CONSUMER LAW 2005 UPDATE
The Judge's Guide to Federal and New York State Consumer Protection Statutes
July 1, 2005•CONSUMER LAW 2008 UPDATE
•CONSUMER LAW 2007 UPDATE
•CONSUMER LAW 2006 UPDATE
•CONSUMER LAW 2003 UPDATE
•CONSUMER LAW 2001 UPDATE
•CONSUMER LAW 2000 UPDATE
Causes of action alleging the violation of one or more Federal and/or New York State consumer protection statutes are frequently asserted in civil cases. This annual paper prepared for New York State Judges, Principal Law Clerks, Arbitrators, Librarians and other Court personnel discusses those consumer protection statutes most frequently used in New York State courts.
In addition to reporting new consumer cases, this paper discusses two new substantive and procedural topics. First, within the last five years there has been a dramatic increase in the use of mandatory arbitration and forum selection clauses in consumer contracts, particularly, in agreements entered into over the Internet. The enforceability of such clauses raises several issues addressed herein. Second, Article 9 of the C.P.L.R. is New York's class action statute and provides consumers with similar claims an opportunity to aggregate their claims into one lawsuit. The scope of consumer class actions including which types of consumer claims are certifiable under Article 9 of the C.P.L.R. is discussed herein as well.
Table Of Contents
1] Table of N.Y.S. Consumer Protection Statutes
2] Table of Federal Consumer Protection Statutes
3] Deceptive and Misleading Business Practices
[A] Threshold of Deception
[B] Scope; Time To File; Accrual; Independent Claim
[C] Territorial Limitations
[D] Types Of Goods & Services Covered By G.B.L. § 349
1] Apartment Rentals
2] Attorney Advertising
3] Aupair Services
4] Arbitrator's Award; Refusal To Pay
5] Auctions; Bid Rigging
6] Automotive; Disclosure of Contract Terms
6.1] Baldness Products
7] Budget Planning
8] Cars
9] Cell Phones
9.1] Checking Accounts
10] Clothing Sales
11] Credit Cards
12] Customer Information
13] Defective Automobile Ignition Switches
14] Defective Brake Shoes
15] Defective Dishwashers
16] Door-To-Door Sales
17] Educational Services
18] Employee Scholarship Programs
19] Excessive & Unlawful Bail Bond Fees
20] Exhibitions & Conferences
21] Furniture Sales
22] Hair Loss Treatment
23] Home Heating Oil Price Increases
24] Home Inspections
25] In Vitro Fertilizations
26] Insurance
27] Internet Marketing & Services
28] " Knock-Off " Telephone Numbers
29] Lasik Eye Surgery
29.1] Layaway Plans
30] Liquidated Damages Clause
31] Loan Applications
32] Mislabeling
32.1] Monopolistic Business Practices
33] Mortgages
34] Motor Oil Changes
35] Movers, Household Goods
36] Professional Networking
37] Privacy, Sale Of Confidential Information
38] Pyramid Schemes
39] Real Estate Sales
40] Securities
41] Sports Nutrition Products
42] Termite Inspections
43] Tobacco Products
44] Transportation Services, E-Z Passes
45] Travel Services
46] TV Repair Shops
47] Wedding Singers
4] False Advertising
5] Cars, Cars, Cars
[A] Automotive Parts Warranty
[B] Automotive Repair Shop Duties
[C] Implied Warranty of Merchantability & Non-Conforming Goods
[D] Magnuson-Moss Warranty Act & Leased Vehicles
[E] New Car Contract Disclosure Rule
[F] New Car Lemon Law
[G] Used Car Dealer Licensing
[H] Used Car Extended Warranty
[I] Used Car Lemon Law
[J] Warranty Of Serviceability
[K] Repossession & Sale of Vehicle
6] Homes
[A] Home Improvement Frauds
[B] Home Improvement Contractor Licensing
[C] New Home Implied Warranty Of Merchantability
[D] Movers, Household Goods
[E] Real Estate Broker Licenses
7] Loans & Credit
[A] Fair Credit Reporting
[B] Home Ownership and Equity Protection
[C] Real Estate Settlements
[D] Regulation Z
[E] Truth In Lending
[F] Mortgage Related Documents; Fees
8] Overcoats Lost At Restaurants
9] Pyramid Schemes
10] Real Property, Apartments & Coops
[A] Real Property Condition Disclosure
[B] Real Property Warranty Of Habitability
[C] Multiple Dwelling Law
11] Retail Sales & Leases
[A] Consumer Transaction Documents, Type Size
[A-1] Dating Services
[B] Dog And Cat Sales
[C] Door To Door Sales
[C-1] Health Clubs
[D] Lease Renewals
[E] Licensing To Do Business
[1] Home Improvement Contractors
[2] Used Car Dealers
[3] Other Licensed Businesses
[F] Merchandise Delivery Dates
[F-1] Merchandise Layaway Plans
[G-1] Retail Installment Sales
[H] Rental Purchase Agreements
[I] Warranty Of Merchantability
12] Telemarketing
[A] Federal Telephone Consumer Protection Act
[B] N.Y.S. Telemarketing And Consumer Fraud And Abuse Prevention Act
[C] Telemarketing Devices Restrictions
[D] Telemarketing Sales Call Registry
13] Litigation Issues[A] Mandatory Arbitration Clauses
[B] Forum Selection Clauses
[C] Consumer Class Actions
1] Types of Consumer Class Action Claims
a] Baby Makers
b] Bail Bonds
c] Books
d] Cars, Cars, Cars
e] CDs & DVDs
f] Computers, Software & Internet Services
g] Dental Products
h] Drugs
i] Entertainment
j] Food & Drink
k] Gambling
l] Grain Silos
m] Hospitals
n] Household Goods
o] Insurance
p] Loans/Credit Cards/Debit Cards
q] Mortgages
r] Newspaper Subscriptions
s] Nursing Homes
t] Personal Products
u] Privacy
v] Shippers
w] Tax Advice
x] Telephones, Cell Phones & Faxes
y] Tobacco Products
z] Toys
aa] Travel
bb] TV & Cable
2] Consumer Law Theories of Liability
3] Common Law Claims
a] Breach of Contract
b] Quasi Contractual Claims
c] Unjust Enrichment
d] Money Had And Received
e] Bad Faith Dealings
f] Breach of Implied Covenant of Good Faith
g] Unconscionability
h] Economic Duress
I] Penalties
j] Breach of Warranty
k] Fraud
l] Breach of Fiduciary Duty
m] Negligence
4] Statutory Theories of Liability
a] G.B.L. §§ 349, 350
b] G.B.L. § 340
c] Telephone Consumer Protection Act
d] Public Health Law
e] Tenant Security Deposit
f] Privacy
g] No Fault Insurance
h] R.P.L. § 274
5] The Class Action Fairness Act of 2005
1] Table Of New York State Consumer Protection Statutes
[A] G.B.L. § 349 [ Deceptive & Misleading Business Practices ];
[B] G.B.L. § 350 [ False Advertising ];
[C] G.B.L. § 198-a [ New Car Lemon Law ];
[D] G.B.L. § 198-b [ Used Car Lemon Law ];
[E] G.B.L. § 201 [ Overcoats Lost At Restaurants ];
[F] G.B.L. § 218-a [ Retail Refund Policies ];
