When Democrats captured the New York Legislature in 2018, prognosticators predicted that New York would pass progressive laws quickly. Yet more than three years later, New Yorkers still lack the consumer protections of red and purple states like Arkansas, Georgia, North Carolina and West Virginia.
Unlike most other states, New York does not prohibit unfair trade practices — the same prohibition that allowed Sandy Hook plaintiffs to hold the maker of the gun that killed their children accountable. Imagine not having that recourse if such a tragedy happened in New York.
Or consider the more common case of Mark Wolfe, a Tennessee resident, wrongfully turned down for a job because a bank carelessly gave an identity thief a credit card in Wolfe’s name. The thief racked up bills and failed to pay them, damaging Wolfe’s credit report. Wolfe was able to sue the bank under a Tennessee law prohibiting unfair conduct. If the same thing happened to a New Yorker, the New Yorker would be out of luck.
Claims based on injustice — and its cousin, abuse — have protected millions of Americans when they had no other options. When Wells Fargo opened millions of unauthorized accounts, the Federal Consumer Financial Protection Bureau based its claim on its powers of injustice and abuse. In other states, unfairness laws also protect consumers from predatory lending, price gouging, and a wide variety of other problems. But New York’s consumer protection law lacks such prohibitions.
Now that could change. The proposed Consumer and Small Business Protection Act would give New Yorkers protections enjoyed by consumers in other states. Long Island lawmakers from both parties, including State Senator Kevin Thomas and Assemblymen Steve Englebright, Michael Montesano, Joe DeStefano and Michaelle Solages, are among the supporters.
Unsurprisingly, the business lobby rallied against the bill. The American Property Casualty Insurance Association warned that the bill would produce an “explosion of litigation”. Similarly, the Business Council says the bill would lead to “an unnecessary increase in the number of baseless lawsuits”.
Such objections would be ominous – except that the business lobby made similar arguments in 1980 when New York gave consumers the right to sue for deceptive acts, and those arguments have proven to be without merit. At the time, the New York State Bankers Association said the law would “virtually guarantee a series of bogus lawsuits.” That prediction itself turned out to be, well, wrong. But while there has been an explosion of litigation since New York enacted the 1980 law, it’s not about consumers suing companies. Rather, they are companies suing consumers – who now account for around a quarter of all cases nationwide.
Companies also object that the bill would increase the amount consumers can recover from $50 to $1,000. But as the eminent jurist Richard Posner has written, only a “madman or a fanatic” sue for amounts like $50. The amount that consumers get back must be enough to make it worth the inconvenience of a lawsuit and to deter bad actors from wrongdoing. Even so, $1,000 compares quite favorably to the amount consumers can recover in the red state of Kansas: $10,000, or 200 times what New York law currently provides.
Businesses in other states have thrived in fair markets that protect consumers. The same will be true for New York companies. It’s high time for New York lawmakers to give their constituents the same protections from excess as consumers in other states.
This guest essay reflects the views of Jeff Sovern, a law professor at St. John’s University in Queens.
