New York Governor Kathy Hochul has spoken: New York consumers need more information, more protections, and more money in their pockets.
As part of the Transportation, Economic Development and Environmental conservation Article VII Legislation section of the FY 2026 New York State Executive Budget (the " TED Bill "), Governor Kathy Hochul signed into law new consumer protection measures aimed to protect New York consumers by requiring businesses operating in the financial sector and retail marketplace to be more transparent about certain business practices and to make certain consumer-favorable transactions less confusing and more streamlined. Companies that engage with New York consumers should promptly familiarize themselves with the new requirements described below to ensure they are in compliance in time for these requirements to take effect -- some as early as July 2025.
Safeguards on Artificial Intelligence Companions
(Part U of the TED Bill)
As artificial intelligence becomes more integrated into society, it is difficult to predict exactly how such technology may benefit or harm users. The TED Bill includes measures to not only protect a consumer financially, as discussed below, but also to protect consumers' emotional wellbeing. Under the TED Bill, artificial intelligence "companions" 1 must (i) have protocols in place for handling any self-harm or suicidal ideation expressed by a user to such artificial intelligence companion; and (ii) the company providing such artificial intelligence companion must notify users at the beginning of each session, and at least once every three hours of continuing interaction with such artificial intelligence companion, that the artificial intelligence companion is a computer program and is not a human being and is unable to feel human emotion.
Clear and Standardized Return and Refund Policies
(Part V of the TED Bill)
Refunds and returns of purchased merchandise can be confusing and may lead consumers to keep product they may have otherwise preferred to return. The TED Bill attempts to address this issue by requiring companies to streamline the refund and return process for all New York consumers. Large retailers, including online retailers, are required to offer their customers a minimum standard refund policy, which includes providing customers with the right to receive a full refund, equal exchange, or store credit (at the retail seller's discretion) up to at least 30 days following the original purchase, subject to certain exceptions including for used goods, perishables, and customized goods received as ordered. Such retailers are also obligated to clearly post their refund policy, either in close proximity to the items for purchase, or at the location of the point of sale.
Simplify Subscription Cancellations
(Part W of the TED Bill)
In New York, the day of the silent, automatically renewing, impossible to cancel subscription seems to be over. The TED Bill amends Section 527-A of the general business law, Chapter 20, Article 29-BB to require businesses to be more transparent with consumers and provide notifications regarding any upcoming renewals of a purchased subscription or any price changes regarding such subscription. Additionally, such subscription service businesses must provide clear instructions to consumers on how to cancel subscriptions, making it as easy for consumers to cancel a subscription as it was to purchase such subscription.
More Oversight on "Buy Now, Pay Later" Loans
(Part Y of the TED Bill)
Buy now, pay later (" BNPL ") loans have become increasingly popular and accessible. To limit risk to New York consumers borrowing money under any such BNPL loan, the TED Bill introduces new oversight over BNPL lenders by establishing a licensing requirement , including establishing maintenance and notification procedures regarding such licensure. Additionally, this legislation provides consumers with additional protections by prohibiting any "unfair, deceptive or abusive act or practice" in connection with such a BNPL loan. The BNPL lender is also required to disclose the terms of the BNPL loan to borrowers, maintain fair refund and data protection policies, and adhere to limitations on loan interest (a 16% cap) and late fees.
Disclose Surveillance Pricing
(Part X of the TED Bill)
It is common knowledge that algorithms may suggest to consumers content for viewing or products for purchasing based on a consumer's online activity or other collected data. However, consumers may not realize that product prices may also be similarly personalized. The TED Bill requires companies that use algorithms to set pricing to clearly and conspicuously disclose to consumers that the price advertised to the consumer was set by an algorithm using the consumer's personal data . To further protect consumers, the Ted Bill also restricts such a company's use of protected class data in setting pricing.
As technology continues to rapidly evolve, we can expect adaptive legislation to be enacted. Accordingly, it is important for businesses to frequently assess their business procedures, including the technology used by such business and its points of interaction with consumers. Stay tuned to see if other states join New York in establishing new consumer protections in the financial and retail sectors.
Footnote
1. An artificial intelligence companion simulates social human interaction.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
