Mayor Zohran Mamdani wants New Yorkers to be able to sue predatory businesses. Unfortunately, his proposed POWER Act could make suing ordinary businesses just as rewarding.
Introduced in the New York City Council earlier this month, the bill promises relief for seniors who lose savings to scams and tenants fighting to recover security deposits. But its combination of sweeping prohibitions, expansive eligibility to sue, and $2,500-per-violation fines could turn consumer protection into a settlement business.
The bill borrows language from the Federal Trade Commission Act, which prohibits unfair competition and deceptive or unfair business practices. The council’s bill adds “abusive” practices, drawn from federal consumer-finance law, and anything “unlawful.” Federal agencies already enforce those provisions, but the POWER Act would hand enforcement to private plaintiffs.
A winning plaintiff could recover actual damages plus $2,500 per violation, with mandatory payment of reasonable attorney fees. The bill provides no corresponding award for businesses that successfully defend themselves. Nonprofit organizations could also sue on behalf of people harmed by a business’s practices, even when the group bought the product solely to test it for violations.
The trouble starts with what counts as “misconduct.” The bill incorporates a 2022 FTC policy statement that requires neither proof of actual harm in a particular case nor a separate showing of market power — the ability to control prices or exclude competition. The city would retain that approach even if the FTC rescinds the policy statement.
The bill also targets “restrictive” or “exclusionary” conduct that harms competitive conditions through its effects on consumers, workers, or other market participants. That breadth invites competitors to challenge arrangements that benefit customers. A gym securing an exclusive building contract, for instance, could face a lawsuit from a disappointed rival.
Antitrust law traditionally distinguishes harm to competition from harm to competitors. A business can lose customers because another offers a better deal. Blurring that distinction gives rivals a tool to make successful competition more expensive.
The consumer provisions create similar risks. Plaintiffs must show harm, but lost time can qualify — even if they lost no money. They also needn’t show that the allegedly deceptive claim influenced their decision to buy.
Consider a neighborhood restaurant with eight employees, already too large for the bill’s exemption for businesses with four or fewer workers. If a court treated a disputed delivery fee on 300 orders as 300 violations, the restaurant could face $750,000 in statutory damages, plus actual damages and attorney fees. Even an owner confident of winning would have reason to settle.
The bill generally requires plaintiffs to give businesses notice and 10 business days to respond before filing suit. But that offers little comfort when the underlying standards remain uncertain, and each additional transaction could multiply the potential payout. Ten days to respond does little to protect a business from vague rules and potentially crushing penalties.
California’s experience shows how broad rights to sue can invite abuse. Before voters approved Proposition 64 in 2004, individuals and organizations could sue businesses over allegedly unfair or unlawful practices without showing that those practices had harmed them or cost them money.
According to California’s attorney general, the Trevor Law Group sued 2,207 auto repair shops and more than 1,000 restaurants and markets over regulatory violations that officials had deemed insufficient to warrant disciplinary action. The attorney general sued the firm, alleging it used the law to extract nuisance settlements. Proposition 64 subsequently required private plaintiffs to show injury and a resulting loss of money or property.
The POWER Act would also preserve federal guidance after its authors abandon it. A Consumer Financial Protection Bureau statement on abusive practices that the bill incorporates was withdrawn in May 2025. New York would give discarded guidance continuing force without requiring lawmakers to reconsider its merits.
Consumer and Worker Protection Commissioner Samuel Levine says a broad private right to sue “has never been more urgent.” It’s true that private lawsuits can catch misconduct that stretched agencies miss, but that strengthens the case for clear standards and remedies tied to harm. Large penalties attached to vague prohibitions instead reward plaintiffs for finding claims that businesses can’t afford to contest.
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New York’s Donnelly Act already lets parties injured by antitrust violations recover three times their actual damages, plus reasonable attorney fees. Lawmakers can strengthen enforcement of those rules while still requiring meaningful injury, protecting competition, and keeping potential liability proportionate. Those safeguards help direct lawsuits toward misconduct and give honest businesses a workable rulebook.
New Yorkers deserve protection from predatory businesses. A law that can’t tell a predator from a competitor won’t give it to them.
Eric Fruits is the director of economic research at the International Center for Law & Economics.