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With the Consumer Financial Protection Bureau (CFPB) still out of action under President Trump, lawmakers in New York are considering a bill that would offer new safeguards for consumers and small businesses.
Last week, New York Attorney General Letitia James announced that she is working to advance a bill known as the Fostering Affordability and Integrity through Reasonable (FAIR) Business Practices Act.
The FAIR Business Practices Act is a program bill from the Office of the Attorney General (OAG) that has been introduced to the State Senate and the State Assembly.
In New York, a "program bill" is a piece of legislation that is proposed as part of the governor's or another official's broader agenda or program for the year.
If enacted, the bill will authorise the OAG to bring civil actions against individuals or companies that engage in unfair, deceptive or abusive practices.
Impacted individuals could also pursue civil actions against defendants, who could be hit with penalty charges and restitution orders under the act.
The OAG said the proposed legislation will protect New Yorkers from deed theft, online phishing scams, hard-to-cancel subscriptions, junk fees and data breaches.
It will also help stop lenders, such as auto lenders, mortgage servicers and student loan servicers, from deceptively steering borrowers into higher-cost loans.
Passed in 1970, New York’s existing consumer protection law prohibits “deceptive” business acts and practices, but does not prohibit “unfair” or “abusive” acts.
According to the OAG, 42 other states and federal law already prohibit unfair practices, making New York’s current law “antiquated” and “inadequate”.
“At a time when the federal government is making life harder, we want to make life easier for New Yorkers,” said James.
“The FAIR Business Practices Act will close loopholes that make it too easy for New Yorkers to be scammed, and will allow my office to go after anyone who violates the law.
“I look forward to working with my partners in state government to ensure that, as Washington retreats from protecting consumers, New York steps up to lead.”
Making up for loss of CFPB
In the wake of President Trump’s partial shutdown of the CFPB, New York’s efforts to create new safeguards for consumers have won praise from lawmakers in other states and from former regulators.
Senator Elizabeth Warren (D-MA), who played a key role in launching the CFPB in 2010, said that “every state in the country” should follow New York’s lead.
“With President Trump and co-president Elon Musk trying to shut down the CFPB, we need to fight back at the federal and local level,” she said.
“New York is leading the way, and I urge other states to protect Americans from getting tricked and trapped by big banks and giant corporations.”
Rohit Chopra, former CFPB director under President Biden, also applauded New York’s efforts to ensure that consumers are not left unprotected as a result of a weakened CFPB.
“Businesses should compete by providing great products and superior service, not by devising schemes to rip people off,” he said.
“With stronger laws on the books, Attorney General James and state law enforcement across the country can stop the scourge of junk fees and other crimes against consumers.”
New director could shed light on CFPB direction under Trump
As covered by Vixio, the CFPB has been under a temporary shutdown order since February 3, when President Trump appointed Treasury Secretary Scott Bessent as its acting director.
The shutdown order was then reissued four days later, when Russell Vought, director of the Office of Management and Budget (OMB), took over from Bessent as acting director.
Since then, the CFPB has dropped several key enforcement actions that were initiated under President Biden, including cases against Capital One, Zelle, J.P. Morgan, Bank of America and Wells Fargo.
Although Vought has requested no additional funding for the CFPB for the upcoming fiscal quarter, he insists that the agency will continue to operate under President Trump.
As proof of these plans, Vought points to Trump’s nomination of Jonathan McKernan as the next permanent director of the CFPB.
McKernan, a former board member at the Federal Deposit Insurance Corporation (FDIC), was approved by the Senate Banking Committee to serve as CFPB director on March 6.
The 13-11 vote saw all Republicans on the committee vote in favour of McKernan, and all Democrats vote against.
McKernan's nomination now heads to the Senate floor, where he must receive 50 votes or more to be confirmed.
Once he is confirmed, it is likely that the direction of the CFPB under President Trump will become clearer.
However, defenders of the CFPB fear that the Trump administration’s plans to “right size” the agency may see it reduced to a shell of its former self.
Democrats fear that a small number of CFPB staff will be kept on, but only to ensure that Biden-era rulemakings, investigations and litigations are reserved.
“Donald Trump and Elon Musk are gutting the CFPB, giving big corporations a free pass to rip you off,” Senator Warren said on Tuesday (March 18).
“We need state-level consumer protections now more than ever, and New York State Attorney General Letitia James is stepping up.”