[G] G.B.L. § 359-fff [ Pyramid Schemes ];
[G-1] G.B.L. § 394-c [ Dating Services ];
[G-2] G.B.L. § 396-aa [ Unsolicited Telefacsimile Advertising ]
[H] G.B.L. § 396-p(5) [ New Car Purchase Contract Disclosure Requirements ];
[H-1] G.B.L. § 396-t [ Merchandise Layaway Plans ];
[I] G.B.L. § 396-u [ Merchandise Delivery Dates ];
[J] G.B.L. § 399-p [ Restrictions On Automated Telemarketing Devices ];
[K] G.B.L. § 399-pp [ Telemarketing And Consumer Fraud And Abuse Prevention Act ];
[L] G.B.L. § 399-z [ No Telemarketing Sales Call Registry ];
[M] G.B.L. § 617(2)(a) [ New Parts Warranties ];
[M-1] G.B.L. §§ 620 et seq [ Health Club Services ];
[N] G.B.L. §§ 752 et seq [ Sale Of Dogs And Cats ];
[O] G.B.L. §§ 771, 772 [ Home Improvement Contracts & Frauds ];
[O-1] G.B.L. § 777 [ New Home Implied Warranty Of Merchantability ];
[P] C.P.L.R. § 3015(e) [ Licensing To Do Business ];
[Q] C.P.L.R. § 4544 [ Consumer Transaction Documents Must Be In 8 Point Type ];
[R] M.D.L. § 78 [ Duty To Keep Premises In Good Repair ];
[R-1] P.P.L. § 401 et seq. [ Retail Installment Sales Act ];
[S] P.P.L. §§ 425 et seq [ Door-To-Door Sales ];
[T] P.P.L. §§ 500 et seq [ Rental Purchase Agreements ];
[U] R.P.L. § 235-b [ Warranty Of Habitability ];
[V] R.P.L. § 274-a(2)(a) [ Mortgage Related Fees ];
[V-1] R.P.L. § 441(b) [ Real Estate Broker Licenses ];
[W] R.P.L. § 462 [ Property Condition Disclosure Act ];
[X] U.C.C. §§ 2-314, 2-318 [ Warranty Of Merchantability ];
[Y] U.C.C. § 2-601 [ Nonconforming Goods; Right of Rescission ];
[Y-1] U.C.C. § 2-608 [ Delivery of Non-Conforming Goods ];
[Y-2] U.C.C. §§ 610, 611 [ Repossession & Sale Of Vehicle ];
[Z] V.T.L. § 417 [ Warranty Of Serviceability ];
[AA] 17 N.Y.C.R.R. § 814.7 [ Duties & Rights of Movers of Household Goods ];
[BB] G.O.L. § 5-901 [ limitations on enforceability of automatic lease renewal provisions ].
2] Table Of Federal Consumer Protection Statutes
[A] 12 U.S.C. § 2601 [ Real Estate Settlement Procedures Act ( RESPA ) ];
[B] 15 U.S.C. §§ 1601 et seq [ Truth In Lending Act ];
[C] 15 U.S.C. § 1639 [ Home Ownerships and Equity Protection Act of 1994 ( HOEPA )];
[D] 15 U.S.C. §§ 2301 et seq [ Magnuson-Moss Warranty Act ];
[E] 47 U.S.C. § 227 [ Federal Telephone Consumer Protection Act Of 1991 ];
[F] 12 C.F.R. §§ 226.1 et seq [ Regulation Z ].
3] Deceptive & Misleading Business Practices: G.B.L. § 349
The most popular of New York State's many consumer protection statutes is General Business Law § 349 [ " G.B.L. § 349 " ] which prohibits deceptive and misleading business practices.[2] G.B.L. § 349 allows consumers and even corporations[3] to sue for $50.00 or actual damages which may be trebled up to $1,000.00 upon a finding of a " wil(ful) or know(ing) violat(ion)".[4] An additional civil penalty not to exceed $10,000 may be imposed for a violation if the " conduct is perpetrated against one or more elderly persons ".[5] G.B.L. § 349 may be pre-empted by other consumer protection statutes.[6] Attorneys fees and costs may be recovered as well. As long as the deceptive business practice has " a broad impact on consumers at large"[7] and constitutes " consumer-oriented conduct "[8] proving a violation of G.B.L. § 349 is straight forward. As stated in Small v. Lorillard Tobacco Co.[9]"To state a claim...a plaintiff must allege that the defendant has engaged ' in an act or practice that is deceptive or misleading in a material way and that plaintiff has been injured by reason thereof '...Intent to defraud and justifiable reliance by the plaintiff are not elements of the statutory claim...However, proof that ' a material deceptive act or practice causes actual, although not necessarily pecuniary harm ' is required to impose compensatory damages ".A well pled G.B.L. § 349 claim need not particularize the deceptive practice but should, at a minimum, allege
" that ( defendants ) engaged in consumer-related activity that effected consumers at large, utilized tactics that were deceptive and misleading in material respects, disseminated advertising through various mediums, that was false in material respects, and injury resulting from ( defendants' ) business practices and advertising " ) [ Gabbay v. Mandel ][10].The complaint must, of course, allege actual injury arising from the alleged violations of G.B.L. § 349 [11] [ Small v. Lorillard Tobacco Co. [12]( in order to make out a G.B.L. § 349 claim the complaint must allege that a deceptive act was directed towards consumers and caused actual injury );
Solomon v. Bell Atlantic Corp. [13]( " A deceptive act or practice is not ' the mere invention of a scheme or marketing strategy, but the actual misrepresentation or omission to a consumer '...by which the consumer is ' caused actual, although not necessarily pecuniary, harm...'" );Sokoloff v. Town Sports International, Inc. [14]( " Such claim impermissibly ' sets forth deception as both act and injury ' " );
Donahue v. Ferolito, Vultaggio & Sons[15]( " ( plaintiff ) failed to establish any actual damages resulting from defendants' alleged deceptive practices and false advertising on the labels " );Levine v. Philip Morris Inc.[16] ( " plaintiff must offer evidence that defendant made a misrepresentation...which actually deceived...and which caused her injury " );
Han v. Hertz Corp. [17] ( " proof that a material deceptive act or practice caused actual-albeit not necessarily pecuniary-harm is required to impose compensatory damages " )].
[A]Threshold Of Deception
Initially G.B.L. § 349 had a low threshold for a finding of deception, i.e., misleading and deceptive acts directed to" the ignorant, the unthinking and the credulous who, in making purchases, do not stop to analyze but are governed by appearances and general impressions " [ Guggenheimer v. Ginzburg ] [18] .Recently, the Court of Appeals raised the threshold to those misleading and deceptive acts " likely to mislead a reasonable consumer acting reasonably under the circumstances " [ Oswego Laborers' Local 214 Pension Fund v. Marine Midland Bank, N.A. [19] ].
[B] Scope; Time To File; Accrual; Non-Residents; Independent Claim
G.B.L. § 349 applies to a broad spectrum of goods and services [ Karlin v. IVF America [20] ( GBL 349...
