Relates to consumer protection from deceptive acts and practices; increases damages and directs consumers on bringing an action for such deceptive acts and practices.
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.
STATE OF NEW YORK ________________________________________________________________________ 74 2011-2012 Regular Sessions IN 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
[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.