New York City Introduces POWER Act to Create a Private Right of Action to Sue Businesses

New York City Mayor Zohran Mamdani on October 8, 2026, introduced the People and Organizations Winning Economic Relief (POWER) Act (Intro. No. 1105 of 2026), which would establish a municipal private right of action for unfair, deceptive, abusive or unlawful business practices. As described in this Holland & Knight alert, the statute is so broad that enacting it could create considerable issues for businesses, nonprofits, individuals and the courts.

The first issue, and not an insignificant one, is that the POWER Act fails to specify or identify what behavior it intends to cover and what actions it intends to remedy. Unfair, deceptive and abusive practices are not objective standards but could include almost any behavior, which could allow the courts to expand its covenants to areas never considered to be relevant.

Moreover, the POWER Act is not just directed at business but any "acts or practices in or affecting business, trade or commerce." As a result, virtually any dispute could result in litigation if there is a showing that it affects trade or commerce, which are neither defined nor limited. Trade or commerce could include partnerships, limited liability companies, cooperatives (co-ops) and condominiums, landlord-tenants, trusts and estates, and the purchase and sale of property, both real and personal.

The POWER Act provides a private right of action that would enable a lawsuit to be filed on any case the lawyer's think needs remediation in court and recover legal fees and other compensation for the alleged abusive behavior. This legislation could lead to New York being viewed as anti-business and presumably make it more difficult for companies to do business or insurance in the city by creating regulatory uncertainty and risk.

Broad New Private Right of Action

Moreover, the POWER Act's jurisdiction is unlimited. The private right of action is granted to "every person in the City of New York." Does this mean that just the 8.5 million residents of New York City have a private right of action, or can anyone in the world come to New York City, feel aggrieved and sue whoever they feel like suing because they would be "in the City of New York?" It would be important to businesses in New York to understand with more certainty exactly who potential claimants may be and what behavior would be covered.

On its face, the law has the potential to create havoc for New York residents and businesses because the POWER Act specifies that "'unfair, deceptive or abusive acts or practices' should be broadly interpreted to include conduct described as constituting an abusive act or practice by the 'Policy Statement on Abusive Acts or Practices,'" issued by the Consumer Financial Protection Bureau (CFPB Policy) on April 3, 2023, regardless of whether the CFPB Policy is active, superseded or rescinded. As a result of this reference buried in the POWER Act Bill, the POWER Act would make the CFPB Policy toward financial institutions a permanent part of New York City law affecting not just financial institutions, but everyday life having nothing to do with financial institutions.

This wholesale incorporation of a federal policy ignores the flaws perceived by some with the CFPB Policy, including that the CFPB Policy failed to properly distinguish abusive acts from unfair or deceptive acts, although the U.S. Congress established abusive conduct as a distinct legal category meant to require specific elements, whereas the CFPB's expansive view blurred those lines. Rather than offering clear guidance for compliance, the CFPB Policy (as with the POWER Act) relies on generic, sweeping descriptions, leaving financial institutions unsure of where normal business practices end and illegal "abusiveness" begins. The CFPB Policy was meant to provide guardrails for financial institutions and not human behavior that some litigants believe would require litigation to modify.

Similar to the POWER Act, the CFPB Policy noted that establishing an abusive practice does not require proof of substantial consumer injury or intent, which is an overreach that bypassed traditional checks on agency enforcement. Finally, the CFPB Policy overstepped the bounds of the 2010 Consumer Financial Protection Act¹ by penalizing standard market conditions, unequal bargaining power or pricing models without proving that the institution acted maliciously or distorted market competition.

Policy Concerns with Adopting a Federal Banking Standard

This begs the question as to whether it is good public policy to just absorb a federal banking regulation into New York City's labyrinth of laws, rules and regulation. Especially troubling for businesses is that conduct would be considered abusive if it materially interferes with a consumer's ability to understand a term or condition of a consumer financial product or service. This includes buried or omitted disclosures, physical or digital dark patterns, and complex or overshadowing structures. Taking unreasonable advantage of a consumer occurs when an entity exploits 1) gaps in a consumer's understanding of the risks, costs or conditions of a product, 2) an inability of consumers to protect their own interests due to unequal bargaining power, market structure or onerous exit costs, or 3) reasonable consumer reliance on a company that holds itself out as acting in the consumer's best interest or serving as an intermediary. Unlike some unfairness or deception claims, establishing abusiveness under the Consumer Financial Protection Act does not require proof of substantial injury or intent. Simply put, businesses are presumed guilty until they can prove they are innocent.

