Deceptively Titled Legislation Will Skyrocket Costs for Consumers & Business
Lawmakers have a knack for pushing overly broad legislation that sounds like it has consumers best interests at heart because it has a feel-good title. An example of this is The Consumer and Small Business Protection Act (S.795/A.7138), sponsored by Senator Comrie and Assemblymember Weinstein, which would greatly expand New York’s consumer protection deceptive acts and practices law. While the bill claims to aid consumers and small businesses, it will only lead to a needless spike in frivolous lawsuits against law-abiding businesses of all sizes, fewer jobs, and higher costs for consumers.
As a business community, we want to weed out bad actors. One bad apple spoils the bunch, as they say. These bad actors give credible, hard-working businesses a bad rep and cause lawmakers to over-legislate to fix a problem. This leads to excessively broad and restrictive policies that skyrocket costs for both business and consumers. This is one of those proposals.
A key component of this bill introduces a new abusive standard which is highly subjective and does not require injury or the possibility of injury, but merely an individual’s interpretation of what might be abusive and unfair. What may be abusive or unfair to one is not abusive or unfair to another. Yet a business will have to spend time, money, and resources to defend itself regardless of if the claim is substantiated or not. Businesses, especially small and medium sized businesses that operate on narrow margins and are still recovering from the pandemic, can’t afford an onslaught of baseless litigation.
Supporters of this proposal say that other states have enacted similar proposals without experiencing a flood of lawsuits. However, most of these states do not mandate that a court award attorney’s fees and costs to a prevailing plaintiff nor do they allow for class actions, like this bill does. What supporters won’t tell you is that the bill is being pushed by private plaintiffs’ attorneys and organizations who stand to see big paydays at the expense of New York consumers who struggle with increasing costs every day. This key change, coupled with a new abusive standard which does not require injury, will only incentivize over eager plaintiffs’ attorneys to bring unfounded lawsuits because on the chance they win, they will see a large cashout.
More egregious is the Senate’s one-house budget proposal, which includes a timeline for an individual who brings a claim, when represented by an attorney, to notify the business ahead of time and demand a settlement amount. This in no way allows for a business to rectify what may be an unintentional error; instead, this holds a business hostage so that a private attorney can receive a contingency fee without much effort. And those over-eager plaintiffs’ attorneys are known to target smaller businesses because they recognize they are easy targets for quick settlements. Small businesses do not have legal staff or hired counsel, and cannot afford a long and expensive trial, which forces them into settlements as the only viable option.
Lawmakers have been quick to institute policies without thinking through how they impact consumers and prices. We’ve all felt it, whether at the grocery store checkout line, or when we have our car serviced, or when purchasing insurance. These policies have driven the cost increase of goods and services, leaving many businesses fighting to stay open and many New Yorkers living paycheck to paycheck. If this legislation becomes law, prices will further rise for businesses big and small because they will have increased liability costs due to the threat of reckless and unnecessary lawsuits. It’s simple: higher costs of providing goods and services equals higher costs for consumers.
We want New York to be more affordable. But there are ways to protect consumers from the bad actors without jeopardizing the livelihood of honest reputable businesses. We are committed to protecting consumers and supporting small businesses, but this proposal will have dire unintended consequences for those whom it seeks to protect.
New Yorkers can’t afford any more deceptively titled policies that will cost them. This bill is bad policy that only serves as a litigation windfall for the few, in exchange for higher costs for the many.
Chelsea Lemon serves as the Director of Government Affairs for The Business Council of New York State, Inc.
Ashley Ranslow serves as the New York State Director of NFIB.
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