New York’s Fostering Affordability and Integrity through Reasonable Business Practices Act, known as the FAIR Act, took effect on February 17, 2026, after Governor Kathy Hochul signed it into law on December 19, 2025. It is the first major update to the state’s core consumer protection statute, General Business Law § 349, in more than 40 years.
The law expands what the New York Attorney General can go after. Previously, the AG could only target “deceptive” business practices. Now, “unfair” and “abusive” acts are also prohibited. That matters because many aggressive tactics, particularly in the merchant cash advance (MCA) industry, did not neatly fit the old “deception” standard but still caused serious harm to small businesses.
Merchant cash advances provide fast capital to businesses that often can’t qualify for bank loans, but at steep cost. Typical terms include factor rates of 1.3x to 1.5x, daily automatic withdrawals from a business bank account, and confessions of judgment, which are legal documents that let a funder win a court judgment against a business owner without a trial. “Debt stacking,” where multiple MCA funders pile obligations on the same business, has also been common.
Under the FAIR Act, the Attorney General can now treat these tactics as abusive and bring enforcement actions. The law also removes a longstanding court-created requirement that practices be “consumer-oriented” in AG enforcement cases, which means the AG’s office can now act on behalf of small businesses and nonprofits, not just individual consumers.
One important limit to know is that only the Attorney General can bring claims for “unfair” or “abusive” conduct. Private lawsuits by businesses or individuals are still restricted to “deceptive” practices only, according to an analysis by DLA Piper.
Civil penalties under the updated law can reach $5,000 per violation, or the greater of $15,000 or three times the restitution amount per violation for knowing or willful conduct.
Small business owners currently in MCA agreements should consider reviewing their contracts for terms that may now be challengeable, and document any aggressive collection behavior such as surprise account freezes, stacking, or threats of personal liability. A practice that was fully disclosed can still be challenged if it is deemed unfair or abusive in substance.
The AG’s office has signaled it intends to use the new authority broadly. Business owners in New York who believe they are being subjected to predatory MCA practices may want to consult an attorney familiar with the FAIR Act’s expanded protections.
