Executive Summary
- What’s new: The FAIR Act is the most significant revamp of New York’s consumer protection law in a half-century and became effective on February 17, 2026. The act expands existing law by permitting the New York attorney general to challenge “unfair” and “abusive” conduct by businesses in the state.
- Why it matters: The FAIR Act materially increases exposure for businesses in New York.
- What to do next: Companies operating in New York (or targeting consumers there) should consider reviewing their business practices — including pricing, auto-renewals, and use of artificial intelligence and algorithms — in light of the FAIR Act’s expansive coverage.
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On February 17, 2026, the Fostering Affordability and Integrity Through Reasonable Business Practices Act (FAIR Act) became law by amending New York’s consumer protection statute, Sections 348 and 349 of New York’s General Business Law. The FAIR Act is the first amendment to New York’s consumer protection law since the 1970s and expands the scope of what may be challenged as unlawful business conduct. Previously, New York’s consumer protection law banned only “deceptive” acts or practices, but the FAIR Act now licenses the Office of the New York Attorney General to challenge “unfair” and “abusive” acts and practices as well — jettisoning the requirement that the AG show that the practices also deceived consumers.
What Do ‘Unfair’ and ‘Abusive’ Mean?
The FAIR Act defines a practice as “unfair” “when it causes or is likely to cause a person substantial injury which is not reasonably avoidable by such person, and is not outweighed by countervailing benefits to consumers or to competition.” By contrast, a practice is “abusive” “when (i) it materially interferes with the ability of a person to understand a term or condition of a product or service; or (ii) it takes unreasonable advantage of: (a) a lack of understanding on the part of a person of the material risks, costs, or conditions of a product or service; (b) the inability of a person to protect their interests in selecting or using a product or service; or (c) the reasonable reliance by a person on a person covered by this section to act in the relying person’s interests.”
The FAIR Act’s “unfair” prong mirrors the consumer protection laws of most other states, and largely mirrors the FTC’s existing standard under 15 U.S.C. § 45(n). By contrast, only a handful of other states also target “abusive” practices in their consumer protection statutes. When defining what constitutes “unfair” or “abusive” acts or practices, New York courts will likely look to legal precedents in other states, especially California and Nevada, as those states are among the few that also bar both “unfair” and “abusive” practices.
The New York AG provided examples of what it considers to be “unfair” or “abusive,” including:
- Using obscure pricing information and fees.
- Student loan servicers that steer borrowers into the most expensive repayment plans.
- Car dealers that add hidden fees and services that the customer did not purchase.
- Debt collectors that collect and refuse to return a senior’s Social Security benefits.
- Health insurance companies that present customers with lists of in-network doctors who, in reality, do not accept the insurance.
The FAIR Act also references new and emerging technologies, indicating interest in regulating AI and algorithmic pricing.
The FAIR Act’s Limitations
While the FAIR Act expands the scope of potential liability for businesses operating in New York, it limits who can enforce parts of it, while also imposing some limitations on companies’ exposure. First, the FAIR Act allows only the New York AG to enforce the law’s “unfair” and “abusive” prohibitions, while consumers still have a private right of action to challenge “deceptive” acts or practices. Second, the FAIR Act preserves a compliance defense for businesses to assert that their conduct is exempt from the statute because they are subject to and comply with federal law.
Remedies
The FAIR Act preserves the existing damages scheme for consumer protection violations in New York. 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. By contrast, the New York AG can now obtain injunctive relief and civil penalties up to $5,000 per violation or the greater of $15,000 or three times the amount of restitution for each violation deemed willful.
The FAIR Act Continues the Trend of States’ Increased Roles in Antitrust and Consumer Protection Enforcement
The FAIR Act contributes to the broader expansion in antitrust and consumer protection enforcement by states. On antitrust, states have pushed for earlier visibility into transactions, including through state-level premerger notification requirements adopted in jurisdictions such as Washington and Colorado, and state enforcers are taking a more active role in merger and conduct challenges. For example, state enforcers successfully pressed ahead with their monopolization case against Live Nation after the company reached a settlement with the federal government, which had been a co-plaintiff in the case.
States have also become more aggressive in their efforts to enforce consumer protection laws, including against so-called “junk fees,” “drip pricing,” pricing algorithms and AI.
Next Steps
The FAIR Act’s reach is broad and touches a wide range of everyday practices for consumer-facing businesses operating in or targeting New York. Industries likely to feel the most immediate impact include financial services, subscription-based services and other industries where consumer pricing is central. Companies should consider reviewing their pricing practices, especially if they use AI, algorithms or other emerging technologies.
For example, while courts will flesh out the full meaning of “unfair” and “abusive” practices, companies operating in or targeting New York can review how they use consumers’ information when presenting them with AI-driven advertising and pricing. In light of the FAIR Act’s explicit reference to emerging technologies, companies could find themselves on the New York AG’s radar screen if they use AI or algorithms in a way that can be argued as taking advantage of unknowing consumers.
This memorandum is provided by Skadden, Arps, Slate, Meagher & Flom LLP and its affiliates for educational and informational purposes only and is not intended and should not be construed as legal advice. This memorandum is considered advertising under applicable state laws.