" on (its) face appl(ies) to virtually all economic activity and (its) application has been correspondingly broad...The reach of (this) statute ' provides needed authority to cope with the numerous, ever-changing types of false and deceptive business practices which plague consumers in our State '" )].G.B.L. § 349 is broader than common law fraud [ Gaidon v. Guardian Life Insurance Company [21] ( " encompasses a significantly wider range of deceptive business practices that were never previously condemned by decisional law " ); State of New York v. Feldman [22] ( G.B.L. § 349 " was intended to be broadly applicable, extending far beyond the reach of common law fraud " )]. Hence, G.B.L. § 349 claims are governed by a three-year period of limitations [ C.P.L.R. 241(2) ]. G.B.L. § 349 claims accrue when the consumer " has been injured by a deceptive act [23]" . G.B.L. § 349 does not apply to the claims of non-residents who did not enter into contracts in New York State [ Goshen v. Mutual Life Insurance Company [24] ] or received services in New York State [ Scott v. Bell Atlantic Corp. ].[25] And, lastly, a G.B.L. § 349 claim " does not need to be based on an independent private right of action " [ Farino v. Jiffy Lube International, Inc. ].[26]
[C] Territorial Limitations
In Goshen v. The Mutual Life Ins. Co. [27][ consumers of vanishing premium insurance policies ] and Scott v. Bell Atlantic Corp. ,[28] [ consumers of Digital Subscriber Line ( DSL ) [29] Internet services ], the Court of Appeals, not wishing to " tread on the ability of other states to regulate their own markets and enforce their own consumer protection laws " and seeking to avoid " nationwide, if not global application " , held that G.B.L. § 349 requires that " the transaction in which the consumer is deceived must occur in New York ". Following this latest interpretation [30] of the " territorial reach " of G.B.L. § 349 the Court in Truschel v. Juno Online Services, Inc.[31] , a consumer class action alleging misrepresentations by a New York based Internet service provider, dismissed the G.B.L. § 349 claim because the named representative entered into the Internet contract in Arizona. Notwithstanding the Goshen territorial limitation, the Court in Peck v. AT&T Corp .[32], a G.B.L. § 349 consumer class action involving cell phone service which" improperly credited calls causing ( the class ) to lose the benefit of weekday minutes included in their calling plans ",approved a proposed settlement on behalf of residents in New York, New Jersey and Connecticut
[ " it would be a waste of judicial resources to require a different [ G.B.L. § 349 ] class action in each state...where, as here, the defendants have marketed their plans on a regional ( basis ) " ].
[D] Types Of Goods & Services Covered By G.B.L. § 349
The types of goods and services to which G.B.L. § 349 applies include the following:
[1] Apartment Rentals [ Bartolomeo v. Runco[33] and Anilesh v. Williams [34] ( renting illegal apartments ); Yochim v. McGrath[35] ( renting illegal sublets )];
[2] Attorney Advertising [ People v. Law Offices of Andrew F. Capoccia[36] ( " The alleged conduct the instant lawsuit seeks to enjoin and punish is false, deceptive and fraudulent advertising practices " ); Aponte v. Raychuk[37] ( deceptive attorney advertisements [ " Divorce, Low Fee, Possible 10 Days, Green Card " ] violated Administrative Code of City of New York §§ 20-70C et seq )];
[3] Aupair Services [ Oxman v. Amoroso[38] ( misrepresenting the qualifications of an abusive aupair to care for handicapped children )];
[4] Arbitrator's Award; Refusal To Pay [ Lipscomb v. Manfredi Motors [39] ( auto dealer's refusal to pay arbitrator's award under G.B.L. § 198-b ( Used Car Lemon Law ) is unfair and deceptive business practice under G.B.L. § 349 )];
[5] Auctions; Bid Rigging [ State of New York v. Feldman[40] ( scheme to manipulate public stamp auctions comes " within the purview of ( G.B.L. § 349 ) " )];
[6] Automotive; Contract Disclosure Rule [ Levitsky v. SG Hylan Motors, Inc .[41] ( violation of G.B.L. § 396-p " and the failure to adequately disclose the costs of the passive alarm and extended warranty constitute a deceptive action ( per se violation of G.B.L. § 349 ); Spielzinger v. S.G. Hylan Motors Corp. [42] ( failure to disclose the true cost of " Home Care Warranty " and " Passive Alarm ", failure to comply with provisions of G.B.L. § 396-p and G.B.L. § 396-q; per se violations of G.B.L. § 349 )];
[6-a] Baldness Products [ Karlin v. IVF [43] ( reference to unpublished decision applying G.B.L. § 349 to products for treatment of balding and baldness );
Mountz v. Global Vision Products, Inc. [44] ( " Avacor, a hair loss treatment extensively advertised on television...as the modern day equivalent of the sales pitch of a snake oil salesman "; allegations of misrepresentations of " no known side effects ' of Avacor is refuted by documented minoxidil side effects " )];
[7] Budget Planning [ People v. Trescha Corp. [45] ( company misrepresented itself as a budget planner which
" involves debt consolidation and...negotiation by the budget planner of reduced interest rates with creditors and the cancellation of the credit cards by the debtors...the debtor agrees to periodically send a lump sum payment to the budget planner who distributes specific amounts to the debtor's creditors " )];
[8] Cars [ People v. Condor Pontiac [46] ( used car dealer violated G.B.L. § 349 and V.T.L. § 417 in failing to disclose that used car was
" previously used principally as a rental vehicle "; " In addition ( dealer violated ) 15 NYCRR §§ 78.10(d), 78.11(12),(13)...fraudulently and/or illegally forged the signature of one customer, altered the purchase agreements of four customers after providing copies to them, and transferred retail certificates of sale to twelve (12) purchasers which did not contain odometer readings...( Also ) violated 15 NYCRR § 78.13(a) by failing to give the purchaser a copy of the purchase agreement in 70 instances ( all of these are deceptive acts ) " );Spielzinger v. S.G. Hylan Motors Corp. [47] ( failure to disclose the true cost of " Home Care Warranty " and " Passive Alarm ", failure to comply with provisions of G.B.L. § 396-p and G.B.L. § 396-q; per se violation of G.B.L. § 349 )];
[9] Cell Phones [ Naevus International, Inc. v. AT&T Corp.[48] , ( wireless phone subscribers seek damages for " frequent dropped calls, inability to make or receive calls and failure to obtain credit for calls that were involuntarily disconnected " )];
[9-1] Checking Accounts [ Sherry v. Citibank [49]
( " plaintiff stated ( G.B.L. §§ 349, 350 claims ) for manner in which defendant applied finance charges for its checking plus ' accounts since sales literature could easily lead potential customer to reasonable belief that interest would stop accruing once he made deposit to his checking account sufficient to pay off amount due on credit line " )].
