New York City businesses could face an expansion of private litigation over unfair, deceptive and abusive practices under proposed legislation that would reach beyond financial services.
The POWER Act, short for People and Organizations Winning Economic Relief, would create a broad private right of action across business, trade and commerce. The proposal combines expansive prohibitions with per-violation damages and mandatory attorneys’ fees, potentially increasing exposure for digital platforms, retailers, landlords and other businesses, according to a Friday (Oct. 23) analysis by Hinshaw & Culbertson.
Introduced Oct. 8 at Mayor Zohran Mamdani’s request, the bill remained in the City Council’s Committee on Consumer and Worker Protection as of the analysis’s publication. It would take effect immediately if enacted, per the analysis.
Its central change concerns who can sue. The Federal Trade Commission Act does not provide a general private damages action under Section 5, relying instead on the FTC for enforcement, the analysis said. The Consumer Financial Protection Act similarly relies on public enforcement and applies to consumer financial products and services.
New York State’s FAIR Business Practices Act expanded state prohibitions to include unfair and abusive practices, but did not create a private right of action. Private plaintiffs retain an avenue for deceptive practices claims under General Business Law Section 349, subject to its limitations, according to the analysis.
The POWER Act would fill that gap locally, authorizing private claims involving unfair, deceptive, abusive or unlawful practices, as well as unfair methods of competition, the analysis said. Injured citizens could sue individually, as well as for similarly situated people or for the general public. Qualifying nonprofits would also receive authority to bring actions.
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The proposal’s reach would extend beyond consumer finance. Claims would not have to concern personal, family or household use, consumer-oriented conduct or conduct with a public impact. There are potential applications in B2B transactions, commercial financing, employment, housing and digital platforms, according to the analysis. Landlord-tenant disputes are an intended application identified by the administration and supporters.
Another provision would expressly eliminate any obligation to plead or prove reliance on a challenged representation. Plaintiffs would still need to show they were injured because of a violation, the analysis said. That distinction would lower a barrier to litigation without dispensing with the need to connect the alleged misconduct to an injury.
Potential remedies include actual damages and $2,500 per violation, alongside injunctive and declaratory relief, according to the analysis. Successful plaintiffs would also receive reasonable attorneys’ fees and costs. The proposal contains no aggregate cap on the per-violation remedy.
For businesses using standardized disclosures, fees, contract terms or website processes, these provisions could multiply exposure when the same challenged practice affects many people, the analysis said.
Geography presents another uncertainty. Companies outside both New York City and New York state could face claims if their dealings with city residents establish a sufficient connection, according to the analysis. Courts would have to determine that boundary, making the issue especially relevant to businesses offering services, advertising or completing transactions through digital platforms.
The bill also raises unresolved preemption issues. It provides a defense for conduct required by specified federal law but would not expressly protect conduct that is merely permitted by, or compliant with, federal or state law, the analysis said.
Most plaintiffs would have to provide notice and allow 10 business days for a written response, but correcting a violation would not expressly bar a lawsuit, according to the analysis. Claims would carry a three-year discovery-based limitations period. A narrow exemption would cover independently operated, nondominant businesses with four or fewer employees and less than $5 million in annual revenue.
Businesses should review existing compliance practices now, the analysis said. For companies serving city residents, the immediate task is identifying recurring practices that could generate claims under a broader local standard, even where existing federal or state enforcement has been limited.
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