When the Apple Rots

Recent developments in the state of New York should cause panic for anyone and everyone selling travel services to any New York resident. In front of the global media, we’ve seen the attorney general of New York prosecute, seize, and fine a business that has done nothing wrong. There was no victim or fraud, and the contract terms were honored 100%, but yet, the state of New York has seen fit to attack an honest business. Why? Because they can.

63(12)

Why can they? New York 63(12) refers to Section 63(12) of the New York Executive Law, also known as “63 12” or “63(12)”. It grants broad powers to the New York Attorney General to investigate and prosecute cases of alleged civil fraud. The law, often referred to by its shorthand, 63(12), which stems from its place in New York’s rule book, allows the state to find fraud even when there’s no evidence or even a victim. And there doesn’t even have to be an incident of fraud, but only to show that conduct created “an atmosphere conducive to fraud.” An atmosphere of fraud?!?

Here’s a breakdown of 63(12)’s key features:

Purpose:

• To combat persistent fraudulent or illegal business practices.
• To protect consumers and the public from harm caused by these practices.

Powers granted to the Attorney General:

• Investigate potential violations through subpoenas and other tools.
• Seek court orders to halt fraudulent activities and obtain restitution for victims.
• Impose damages and penalties against those found to have violated the law.

Key points to remember:

• 63(12) applies to businesses, not individuals.
• It broadly defines “fraud,” including deceptive practices, misrepresentations, and unconscionable contracts.
• It has been used in high-profile cases, including investigations against The Trump Organization and Martin Shkreli.

Truth in Travel Act

Now, let’s add on New York’s Truth in Travel Act. Found in Article 10-A of the General Business Law,  it supposedly aims to protect consumers when dealing with travel agents and promoters operating within the state. Here’s a breakdown of its key aspects:

Who it applies to:

• Travel agents: Individuals or businesses selling travel services like vacations, tours, or cruises.
• Travel promoters: Individuals or businesses advertising or promoting travel services on behalf of agents.

Key requirements for travel agents and promoters:

Registration

• They must register with the New York State Department of State and display their registration number in advertising.

 Disclosures

• • They must disclose certain information upfront, including:
    • Full name and business address.
    • Whether they act as a principal or an agent.
    • Any limitations on their services or authority.
    • Any affiliations with specific suppliers or brands.

Prohibited practices:

• • They are prohibited from engaging in deceptive or unfair practices, such as:
    • Making false or misleading statements about prices, services, or destinations.
    • Failing to disclose cancellation policies, refund procedures, or other important terms.
    • Bait-and-switch tactics or using high-pressure sales tactics.
    • Failing to deliver promised services or providing them below advertised standards.

We’re in the business of travel, not law

So what are sellers of travel to think? There’s a patchwork of laws, none of them very clear, and it really doesn’t matter anyway because they can sue you for whatever they want whenever they want, regardless of where you are. After all, you sold something to a New York resident. So we have to ask ourselves, is it worth it? Businesses seem to think it’s not to the point where New York Governor Hochul says law-abiding businesspeople have “nothing to worry about” after questions on the state’s commercial climate. It’s funny how “nothing to worry about” and “really an extraordinary, unusual circumstance” become commonplace after it’s found to be an effective tool to punish whoever you want. (Remember 14 days to flatten the curve?)

Is it worth it?

That’s for you to decide. Do you need a couple of $1000 in sales from a New York client more than you want to avoid unlimited prosecution from the state, costing you millions in fines and possibly your business? Do you want to spend thousands or tens of thousands of dollars working with an attorney creating a travel contract only to have it ignored completely should the client complain that the soup was cold or the state decides that they just didn’t like you? Here in our humble shop, we’ve decided it’s not worth the risk. If they can take on billionaires with impunity, imagine what they can do to the small seller of travel. New York has become a third-world dictatorship outside the rule of law and contract, and we have worked too hard to get where we are now to see it erased.