Applying the law to banks and preemption issues

In the episode of the Consumer Finance Monitor podcast we are releasing today, we examine what may be the most consequential development in New York consumer protection law in nearly half a century: the enactment of the New York State Fair Business Practices Act (the FAIR Act).

Signed into law in December 2025 and taking effect on February 17, 2026, the FAIR Act represents the first comprehensive overhaul of New York General Business Law § 349 in almost 50 years. Long focused primarily on deceptive acts and practices, Section 349 has now been expanded to expressly prohibit unfair and abusive business practices as well—bringing New York law far closer to the federal UDAAP framework under the Consumer Financial Protection Act.

To explore what changed, why it matters, and how the law will be enforced in practice, Alan Kaplinsky (founder and former leader of the Consumer Financial Services Group at Ballard Spahr LLP and now Senior Counsel and host of Consumer Finance Monitor) is joined by two senior officials from the New York Attorney General's Bureau of Consumer Frauds and Protection who were directly involved in shaping and implementing the statute:

· Jane Azia, Chief of the Bureau of Consumer Frauds and Protection

· Alec Webley, Assistant Attorney General and one of the attorneys who helped shepherd the FAIR Act through the legislative process

What followed was a wide-ranging and unusually candid discussion of the statute's origins, scope, enforcement implications, and practical lessons for businesses operating in, or affecting, New York.

From Deception to Unfairness and Abusiveness

For decades, New York's consumer protection regime lagged behind most other states and federal regulators by focusing almost exclusively on deception. As Jane Azia explained, deception alone often fails to capture conduct that is plainly harmful to consumers, particularly where disclosures technically exist but are obscured, consumers are subjected to high-pressure tactics, or businesses exploit significant informational or power asymmetries.

The FAIR Act closes those gaps by expressly prohibiting:

· Unfair practices, modeled closely on the FTC's longstanding unfairness framework

· Abusive practices, drawing heavily on more than a decade of CFPB enforcement experience

Importantly, while the statute borrows from federal concepts of unfairness and abusiveness, New York is not bound to follow future CFPB reinterpretations. As Alec Webley emphasized, the legislature carefully chose its language, expressly incorporating only certain federal elements (such as the FTC's "substantial injury" concept) while deliberately declining to tether New York law to future federal regulatory shifts.

Broader Scope Than Federal Law

One of the most significant differences between the FAIR Act and federal consumer protection law is scope.

Jane Azia pointed out that unlike the federal Consumer Financial Protection Act, which applies primarily to financial services, the FAIR Act applies to all business activity occurring in, or affecting consumers in, New York. That means unfair or abusive conduct by non-financial businesses now squarely falls within the Attorney General's enforcement authority.

The statute also avoids many of the preemption constraints that can limit state enforcement against national banks under federal law, because it is a law of general application rather than a banking regulation.

No Rulemaking—But Clear Signals

The FAIR Act does not grant the Attorney General rulemaking authority, and the AG's office does not currently plan to issue formal regulations or written guidance. Instead, businesses should expect the meaning of "unfair" and "abusive" to be fleshed out through enforcement actions, settlements, and existing federal precedent.

That said, the Attorney General has already identified categories of conduct likely to draw scrutiny, including:

· Steering borrowers into unnecessarily costly repayment options

· High-pressure sales tactics

· Obscured or misleading pricing

· Exploitation of consumers with limited English proficiency

· Misleading marketing in health care, auto sales, and emerging financial products

Several examples discussed on the podcast, including enforcement actions involving e-cigarettes, earned wage access products, and savings account practices, illustrate how the AG's office has already been applying unfairness and abusiveness theories under existing authority, and how the FAIR Act now allows those claims to be brought directly under state law.

Remedies and Enforcement Tools

The FAIR Act does not dramatically alter the remedies available to the Attorney General, but it reinforces a powerful enforcement arsenal, including:

· Injunctive relief

· Restitution

· Civil penalties

· Disgorgement

· Expedited "special proceedings" that can allow the AG to move quickly in court to halt unlawful conduct

As a reminder, recent amendments to Article 22-a of the general business law also significantly increased civil penalties for violations of section 349 occurring during disasters or abnormal market disruptions, an issue businesses should not overlook.

Extraterritorial Reach and Coordination with Other Regulators

The discussion also addresses a recurring compliance question: when New York law applies beyond New York's borders.

In general, the statute applies where conduct occurs in New York or where New York consumers are harmed. It can also apply to out-of-state consumers harmed by New York-based businesses. By contrast, purely out-of-state conduct with no meaningful New York nexus typically falls outside the statute's reach.

The episode also explores how the Attorney General coordinates with:

· Other state attorneys general in multi-state investigations,

· The New York Department of Financial Services,

· The New York City Department of Consumer and Worker Protection, and

· Federal agencies such as the FTC.

Even as federal consumer protection enforcement ebbs and flows, the states, and New York in particular, remain active and increasingly influential.

Practical Takeaways for Businesses

A central theme of the discussion was that the FAIR Act is not a reason to relax compliance efforts—quite the opposite.

As Alec Webley noted, statutes like this create an opportunity for companies and their counsel to step back, reassess business practices, and ask hard questions:

· Are consumers complaining about this practice?

· Is it genuinely necessary to the business?

· Does it obscure costs or risks?

· Would the company be comfortable seeing it described on the front page of a major newspaper?

Practices that may have survived under a narrow deception standard could now pose real enforcement risk under broader unfairness and abusiveness principles.

Looking Ahead

Both guests emphasize that the FAIR Act was drafted with care and restraint, and that early enforcement actions are likely to fall squarely within the statute's text and intent. At the same time, emerging technologies, particularly digital marketing, fine-print disclosures on mobile devices, and the use of AI, are clearly on the Attorney General's radar.

The bottom line is clear: the FAIR Act marks a fundamental shift in New York consumer protection law. With its February 17, 2026 effective date now here, businesses operating in or affecting New York should be taking this development seriously by reviewing practices, strengthening compliance frameworks, and preparing for a more expansive and assertive enforcement environment.

We will continue to track developments under the FAIR Act and report on key enforcement actions and interpretations as they unfold.

Consumer Finance Monitor is hosted by Alan Kaplinsky, Senior Counsel at Ballard Spahr, and the founder and former chair of the firm's Consumer Financial Services Group. We encourage listeners to subscribe to the podcast on their preferred platform for weekly insights into developments in the consumer finance industry.