[10] Clothing Sales [ Baker v. Burlington Coat Factory [50] ( refusing to refund purchase price in cash for defective and shedding fake fur )];
[11] Credit Cards [ People v. Telehublink [51]
( " telemarketers told prospective customers that they were pre-approved for a credit card and they could receive a low-interest credit card for an advance fee of approximately $220. Instead of a credit card, however, consumers who paid the fee received credit card applications, discount coupons, a merchandise catalog and a credit repaid manual " );Sims v. First Consumers National Bank ,[52]
( " The gist of plaintiffs' deceptive practices claim is that the typeface and location of the fee disclosures, combined with high-pressure advertising, amounted to consumer conduct that was deceptive or misleading " );Broder v. MBNA Corporation[53] ( credit card company misrepresented the application of its low introductory annual percentage rate to cash advances )];
[12] Customer Information [ Anonymous v. CVS Corp. [54] ( CVS acquired the customer files from 350 independent pharmacies without customers' consent; the
" practice of intentionally declining to give customers notice of an impending transfer of their critical prescription information in order to increase the value of that information appears to be deceptive " )];
[13] Defective Automobile Ignition Switches [ Ritchie v. Empire Ford Sales, Inc. [55] ( dealer liable for damages to used car that burned up 4 ½ years after sale )];
[14] Defective Brake Shoes [ Giarrantano v. Midas Muffler [56]( Midas Muffler fails to honor brake shoe warranty )];
[15] Defective Dishwashers [ People v. General Electric Co., Inc [57]( misrepresentations " made by...GE to the effect that certain defective dishwashers it manufactured were not repairable " was deceptive under G.B.L. § 349 )];
[16] Door-To-Door Sales [ New York Environmental Resources v. Franklin [58],( misrepresented and grossly overpriced water purification system ); Rossi v. 21st Century Concepts, Inc. [59] ( selling misrepresented and overpriced pots and pans )];
[17] Educational Services [ Andre v. Pace University [60] ( failing to deliver computer programming course for beginners ); Brown v. Hambric [61] ( failure to deliver travel agent education program )];
[18] Employee Scholarship Programs[ Cambridge v. Telemarketing Concepts, Inc. [62] ( refusal to honor agreement to provide scholarship to employee )];
[19] Excessive & Unlawful Bail Bond Fees [ McKinnon v. International Fidelity Insurance Co. [63]( misrepresentation of expenses in securing bail bonds )];
[20] Exhibitions and Conferences [ Sharknet Inc. v. Telemarketing, NY Inc. [64]( misrepresenting length of and number of persons attending Internet exhibition )];
[21] Furniture Sales [ Petrello v. Winks Furniture [65] ( misrepresenting a sofa as being covered in Ultrasuede HP and protected by a 5 year warranty ); Walker v. Winks Furniture [66] ( falsely promising to deliver furniture within one week ); Filpo v. Credit Express Furniture Inc. [67] ( failing to inform Spanish speaking consumers of a three day cancellation period ); Colon v. Rent-A-Center, Inc. [68]( rent-to-own furniture; " an overly inflated cash price " for purchase may violate G.B.L. § 349 )];
[22] Hair Loss Treatment [ Mountz v. Global Vision Products, Inc. [69] ( " marketing techniques ( portrayed ) as the modern day equivalent of the sales pitch of a snake oil salesman ", alleged misrepresentations of " no known side effects " without revealing documented side effects " which include cardiac changes, visual disturbances, vomiting, facial swelling and exacerbation of hair loss "; G.B.L. § 349 claim stated for New York resident " deceived in New York " )];
[23] Home Heating Oil; Unilateral Price Increase [ State v. Wilco Energy Corp. [70] ( home heating oil company's " conduct constituted a deceptive practice. It offered a fixed-price contract and then refused to comply with its most material term-an agreed-upon price for heating oil " )];
[24] Home Inspections [ Ricciardi v. Frank d/b/a/ InspectAmerica Enginerring,P.C. [71]( civil engineer liable for failing to discover wet basement ) ];
[25] In Vitro Fertilization [ Karlin v. IVF America, Inc. [72] ( misrepresentations of in vitro fertilization rates of success )]; [26] Insurance [ Gaidon v. Guardian Life Insurance Co. & Goshen v. Mutual Life Insurance Co. [73] ( misrepresentations that " out-of-pocket premium payments ( for life insurance policies ) would vanish within a stated period of time " ); Monter v. Massachusetts Mutual Life Ins. Co.[74] ( misrepresentations with respect to the terms " Flexible Premium Variable Life Insurance Policy " ); Skibinsky v. State Farm Fire and Casualty Co. [75] ( misrepresentation of the coverage of a " builder's risk " insurance policy ); Makuch v. New York Central Mutual Fire Ins. Co. [76] ( " violation of ( G.B.L. § 349 for disclaiming ) coverage under a homeowner's policy for damage caused when a falling tree struck plaintiff's home " ); Brenkus v. Metropolitan Life Ins. Co. [77] ( misrepresentations by insurance agent as to amount of life insurance coverage ); Acquista v. New York Life Ins. Co. [78]
( " allegation that the insurer makes a practice of inordinately delaying and then denying a claim without reference to its viability "" may be said to fall within the parameters of an unfair or deceptive practice " );Rubinoff v. U.S. Capitol Insurance Co. [79] ( automobile insurance company fails to provide timely defense to insured ); Makastchian v. Oxford Health Plans, Inc. [80] ( practice of terminating health insurance policies without providing 30 days notice violated terms of policy and was a deceptive business practice because subscribers may have believed they had health insurance when coverage had already been canceled )];
[27] Internet Marketing & Services
[ Zurakov v. Register.Com, Inc.[81] ( " Given plaintiff's claim that the essence of his contract with defendant was to establish his exclusive use and control over the domain name ' Laborzionist.org ' and that defendant's usurpation of that right and use of the name after registering it for plaintiff defeats the very purpose of the contract, plaintiff sufficiently alleged that defendant's failure to disclose its policy of placing newly registered domain names on the ' Coming Soon ' page was material "and constitutes a deceptive act under G.B.L. § 349 );
People v. Network Associates, Inc. [82]( " Petitioner argues that the use of the words ' rules and regulations ' in the restrictive clause ( prohibiting testing and publication of test results of effectiveness of McAfee antivirus and firewall software ) is designed to mislead consumers by leading them to believe that some rules and regulations outside ( the restrictive clause ) exist under state or federal law prohibiting consumers from publishing reviews and the results of benchmark tests...the language is ( also ) deceptive because it may mislead consumers to believe that such clause is enforceable under the lease agreement, when in fact it is not...as a result consumers may be deceived into abandoning their right to publish reviews and results of benchmark tests " );People v. Lipsitz [83] ( failing to deliver purchased magazine subscriptions ); Scott v. Bell Atlantic Corp. , [84] ( misrepresented Digital Subscriber Line ( DSL ) [85] Internet services )];
[28] " Knock-Off " Telephone Numbers
[ Drizin v. Sprint Corp. [86] ( " defendants' admitted practice of maintaining numerous toll-free call service numbers identical, but for one digit, to the toll-free call service numbers of competitor long-distance telephone service providers. This practice generates what is called ' fat-fingers ' business, i.e., business occasioned by the misdialing of the intended customers of defendant's competing long-distance service providers. Those customers, seeking to make long-distance telephone calls, are, by reason of their dialing errors and defendants' many ' knock-off ' numbers, unwittingly placed in contact with defendant providers rather than their intended service providers and it is alleged that, for the most part, they are not advised of this circumstance prior to completion of their long-distance connections and the imposition of charges in excess of those they would have paid had they utilized their intended providers. These allegations set forth a deceptive and injurious business practice affecting numerous consumers ( under G.B.L. 349 ) " )];
[29] Lasik Eye Surgery [ Gabbay v. Mandel [87]( medical malpractice and deceptive advertising arising from lasik eye surgery )];
[29-1] Layaway Plans [ Amiekumo v. Vanbro Motors, Inc. [88]( failure to deliver vehicle purchased on layaway plan and comply with statutory disclosure requirements; a violation of G.B.L. § 396-t is a per se violation of G.B.L. § 349 ];
