FAIR Warning: New York's Consumer Laws Get a Makeover

New York Gov. Kathy Hochul in December 2025 took significant steps aimed at strengthening New York's consumer protection laws by signing two major pieces of legislation targeting unfair and abusive business practices and unlicensed conduct.

Law Penalizing Unlicensed Acts

On December 5, 2025, Gov. Hochul enacted Senate Bill S8408, which amends the Financial Services Law by adding Section 402-a. Section 402-a makes it unlawful to engage in any activity within New York state that requires a license, registration or authorization without actually possessing the necessary credentials. More importantly, it gives the New York Department of Financial Services superintendent the authority to impose civil penalties on individuals or entities operating without proper licensure.

A prohibited unlicensed act is subject under Section 402-a to the penalties authorized in Section 44 of the Banking Law or Section 408 of the Financial Services Law, depending on the law to which the unlicensed act relates. (If the unlicensed act relates to both laws, only the penalty authorized by one of the laws may be imposed.) Penalties may be doubled if the unlicensed act is found to have resulted in consumer harm. Also, the superintendent may order restitution in appropriate circumstances.

FAIR Act

On December 19, Gov. Hochul signed the Fostering Affordability and Integrity through Reasonable Business Practices Act (Senate Bill S8416/A8427A/FAIR Act), resulting in a major expansion of New York's General Business Law Article 22-A. Previously, Article 22-A prohibited only deceptive business acts and practices, leaving gaps in consumer protection.

Article 22-A adds new prohibitions against unfair and abusive business acts and practices. It defines:

1. an "unfair act or practice" as one that causes or is likely to cause substantial injury to consumers that they cannot reasonably avoid and is not outweighed by countervailing benefits to consumers or competition
2. an "abusive act or practice" as one that materially interferes with a person's ability to understand the terms of a transaction or takes unreasonable advantage of persons' 1) lack of understanding of the material risks, costs or conditions of a product or service, 2) inability to protect their interests in selecting a product or service, or 3) reasonable reliance on a business to act in their best interests

Existing Article 22-A authorized the New York attorney general (NYAG) to enforce its provisions prohibiting deceptive acts or practices and gave those harmed by such acts or practices a private right of action, individually or as members of a class, to sue for damages. The FAIR Act retains that private right of action but does not extend it to cover unfair or abusive acts or practices.

In a press release issued on Dec. 20, 2025, the NYAG stated that the FAIR Act will "help stop lenders, including auto lenders, mortgage servicers, and student loan servicers, from deceptively steering people into higher cost loans[,] reduce unnecessary and hidden fees, stop unfair billing practices by health care companies, and prevent companies from taking advantage of New Yorkers with limited English proficiency."

The FAIR Act represents a significant shift for financial services providers operating in New York. By expanding the scope of Article 22-a to include business transactions and transactions involving nonprofits, as well as prohibitions against unfair and abusive acts or practices, the FAIR Act introduces new compliance risks and uncertainties. The definitions of "unfair" and "abusive" acts are broad and, crucially, are subject to interpretation by the NYAG and the courts. Absent guidance from the NYAG as to what specific acts or practices will be prohibited as unfair or abusive, financial services providers could find themselves defending against an NYAG enforcement action based on conduct they reasonably believed was compliant.

The Bottom Line

These new laws modernize and reinforce New York's consumer protection framework. In doing so, they also create additional compliance risks for businesses, including for financial services providers, and portend a more aggressive enforcement environment. To reduce their increased risk in such an environment, financial service providers may need to consider proactive steps such as enhanced compliance reviews, employee training and documentation of decision-making processes. 

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.