New York enacts the FAIR Business Practices Act: Key considerations for businesses

New York has enacted potentially the most significant update to its consumer protection regime in nearly 50 years.

Governor Kathy Hochul recently signed the Fostering Affordability and Integrity through Reasonable Business Practices Act (FAIR Business Practices Act or FAIR Act, Senate Bill S8416).

The law, enacted on December 19, 2025, expands New York General Business Law Section 349 by prohibiting not only “deceptive” acts and practices, but also “unfair” and “abusive” practices. However, this change applies only to actions by the New York Attorney General.

This development reflects a broader shift toward state-level consumer protection enforcement as federal oversight wanes.

In this alert, we discuss potential considerations for businesses now that the FAIR Act has taken effect.

What changed?

The FAIR Act gives the New York Attorney General additional tools to police a wider range of business conduct by broadening the types of conduct that can trigger liability under GBL Section 349. Historically, New York focused on “deceptive” acts or practices. By adding an “unfair” prong, the statute now aligns more closely with the approach used in most states. The statute’s definition for “unfair” largely mirrors the FTC’s existing standard based on 15 U.S.C. § 45(n), but it goes a step further by also protecting non-consumers from “unfair” conduct.

The addition of “abusive” makes New York an outlier compared to other states, very few of which provide comparable authority. The law defines “abusive” in the same way as the federal Consumer Financial Protection Act, 12 U.S.C. § 5531(d), imposing no additional requirements for businesses.

Private lawsuits versus Attorney General enforcement

Businesses will be relieved to learn that these changes are limited to cases brought by the Attorney General, not private consumers. An early version of the bill would have created a private right of action for “unfair” and “abusive” practices, but that provision was removed to secure passage. As enacted, only the New York Attorney General may bring claims alleging “unfair” or “abusive” practices. Private plaintiffs may continue to sue for “deceptive” acts or practices under the existing GBL Section 349 framework.

Consumer oriented standard expected to remain

Initial legislative drafts suggested eliminating court-imposed requirements that misconduct be “consumer oriented,” or have a broader impact on consumers at large. This requirement prevents GBL Section 349 from being used to police private disputes unique to individual parties. Fortunately for businesses, Governor Hochul’s approval memorandum cabined this expansion. The memo notes that changes were needed “to ensure that the bill does not override existing case law concerning the ‘consumer-oriented standard.’” As a result, GBL Section 349 will remain applicable only to conduct that is consumer oriented.

Remedies and exposure

As the FAIR Act impacts Attorney General actions only, it preserves the existing damages scheme for private actions under GBL Section 349. An individual may recover the greater of actual damages or $50, and if the court finds a willful or knowing violation, it may award up to three times actual damages, capped at $1,000. Prevailing plaintiffs may also recover reasonable attorneys’ fees. In enforcement matters, however, the Attorney General can now obtain injunctive relief and civil penalties for “unfair” and “abusive” practices.

Who and what is in scope?

The statute’s reach is broad and touches a wide range of everyday business practices. In public statements, Attorney General Letitia James identified anticipated enforcement priorities, including lenders and servicers in the auto, student loan, and mortgage markets, as well as healthcare companies, insurers, and nursing homes.

The Attorney General has also signaled attention to business dealings affecting New Yorkers with limited English proficiency. That includes marketing, disclosures, and billing practices. The statute also references new and emerging technologies, signaling potential oversight of artificial intelligence (AI) driven pricing and automated decision making when outcomes may be viewed as deceptive, unfair, or abusive.

Businesses can expect heightened scrutiny of consumer finance and servicing, including lending, repayment plans, and loan servicing. Regulators may also focus on healthcare billing, insurance practices, and subscription or negative option services, along with other consumer facing activities.

Organizations using algorithms

Companies should also ensure that, for compliance purposes, they review the use of AI in other contexts, like advertising and privacy, with at least the same rigor as if no AI was present. Federal and state regulators have made clear for several years that there is no AI exception to the laws on the books. Now, via its statutory reference to new and emerging technology, New York State has made that point even more explicit.

The new authority to police “abusive” conduct may also be relevant to the new ways that companies are starting to add advertising content within AI chatbot interfaces. The public has raised concerns about the ability to manipulate chatbot users to consider certain products or services, especially young or vulnerable users about whom the chatbot operator possesses highly personal information. Both chatbot companies and advertisers could be in the Attorney General’s crosshairs if such marketing is seen as materially interfering with, or taking advantage of, people weighing a commercial transaction.

Potential steps to reduce risk

The FAIR Act recently took effect on February 17, 2026. As such, businesses are encouraged quickly to assess risk and update practices.

• To start, companies can examine the consumer journey and consider whether key information is easy to locate and understand at each step: (1) discovery of the product or service, (2) sign-up, (3) use, (4) payment, and, if they choose, (5) cancellation.
  
  
• Businesses can gain insight by reviewing their own enrollment, billing, and cancellation flows as a consumer would, noting where choices, fees, renewals, add-ons, and timelines are presented – and how intuitive those presentations are, whether consent or constructive notice of policies is explicit, and how easy it is to cancel any service.
  
  
• Companies are also encouraged to evaluate how they serve consumers with limited English proficiency by ensuring that call center scripts, templates, and translated materials all contain the appropriate disclosures to promote consistency and comprehension.
  
  
• Organizations using algorithms, automation, or AI-driven practices are encouraged to (1) examine disclosures, pricing, collections, and eligibility decision-making processes for outcomes that could be construed as unfair or abusive, (2) document the business rationale for those practices, and (3) institute appropriate guardrails, including human oversight where appropriate. It may also be helpful to strengthen oversight of third-party vendors that have direct interactions with customers.

These steps can reduce exposure under the FAIR Act, demonstrate a culture of compliance, and position an organization to respond adequately once the law takes effect.

Learn more

To learn more about the implications of the FAIR Act for your organization, please contact the authors.