[30] Liquidated Damages Clause [ Morgan Services, Inc. v. Episcopal Church Home & Affiliates Life Care Community, Inc .[89] ( it is deceptive for seller to enter
" into contracts knowing that it will eventually fail to supply conforming goods and that, when the customer complains and subsequently attempts to terminate the contract ( seller ) uses the liquidated damages clause of the contract as a threat either to force the customer to accept the non-conforming goods or to settle the lawsuit " )];
[31] Loan Applications [ Dunn v. Northgate Ford, Inc. [90] ( automobile dealer completes and submits loan application to finance company and misrepresents teenage customer's ability to repay loan which resulted in default and sale of vehicle )];
[32] Mislabeling [ Lewis v. Al DiDonna [91]( pet dog dies from overdose of prescription drug, Feldene, mislabeled " 1 pill twice daily ' when should have been " one pill every other day " )];
[32-a] Monopolistic Business Practices
[ Cox v. Microsoft Corporation [92]( " allegations that Microsoft engaged in purposeful, deceptive monopolistic business practices; including entering into secret agreements with computer manufacturers and distributors to inhibit competition and technological development and creating an ' applications barrier ' in its Windows software that, unbeknownst to consumers, rejected competitors' Intel-compatible PC operating systems, and that such practices resulted in artificially inflated prices for defendant's products and denial of consumer access to competitors' innovations, services and products " )];
[33] Mortgages
[ Kidd v. Delta Funding Corp. [93]( " The defendants failed to prove that their act of charging illegal processing fees to over 20,000 customers, and their failure to notify the plaintiffs of the existence and terms of the settlement agreement, were not materially deceptive or misleading " );Walts v. First Union Mortgage Corp .[94] ( consumers induced to pay for private mortgage insurance beyond requirements under New York Insurance Law § 6503 ); Negrin v. Norwest Mortgage, Inc. [95]( mortgagors desirous of paying off mortgages charged illegal and unwarranted fax and recording fees ); Trang v. HSBC Mortgage Corp., USA [96]( $15.00 special handling/fax fee for a faxed copy of mortgage payoff statement violates R.P.L. § 274-a(2)(a) which prohibits charges for mortgage related documents and is deceptive as well )];
[34] Motor Oil Changes [ Farino v. Jiffy Lube International, Inc. [97] ( an " Environmental Surcharge " of $.80 to dispose of used motor oil after every automobile oil change may be deceptive since under Environmental Conservation Law § 23-2307 Jiffy was required to accept used motor oil at no charge )];
[35] Movers; Household Goods [ Goretsky v. ½ Price Movers, Inc . [98] ( " failure to unload the household goods and hold them ' hostage ' is a deceptive practice under " G.B.L. § 349 )];
[36] Professional Networking [ BNI New York Ltd. v. DeSanto [99]( enforcing an unconscionable membership fee promissory note ) ];
[37] Privacy [ Anonymous v. CVS Corp .[100] ( sale of confidential patient information by pharmacy to a third party is " an actionable deceptive practice " under G.B.L. 349 ); Smith v. Chase Manhattan Bank [101] ( same )];
[38] Pyramid Schemes [ C.T.V. Inc. v. Curlen [102] ( selling bogus " Beat The System Program " certificates ); Brown v. Hambric [103]( selling misrepresented instant travel agent credentials and educational services )];
[39] Real Estate Sales [ Gutterman v. Romano Real Estate [104] ( misrepresenting that a house with a septic tank was connected to a city sewer system ); Board of Mgrs, of Bayberry Greens Condominium v. Bayberry Greens Associates [105] ( deceptive advertisement and sale of condominium units ); B.S.L. One Owners Corp. v. Key Intl. Mfg. Inc.[106] ( deceptive sale of shares in a cooperative corporation ); Breakwaters Townhouses Ass'n. v. Breakwaters of Buffalo, Inc. [107]( condominium units ); Latiuk v. Faber Const. Co. [108]( deceptive design and construction of home ); Polonetsky v. Better Homes Depot, Inc. [109]( N.Y.C. Administrative Code §§ 20-700 et seq ( Consumer Protection Law ) applies to business of buying foreclosed homes and refurbishing and reselling them as residential properties; misrepresentations that recommended attorneys were approved by Federal Housing Authority deceptive )];
[40] Securities [ Not Covered By G.B.L. § 349 ][ Gray v. Seaboard Securities, Inc. [110] ( G.B.L. § 349 provides no relief for consumers alleging injury arising from the deceptive or misleading acts of a trading company ); Fesseha v. TD Waterhouse Investor Services, Inc. [111]
( " Finally, section 349 does not apply here because, in addition to being a highly regulated industry, investments are not consumer goods " );Berger v. E*Trade Group, Inc. [112]
( " Securities instruments, brokerage accounts and services ancillary to the purchase of securities have been held to be outside the scope of the section " );But see Scalp & Blade, Inc. v. Advest, Inc. [113] ( G.B.L. § 349 covers securities transactions )];
[41] Sports Nutrition Products [ Morelli v. Weider Nutrition Group, Inc. [114] ,( manufacturer of Steel Bars, a high-protein nutrition bar, misrepresented the amount of fat, vitamins, minerals and sodium therein )];
[42] Termite Inspections [ Anunziatta v. Orkin Exterminating Co., Inc. [115] ( misrepresentations of full and complete inspections of house and that there were no inaccessible areas are misleading and deceptive )];
[43] Tobacco Products [ Blue Cross and Blue Shield of New Jersey, Inc. v. Philip Morris Inc.[116], ( tobacco companies' scheme to distort body of public knowledge concerning the risks of smoking, knowing public would act on companies' statements and omissions was deceptive and misleading )];
[44] Transportation Services, E-Z Passes [ Kinkopf v. Triborough Bridge & Tunnel Authority [117] ( E-Z pass contract fails to reveal necessary information to customers wishing to make a claim and " on its face constitutes a deceptive practice " )];
[45] Travel Services [ Meachum v. Outdoor World Corp. [118] ( misrepresenting availability and quality of vacation campgrounds; Vallery v. Bermuda Star Line, Inc.[119] ( misrepresented cruise ); Pellegrini v. Landmark Travel Group [120] ( refundability of tour operator tickets misrepresented ); People v. P.U. Travel, Inc. [121] ( Attorney General charges travel agency with fraudulent and deceptive business practices in failing to deliver flights to Spain or refunds )];
[46] TV Repair Shops [ Tarantola v. Becktronix, Ltd .[122] ( TV repair shop's violation of
" Rules of the City of New York ( 6 RCNY 2-261 et seq )...that certain procedures be followed when a licensed dealer receives an electronic or home appliance for repair...constitutes a deceptive practice under ( G.B.L. § 349 )" )];
[47] Wedding Singers [ Bridget Griffin-Amiel v. Frank Terris Orchestras [123]( the bait and switch [124] of a
" 40-something crooner " for the " 20-something " Paul Rich " who promised to deliver a lively mix of pop hits, rhythm-and-blues and disco classics " ) ].For broken engagements and disputes over wedding preparations, generally, see DeFina v. Scott. [125]
4] False Advertising: G.B.L. § 350
Consumers who rely upon false advertising and purchase defective goods or services may claim a violation of G.B.L. § 350 [ Scott v. Bell Atlantic Corp. [126] ( defective ' high speed ' Internet services falsely advertised ); Card v. Chase Manhattan Bank [127] ( bank misrepresented that its LifePlus Credit Insurance plan would pay off credit card balances were the user to become unemployed )]. G.B.L. § 350 prohibits false advertising which" means advertising, including labeling, of a commodity...if such advertising is misleading in a material respect...( covers )....representations made by statement, word, design, device, sound...but also... advertising ( which ) fails to reveal facts material " .[128]G.B.L. § 350 covers a broad spectrum of misconduct
[ Karlin v. IVF America [129] ( " ( this statute ) on ( its ) face appl(ies) to virtually all economic activity and ( its ) application has been correspondingly broad " )].Proof of a violation of G.B.L. 350 is simple, i.e., " the mere falsity of the advertising content is sufficient as a basis for the false advertising charge " [ People v. Lipsitz [130] ( magazine salesman violated G.B.L. § 350;
" ( the ) ( defendant's ) business practice is generally ' no magazine, no service, no refunds " although exactly the contrary is promised " ].However, unlike a claim under G.B.L. § 349 plaintiffs must prove reliance on false advertising to establish a violation of G.B.L. § 350 [ Pelman v. McDonald's Corp. [131] ( G.B.L. § 350 requires proof of reliance );
Gale v. International Business Machines Corp. [132] ( " Reliance is not an element of a claim under ( G.B.L. § 349 )...claims under ( G.B.L. § 350 )...do require proof of reliance " )].
