A Fundamental Shift in New York’s Consumer Protection Framework
On Dec. 19, 2025, New York enacted the Fostering Affordability and Integrity through Reasonable (FAIR) Business Practices Act, the most sweeping revision to the state’s consumer protection laws in more than four decades.
The law materially expands the scope of prohibited conduct, strengthens the New York Attorney General’s enforcement authority and modernizes the statute to address emerging risks such as junk fees and AI-enabled sales practices. For lenders, servicers, and product administrators operating in New York, the Act represents a meaningful shift in how compliance risk is defined and enforced.
Below are the three changes with the greatest impact.
1. Prohibited Conduct Now Extends Beyond “Deceptive” Practices
Historically, New York law focused narrowly on deceptive practices. The FAIR Act significantly broadens that standard by expressly prohibiting “unfair” and “abusive” business practices.
- Unfair practices are those that cause or are likely to cause substantial harm that consumers cannot reasonably avoid and that is not outweighed by countervailing benefits.
- Abusive practices include conduct that materially interferes with a person’s ability to understand key terms or that takes unreasonable advantage of a consumer’s lack of understanding, inability to protect their interests, or reliance on a business to act in good faith.
This expansion matters because liability is no longer tied solely to false statements. Practices that produce harmful outcomes, or exploit complexity, opacity, or imbalance, can now trigger enforcement even when disclosures technically exist.
Bottom line: Compliance is no longer just about what is said, but about whether outcomes are fair.
2. Enforcement Power Consolidated with the Attorney General
The FAIR Business Practices Act grants exclusive authority to the New York Attorney General to bring claims based on unfair or abusive practices. Private lawsuits remain limited to deceptive conduct only.
This structure reduces the risk of fragmented private litigation while significantly elevating the importance of regulatory enforcement. The Attorney General has publicly characterized the law as a “historic advancement” and in a March 13, 2025, press release identified financial services providers including auto lenders, and mortgage and student loan servicers as areas of focus.
For regulated entities, this potentially signals fewer nuisance lawsuits but higher stakes when enforcement does occur.
3. Junk Fees and AI-Driven Practices Are Squarely in Scope
The FAIR Act was drafted with modern business models in mind. It strengthens the state’s ability to challenge practices such as drip pricing, undisclosed add-on fees, and other pricing strategies that are claimed to obscure true cost.
The law is also forward-looking on technology. While artificial intelligence is not expressly defined in the statute, Attorney General James has stated the Act will be used to address AI-based schemes. Automated pricing tools, loan eligibility engines, and AI-driven sales workflows may now be evaluated not only for deception but for unfair or abusive outcomes.
This raises the bar for governance, testing, and documentation of automated credit decisioning systems.
What the FAIR Business Practices Act Means Going Forward
The FAIR Business Practices Act establishes a stronger and more subjective standard for compliance; one that emphasizes fairness, transparency, and consumer impact, not just disclosure mechanics.
For auto lenders and other stakeholders in the auto industry, the law reinforces a broader regulatory trend: Compliance risk increasingly originates upstream, at origination, pricing and system design, and not just at servicing or dispute resolution.
In New York, fairness is no longer aspirational. It is enforceable. Visit our Resource Center for ongoing coverage of state-level developments, operational guidance, and emerging trends in F&I product oversight.
The information provided in this post does not, and is not intended to, constitute legal advice; instead, all information, content, and materials referenced are for general informational purposes only. Readers should contact their attorney to obtain advice with respect to any particular legal matter.