Defining Unfair and Abusive Conduct

The POWER Act Bill defines an "unfair act or practice" as one that 1) "causes or is likely to cause substantial injury to consumers which is not reasonably avoidable by consumers" and 2) "such substantial injury is not outweighed by countervailing benefits to consumers or to competition." This means that the standard of care is that it could cause a substantial injury to a consumer, but there is no requirement that a consumer was not contributorily negligent, so if a consumer suffers any kind of physical or mental injury or emotional trauma the other party can be sued even if there was no intent to harm anyone. Moreover, the unfair act or practice would include conduct that would constitute an unfair act or practice under the U.S. Code. Therefore, even if there is already a remedy under federal law, the New York plaintiff can bring the action.

The POWER Act then indicates that the Fostering Affordability and Integrity Through Reasonable (FAIR) Business Practices Act, which was added to the New York State General Business Law in early 2026 to protect consumers against unfair business practices, is not adequate because it does not provide a private right of action. The sponsors' position seems to be that although private lawsuits remain limited to deceptive claims under New York GBL § 349, only the New York Attorney General (AG) can enforce the new unfair and abusive provisions, with expanded extraterritorial reach for cross-state violations. The result is a POWER Act that could force the AG to act to avoid the risk of a New York Court decision reducing the AG's authority. What is more surprising is that the sponsors are not even giving the FAIR Act a chance to fail, which is unfair to the Legislature.

The POWER Act Bill goes on to note that the "unfair methods of competition" should be broadly interpreted and applied to accomplish the remedial purposes. The term "injury" means any impairment of a person's lawful interests, regardless of whether such impairment to such interests are quantifiable, economic or monetary in nature, including but not limited to loss of time, privacy or security or other harm caused by a violation of the POWER Act.

The term "abusive act or practice" means any act or practice that materially interferes with the ability of a consumer to understand a term or condition of a good or service or takes unreasonable advantage of 1) a lack of understanding on the part of a person of the material risks, costs or conditions of a good or service, 2) the inability on the part of a person to protect such person's interests in selecting or using a good or service, or 3) the reasonable reliance by a person on the person engaging in the act or practice to act in the interests of such person. Therefore, businesspeople arguably need to have a physical, mental and emotional understanding of their customers or risk being taken to court in a class action based on the assumption that there might be a class of people who need protection, which will further congest the courts with more litigation.

The POWER Act also stipulates that "it shall not be a requirement that the person commencing such action, proceeding or special proceeding allege reliance on a prohibited act or practice, nor shall any such action, proceeding or special proceeding be limited to acts or practices related to personal, family, or household use or to acts or practices with a public impact or that are consumer oriented." As a result, a business can be sued and a class action commenced without anyone being injured by the aggrieved action – it is enough that someone could have been affected by it. Therefore, the POWER Act is creating a remedy for a situation where no one was injured, which makes the need for a private right of action necessary because without the private right of action, the person who was not injured would not be able to sue and recover compensatory damages and legal fees for their lawyer.

Potential Challenges to the POWER Act's Legal Authority

In reviewing the POWER Act, one has to wonder whether the New York City Council can enact expansive liability for "unfair" and "abusive" acts when New York state law (New York State General Business Law § 349) does not provide a private rights of action for the aggrieved conduct. This also necessitates an analysis as to whether the City Council has the authority to make an act illegal with legislation, which is contrary to state and federal law, or provide a private right of action for enforcing state or federal laws. Moreover, federal plaintiffs need to have suffered injury which is contrary to what is required under the POWER Act. The POWER Act also permits lawsuits to be brought by workers, tenants and advocacy groups, which is contrary to state and federal law.

Interestingly, the penultimate provision of the POWER Act provides that "nothing contained in this chapter shall be construed as creating any private right of action against the city or any agency or employee thereof or a small business" and small business is defined as "an entity that is independently owned and operated, is not dominant in its field, employs four or fewer employees, and, whose gross revenue in the preceding fiscal year was in an amount less than five million dollars." This suggests that City Council understands that the POWER Act could have a negative impact on businesses as well as the city, and therefore is attempting to protect very small businesses, while holding larger businesses to a significantly higher standard. As a result, all businesses should understand the POWER Act and its potential implications when doing business in New York City.

Notes

¹ See "An Analysis of the Bureau of Consumer Financial Protection Act" by Stuart Saft published in The Real Estate Finance Journal (Vol. 26, No. 4, Spring 2011).

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.