5] Cars, Cars, Cars
There are a variety of consumer protection statutes available to purchasers and lessees of automobiles, new and used. A comprehensive review of five of these statutes [ GBL § 198-b[133] ( Used Car Lemon Law ), express warranty [134], implied warranty of merchantability [135] ( U.C.C. §§ 2-314, 2-318 ), Vehicle and Traffic Law [ V&T ] § 417, strict products liability [136]] appears in Ritchie v. Empire Ford Sales, Inc. [137], a case involving a used 1990 Ford Escort which burned up 4 ½ years after being purchased because of a defective ignition switch. A comprehensive review of two other statutes [ GBL § 198-a ( New Car Lemon Law ) and GBL § 396-p ( New Car Contract Disclosure Rules )] appears in Borys v. Scarsdale Ford, Inc. [138], a case involving a new Ford Crown Victoria, the hood, trunk and both quarter panels of which had been negligently repainted prior to sale.
[A] Automotive Parts Warranty: G.B.L. § 617(2)(a)
" The extended warranty and new parts warranty business generates extraordinary profits for the retailers of cars, trucks and automotive parts and for repair shops. It has been estimated that no more than 20% of the people who buy warranties ever use them... Of the 20% that actually try to use their warranties... ( some ) soon discover that the real costs can easily exceed the initial cost of the warranty certificate " .[139]In Giarratano v. Midas Muffler [140], Midas would not honor its brake shoe warranty unless the consumer agreed to pay for additional repairs found necessary after a required inspection of the brake system. G.B.L. § 617(2)(a) protects consumers who purchase new parts or new parts' warranties from breakage or a failure to honor the terms and conditions of a warranty
[ " If a part does not conform to the warranty...the initial seller shall make repairs as are necessary to correct the nonconformity " ].[141]A violation of G.B.L. § 617(2)(a) is a per se violation of G.B.L. § 349 which provides for treble damages, attorneys fees and costs .[142]
[B] Auto Repair Shop Duty To Perform Quality Repairs
Service stations should perform quality repairs. Quality repairs are those repairs held by those having knowledge and expertise in the automotive field to be necessary to bring a motor vehicle to its premalfunction or predamage condition [ Welch v. Exxon Superior Service Center [143]( consumer sought to recover $821.75 from service station for failing to make proper repairs to vehicle;" While the defendant's repair shop was required by law to perform quality repairs, the fact that the claimant drove her vehicle without incident for over a year following the repairs indicates that the vehicle had been returned to its premalfunction condition following the repairs by the defendant, as required " );Shalit v. State of New York [144]( conflict in findings in Small Claims Court in auto repair case with findings of Administrative Law Judge under VTL § 398 ).
[C] Implied Warranty Of Merchantability: U.C.C. §§ 2-314, 2-318; Delivery Of Non-Conforming Goods: U.C.C. § 2-608
Both new and used cars carry with them an implied warranty of merchantability [ U.C.C. §§ 2-314, 2-318 ][ Denny v. Ford Motor Company ].[145] Although broader in scope than the Used Car Lemon Law the implied warranty of merchantability does have its limits, i.e., it is time barred four years after delivery [ U.C.C. § 2-725; Hull v. Moore Mobile Homes Stebra, Inc .,[146] ( defective mobile home; claim time barred )] and the dealer may disclaim liability under such a warranty [ U.C.C. § 2-316 ] if such a disclaimer is written and conspicuous [ Natale v. Martin Volkswagen, Inc. [147]( disclaimer not conspicuous )]. A knowing misrepresentation of the history of a used vehicle may state a claim under U.C.C. § 2-608 for the delivery of non-conforming goods [ Urquhart v. Philbor Motors, Inc. [148]][D] Magnuson-Moss Warranty Act & Leased Vehicles: 15 U.S.C. §§ 2301 et seq
In Tarantino v. DaimlerChrysler Corp. [149], DiCinto v. Daimler Chrysler Corp. [150]and Carter-Wright v. DaimlerChrysler Corp. [151] , it was held that the Magnuson-Moss Warranty Act, 15 U.S.C. §§ 2301 et seq. applies to automobile lease transactions. However, in DiCintio v. DaimlerChrysler Corp. [152], the Court of Appeals held that the Magnuson-Moss Warranty Act does not apply to automobile leases.[E] New Car Contract Disclosure Rule: G.B.L. § 396-p
In Borys v. Scarsdale Ford, Inc.[153] , a consumer demanded a refund or a new car after discovering that a new Ford Crown Victoria had several repainted sections. The Court discussed liability under G.B.L. § 198-a ( New Car Lemon Law ) and G.B.L. § 396-p(5) ( Contract Disclosure Requirements )
[ " gives consumers statutory rescission rights ' in cases where dealers fail to provide the required notice of prior damage and repair(s)' ( with a ) ' retail value in excess of five percent of the lesser of manufacture's or distributor's suggested retail price '" ].In Borys the Court dismissed the complaint finding (1) that under G.B.L. § 198-a the consumer must give the dealer an opportunity to cure the defect and (2) that under G.B.L. § 396-p(5) Small Claims Court would not have jurisdiction [ money damages of $3,000 ] to force " defendant to give...a new Crown Victoria or a full refund, minus appropriate deductions for use ". In Levitsky v. SG Hylan Motors, Inc. [154] a car dealer overcharged a customer for a 2003 Honda Pilot and violated G.B.L. 396-p by failing to disclose the " estimated delivery date and place of delivery...on the contract of sale ". The Court found that the violation of G.B.L. § 396-p
" and the failure to adequately disclose the costs of the passive alarm and extended warranty constitutes a deceptive act ( in violation of G.B.L. § 349 ). Damages included " $2,251.50, the $2,301.50 which he overpaid, less the cost of the warranty of $50.00 "and punitive damages under G.B.L. § 349(h) bringing the award up to $3,000.00, the jurisdictional limit of Small Claims Court.
And in Spielzinger v. S.G. Hylan Motors Corp. [155]( failure to disclose the true cost of " Home Care Warranty " and " Passive Alarm ", failure to comply with provisions of G.B.L. § 396-p ( confusing terms and conditions, failure to notify consumer of right to cancel ) and G.B.L. § 396-q ( dealer failed to sign sales contract ); per se violations of G.B.L. § 349 with damages awarded of $734.00 ( overcharge for warranty ) and $1,000 statutory damages ).
