dollars, whichever is greater, or
  both such actions.  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] TEN thousand dollars, if the court finds the defendant willful-
  ly or knowingly violated this section. THE COURT MAY ALSO AWARD PUNITIVE
  DAMAGES  IN  AN  AMOUNT NOT TO EXCEED THREE TIMES THE ACTUAL DAMAGES AND
  PROVIDE ANY EQUITABLE RELIEF THE COURT CONSIDERS NECESSARY OR PROPER.
    (2) The court [may] SHALL award reasonable attorney's fees  AND  COSTS
  to a prevailing plaintiff.
    (I)(1)  IN  DETERMINING  WHETHER AN ACT OR PRACTICE IS UNCONSCIONABLE,
  THE COURT SHALL CONSIDER CIRCUMSTANCES OF WHICH THE  DEFENDANT  KNEW  OR
  REASONABLY  SHOULD HAVE KNOWN, INCLUDING, BUT NOT LIMITED TO THE FOLLOW-
  ING:


   EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                        [ ] is old law to be omitted.
                                                             LBD01064-01-1

 S. 74                               2

    (A) THAT THE DEFENDANT TOOK ADVANTAGE OF THE INABILITY OF THE CONSUMER
  TO REASONABLY PROTECT THE CONSUMER'S INTERESTS BECAUSE OF THE CONSUMER'S
  PHYSICAL INFIRMITY, ILLITERACY OR INABILITY TO UNDERSTAND  THE  LANGUAGE
  OF AN AGREEMENT;
    (B)  THAT  AT  THE TIME THE CONSUMER TRANSACTION WAS ENTERED INTO, THE
  PRICE GROSSLY EXCEEDED THE PRICE AT WHICH SIMILAR PROPERTY  OR  SERVICES
  WERE READILY OBTAINABLE IN SIMILAR TRANSACTIONS BY SIMILAR CONSUMERS;
    S  2.  Paragraph  (a) of subdivision 2 of section 349-c of the general
  business law, as added by chapter 687 of  the  laws  of  1996  and  such
  section  as renumbered by chapter 189 of the laws of 1999, is amended to
  read as follows:

    (a) In addition to any  liability  for  damages  or  a  civil  penalty
  imposed  pursuant  to  sections  three hundred forty-nine, THREE HUNDRED
  FORTY-NINE-E, three hundred fifty-c and three hundred  fifty-d  of  this
  [chapter]  ARTICLE, regarding deceptive practices and false advertising,
  and subdivision twelve of section  sixty-three  of  the  executive  law,
  regarding  proceedings  by  the  attorney  general  for equitable relief
  against fraudulent or illegal consumer fraud, a  person  or  entity  who
  engages  in  any conduct prohibited by said provisions of law, and whose
  conduct is perpetrated against one  or  more  elderly  persons,  may  be
  liable  for an additional civil penalty not to exceed [ten] TWENTY thou-
  sand dollars, if the factors in paragraph (b) of  this  subdivision  are
  present.
    S 3. The general business law is amended by adding a new section 349-e
  to read as follows:

    S 349-E. CIVIL ACTION.  ANY CONSUMER ENTITLED TO BRING AN ACTION UNDER
  THIS  ARTICLE  MAY, IF THE UNLAWFUL ACT OR PRACTICE HAS CAUSED DAMAGE TO
  OTHER CONSUMERS SIMILARLY SITUATED, BRING AN ACTION ON BEHALF OF HIMSELF
  AND SUCH OTHER CONSUMERS TO RECOVER DAMAGES OR OBTAIN  OTHER  RELIEF  AS
  PROVIDED FOR IN THIS ARTICLE.
    ANY  ACTION  BROUGHT  UNDER THIS SUBDIVISION SHALL COMPLY WITH ARTICLE
  NINE OF THE CIVIL PRACTICE LAW AND RULES.
    S 4. Section 350-d of the general business law, as amended by  chapter
  208 of the laws of 2007, is amended to read as follows:

    S  350-d.  Civil penalty. Any person, firm, corporation or association
  or agent or employee thereof who engages in any of the acts or practices
  stated in this article to be unlawful shall be liable to a civil penalty
  of not more than [five] TEN thousand dollars for each  violation,  which
  shall  accrue  to  the state of New York and may be recovered in a civil
  action brought by the attorney general. In any such action it shall be a
  complete defense that the advertisement is subject to and complies  with
  the  rules  and  regulations  of,  and  the statutes administered by the
  Federal Trade Commission or any official department,  division,  commis-
  sion or agency of the state of New York.
    S  5.  Subdivision  3 of section 350-e of the general business law, as
  amended by chapter 328 of the laws of 2007, is amended and a new  subdi-
  vision 4 is added to read as follows:

    3.  Any  person  who  has  been  injured by reason of any violation of
  section three hundred fifty or three hundred fifty-a of this article may
  bring an action in his or her own name to enjoin such  unlawful  act  or
  practice, an action to recover his or her actual damages or five hundred
  dollars,  whichever  is greater, or both such actions. The court may, in
  its discretion, increase the award of damages to an amount not to exceed
  three times the actual damages, up to ten thousand dollars, if the court
  finds that the defendant willfully or knowingly violated  this  section.

 S. 74                               3

  The  court  [may]  SHALL award reasonable attorney's fees AND COSTS to a
  prevailing plaintiff.
    4.  (A)  IN  ADDITION  TO ANY OTHER APPLICABLE PENALTY, ANY PERSON WHO
  INTENTIONALLY VIOLATES  ANY  INJUNCTION  PROHIBITING  UNCONSCIONABLE  OR
  DECEPTIVE  ACTS  OR  PRACTICES  ISSUED PURSUANT TO THIS ARTICLE SHALL BE
  LIABLE FOR A CIVIL PENALTY NOT TO EXCEED FIVE THOUSAND DOLLARS FOR  EACH
  VIOLATION. WHERE THE CONDUCT CONSTITUTING A VIOLATION IS OF A CONTINUING
  NATURE,  EACH  DAY OF THAT CONDUCT IS A SEPARATE AND DISTINCT VIOLATION.
  IN DETERMINING THE AMOUNT OF THE CIVIL PENALTY, THE COURT SHALL CONSIDER
  ALL RELEVANT CIRCUMSTANCES, INCLUDING, BUT NOT LIMITED TO, THE EXTENT OF
  THE HARM CAUSED BY THE CONDUCT CONSTITUTING A VIOLATION, THE NATURE  AND
  PERSISTENCE  OF  THAT CONDUCT, THE LENGTH OF TIME OVER WHICH THE CONDUCT
  OCCURRED, THE ASSETS, LIABILITIES,  AND  NET  WORTH  OF  THE  DEFENDANT,
  WHETHER  CORPORATE OR INDIVIDUAL, AND ANY CORRECTIVE ACTION TAKEN BY THE
  DEFENDANT.
    (B) UPON PETITION BY THE ATTORNEY GENERAL, THE COURT MAY FOR  HABITUAL
  VIOLATION  OF  INJUNCTIONS  ISSUED  PURSUANT  TO  THIS ARTICLE ORDER THE
  CANCELING OF ANY CERTIFICATE FILED UNDER AND BY VIRTUE OF THE PROVISIONS
  OF SECTION ONE HUNDRED THIRTY OF THIS CHAPTER.
    S 6. This act shall take effect on the ninetieth day  after  it  shall
  have become a law.