[F] New Car Lemon Law: G.B.L. § 198-a
New York State's New Car Lemon Law [ G.B.L. § 198-a ] provides that" If the same problem cannot be repaired after four or more attempts; Or if your car is out of service to repair a problem for a total of thirty days during the warranty period; Or if the manufacturer or its agent refuses to repair a substantial defect within twenty days of receipt of notice sent by you...Then you are entitled to a comparable car or refund of the purchase price " [ Borys v. Scarsdale Ford, Inc. [156] ].Before commencing a lawsuit seeking to enforce the New Car Lemon Law the dealer must be given an opportunity to cure the defect [ Chrysler Motors Corp. v. Schachner [157] ( dealer must be afforded a reasonable number of attempts to cure defect )]. The consumer may utilize the statutory repair presumption after four unsuccessful repair attempts after which the defect is still present .[158] However, the defect need not be present at the time of arbitration hearing .[159] See, generally, Kucher v. DaimlerChrycler Corp . [160]( judgment for defendant )]. Attorneys fees and costs may be awarded to the prevailing consumer [ DaimlerChrysler Corp. v. Karman [161]( $5,554.35 in attorneys fees and costs of $300.00 awarded )].
[G] Used Car Dealer Licensing: C.P.L.R. § 3015(e)
In B & L Auto Group, Inc. v. Zilog [162] a used car dealer sued a customer to collect the $2,500.00 balance due on the sale of a used car. Because the dealer failed to have a Second Hand Automobile Dealer's license pursuant to New York City Department of Consumer Affairs when the car was sold the Court refused to enforce the sales contract pursuant to C.P.L.R. § 3015(e).[H] Used Car Extended Warranty
In Barthley v. Autostar Funding LLC [163] the consumer purchased a 1993 Lexus with over 110,000 miles and an extended warranty on the vehicle. After the vehicle experienced engine problems and a worn cam shaft was replaced at a cost of $1,733.66 the consumer made a claim under the extended warranty. The claim was rejected by the warranty company " on the basis that a worn camshaft was a pre-existing condition ". The Court found this rejection unconscionable and awarded damages to cover the cost of the new camshaft.
" In effect, the warranty company has chosen to warranty a ten year old car with over 110,000 miles on the odometer and then rejects a timely claim on the warranty on the basis that the car engine's internal parts are old and worn ".
[I] Used Car Lemon Law: G.B.L. § 198-b
New York State's Used Car Lemon Law [ G.B.L. § 198-b ] provides limited warranty protection for ninety days or 4,000 miles, whichever comes first, for vehicles with odometer readings of less than 36,000 [ Cintron v. Tony Royal Quality Used Cars, Inc. [164] ( defective 1978 Chevy Malibu returned within thirty days and full refund awarded )]. Used car dealers must be given an opportunity to cure a defect before the consumer may commence a lawsuit enforcing his or her rights under the Used Car Lemon Law [ Milan v. Yonkers Avenue Dodge, Inc. [165] ( dealer must have opportunity to cure defects in used 1992 Plymouth Sundance ) ]. The Used Car Lemon Law does not preempt other consumer protection statutes [ Armstrong v. Boyce ] [166], does not apply to used cars with more than 100,000 miles when purchased [167] and has been applied to used vehicles with coolant leaks [ Fortune v. Scott Ford, Inc. [168] ], malfunctions in the steering and front end mechanism [ Jandreau v. LaVigne [169]], stalling and engine knocking [ Ireland v. JL's Auto Sales, Inc. [170] ] and vibrations [ Williams v. Planet Motor Car, Inc. [171] ] . An arbitrator's award may be challenged in a special proceeding [ C.P.L.R. 7502 ] [ Lipscomb v. Manfredi Motors [172] ]. Recoverable damages include the return of the purchase price and repair and diagnostic costs [ Williams v. Planet Motor Car, Inc. [173] ].[J] Warranty Of Serviceability: V.T.L. § 417
Used car buyers are also protected by Vehicle and Traffic Law § 417 [ " V&T § 417 " ] which requires used car dealers to inspect vehicles and deliver a certificate to buyers stating that the vehicle is in condition and repair to render, under normal use, satisfactory and adequate service upon the public highway at the time of delivery. V&T § 417 is a non-waiveable, nondisclaimable, indefinite, warranty of serviceability which has been liberally construed [ Barilla v. Gunn Buick Cadillac-GNC, Inc.[174] ; Ritchie v. Empire Ford Sales, Inc. [175] ( dealer liable for Ford Escort that burns up 4 ½ years after purchase ); People v. Condor Pontiac [176] ( used car dealer violated G.B.L. § 349 and V.T.L. § 417 in failing to disclose that used car was" previously used principally as a rental vehicle "; " In addition ( dealer violated ) 15 NYCRR §§ 78.10(d), 78.11(12), (13)...fraudulently and/or illegally forged the signature of one customer, altered the purchase agreements of four customers after providing copies to them, and transferred retail certificates of sale to twelve (12) purchasers which did not contain odometer readings...( Also ) violated 15 NYCRR § 78.13(a) by failing to give the purchaser a copy of the purchase agreement in 70 instances ( all of these are deceptive acts ) "];recoverable damages include the return of the purchase price and repair and diagnostic costs [ Williams v. Planet Motor Car, Inc. [177] ].
[K] Repossession & Sale Of Vehicle
In Coxall v. Clover Commercials Corp.[178] , the consumer purchased a" 1991 model Lexus automobile, executing a Security Agreement/Retail Installment Contract. The ' cash price ' on the Contract was $8,100.00 against which the Coxalls made a ' cash downpayment ' of $3,798.25 ".After the consumers stopped making payments because of the vehicle experienced mechanical difficulties the Lexus was repossessed and sold. In doing so, however, the secured party failed to comply with U.C.C. § 9-611(b) which requires " ' a reasonable authenticated notification of disposition ' to the debtor " and U.C.C § 9-610(b) ( " the sale must be ' commercially reasonable ' " ). Statutory damages awarded offset by defendant's breach of contract damages.
6] Homes
[A] Home Improvement Contracts & Frauds: G.B.L. §§ 771, 772
G.B.L. § 771 requires that home improvement contracts be in writing and executed by both parties. A failure to sign a home improvement contract means it can not be enforced in a breach of contract action [ Precision Foundations v. Ives [179]]. G.B.L. § 772 provides homeowners victimized by unscrupulous home improvement contractors [ who make " false or fraudulent written statements " ] with statutory damages of $500.00, reasonable attorneys fees and actual damages [ Udezeh v. A+Plus Construction Co. [180] ( statutory damages of $500.00, attorneys fees of $1,500.00 and actual damages of $3,500.00 awarded ); Garan v. Don & Walt Sutton Builders, Inc. [181]( construction of a new, custom home falls within the coverage of G.B.L. § 777(2) and not G.B.L. § 777-a(4) )].[B] Home Improvement Contractor Licensing: C.P.L.R. § 3015(e)
Homeowners often hire home improvement contractors to repair or improve their homes or property. Home improvement contractors must, at least, be licensed by the Department of Consumer Affairs of New York City, Westchester County, Suffolk County, Rockland County, Putnam County and Nassau County if they are to perform services in those Counties [ C.P.L.R. § 3015(e) ]. Should the home improvement contractor be unlicenced he will be unable to sue the homeowner for non-payment for services rendered [ Tri-State General Remodeling Contractors, Inc v. Inderdai Baijnauth [182] ( salesmen do not have to have a separate license );Routier v. Waldeck [183]( " The Home Improvement Business provisions...were enacted to safeguard and protect consumers against fraudulent practices and inferior work by those who would hold themselves out as home improvement contractors " );Cudahy v. Cohen [184] ( unlicenced home improvement contractor unable to sue homeowner in Small Claims Courts for unpaid bills ); Moonstar Contractors, Inc. v. Katsir [185]( license of sub-contractor can not be used by general contractor to meet licensing requirements )]. Obtaining a license during the performance of the contract may be sufficient [ Mandioc Developers, Inc. v. Millstone [186] ] while obtaining a license after performance of the contract is not sufficient
[ B&F Bldg. Corp. V. Liebig [187] ( " The legislative purpose...was not to strengthen contractor's rights, but to benefit consumers by shifting the burden from the homeowner to the contractor to establish that the contractor is licensed " )].
[C] New Home Implied Warranty Of Merchantability : G.B.L. § 777
G.B.L. § 777 provides, among other things, for a statutory housing merchant warranty [188] for the sale of a new house which for- (1) one year warrants " the home will be free from defects due to a failure to have been constructed in a skillful manner " and for
- 2) two years warrants that " the plumbing, electrical, heating, cooling and ventilation systems of the home will be free from defects due to a failure by the builder to have installed such systems in a skillful manner " and for
- ( (3) six years warrants " the home will free from material defects ".
[D] Movers, Household Goods: 17 N.Y.C.R.R. § 814.7
In Goretsky v. ½ Price Movers, Inc [193] claimant asserted that a mover hired to transport her household goods" did not start at time promised, did not pick-up the items in the order she wanted and when she objected ( the mover ) refused to remover her belongings unless they were paid in full ".The Court noted the absence of effective regulations of movers.
" The biggest complaint is that movers refuse to unload the household goods unless they are paid...The current system is, in effect, extortion where customers sign documents that they are accepting delivery without complaint solely to get their belongings back. This situation is unconscionable ".The Court found a violation of 17 N.Y.C.R.R. § 814.7 when the movers " refused to unload the entire shipment ", violations of G.B.L. § 349 in " that the failure to unload the household goods and hold them ' hostage ' is a deceptive practice " and a failure to disclose relevant information in the contract and awarded statutory damages of $50.00.
[E] Real Estate Brokers' Licenses: R.P.L. § 441(b)
In Olukotun v. Reiff[194] the plaintiff wanted to purchase a legal two family home but was directed to a one family with an illegal apartment. After refusing to purchase the misrepresented two family home she demanded reimbursement of the $400 cost of the home inspection. Finding that the real estate broker violated the competency provisions of R.P.L. § 441(1)(b) ( a real estate broker should have " competency to transact the business of real estate broker in such a manner as to safeguard the interests of the public " ), the Court awarded damages of $400 with interest, costs and disbursements.7] Loans & Credit
[A] Fair Credit Reporting Act: 15 U.S.C. §§ 1681 et seq
[B] Home Ownership and Equity Protection: 15 U.S.C. § 1639
[C] Real Estate Settlement Procedures Act: 12 U.S.C. § 2601
[D] Regulation Z: 12 C.F.R. §§ 226.1 et seq.
[E] Truth In Lending Act: 15 U.S.C. §§ 1601 et seq
Consumers may sue for a violation of several federal statutes which seek to protect borrowers, e.g., including the- (1) Truth In Lending Act, 15 U.S.C.A. §§ 1601-1665 [ TILA [195] ],
- (2) the Fair Credit Reporting Act, 15 U.S.C. § 1681,
- (3) the Real Estate Settlement Procedures Act, 12 U.S.C. § 2601 [ RESPA ],
- (4) the Home Ownership and Equity Protection Act, 15 U.S.C. § 1639 [ HOEPA ] and
- (5) Regulation Z, 13 C.F.R. §§ 226.1 et seq. and recover appropriate damages [ See e.g., Bank of New York v. Walden [196] ( counterclaiming borrowers allege violations of TILA, HOEPA and Regulation Z; " mortgages were placed on...defendants' properties without their knowledge or understanding. Not the slightest attempt at compliance with applicable regulations was made by the lenders. No Truth in Lending disclosures or copies of any of the loan documents signed at the closing were given to the defendants. Thus, plaintiffs did not comply with TILA and Regulation Z...It also appears that the lenders violated HOEPA and Regulation Z in that they extended credit to the defendant based on their collateral rather than considering their incomes...The lenders also violated Regulation Z which prohibits lenders from entering into a balloon payment note with borrowers on high-interest, high fee loans "; injunction preventing eviction issued ); Community Mutual Savings Bank v. Gillen [197]
( borrower counterclaims in Small Claims Court for violation of TILA and is awarded rescission of loan commitment with lender and damages of $400.00; " TILA ( protects consumers ) from the inequities in their negotiating position with respect to credit and loan institutions...( TILA ) requir(es) lenders to provide standard information as to costs of credit including the annual percentage rate, fees and requirements of repayment...( TILA ) is liberally construed in favor of the consumer...The borrower is entitled to rescind the transaction ' until midnight of the third business day following the consummation of the transaction or the delivery of the information and rescission forms required ... together with a statement containing the material disclosures required... whichever is later...The consumer can opt to rescind for any reasons, or for no reason " ); Rochester Home Equity, Inc. v. Upton [198] ( mortgage lock-in fee agreements are covered by TILA and RESPA; " There is nothing in the New York regulations concerning lock-in agreements that sets out what disclosures are required and when they must be made...In keeping with the trend toward supplying consumers with more information than market forces alone would provide, TILA is meant to permit a more judicious use of credit by consumers through a ' meaningful disclosure of credit terms '...It would clearly violate the purpose behind TILA and RESPA to allow fees to be levied before all disclosures were made...the court holds that contracts to pay fees such as the lock-in agreements must be preceded by all the disclosures that federal law requires " ); Nova Information Systems, Inc. v. Labatto [199]( consumer seeks charge backs on two credit card payments for unsatisfactory dental work; TILA claim sustained ); Tyk v. Equifax Credit Information Services, Inc. [200] ( consumer who recovered damages under the Fair Credit Reporting Act denied an award of attorneys fees
( " more must be shown than simply prevailing in litigation. It must be shown that the party who did not prevail acted in bad faith or for purposes of harassment " )].
TILA has been held to preempt Personal Property Law provisions governing retail instalment contracts and retail credit agreements [ Albank, FSB v. Foland [201] ] and both TILA and RESPA have been held to " preempt any inconsistent state law " [ Rochester Home Equity, Inc. v. Upton [202] )].
[F] Fees For Mortgage Related Documents: R.P.L. § 274-a(2)(a)
In Dougherty v. North Ford Bank [203] the Court found that the lender had violated R.P.L. § 274-a(2)(a) which prohibits the charging of fees for " for providing mortgage related documents " by charging consumer a $5.00 " Facsimile Fee " and a $25.00 " Quote Fee ". See also: Negrin v. Norwest Mortgage[204] .8] Overcoats Lost At Restaurants: G.B.L. § 201
" For over 100 years consumers have been eating out at restaurants, paying for their meals and on occasion leaving without their simple cloth overcoats...mink coats...mink jackets...racoon coats...Russian sable fur coats...leather coats and, of course, cashmere coats..." .[20]In DiMarzo v. Terrace View [206] , restaurant personnel encouraged a patron to remove his overcoat and then refused to respond to a claim after the overcoat disappeared from their coatroom. In response to a consumer claim arising from a lost overcoat the restaurant may seek to limit its liability to $200.00 as provided for in General Business Law § 201 [ " GBL § 201 " ]. However, a failure to comply with the strict requirements of GBL § 201
[ "' as to property deposited by...patrons in the...checkroom of any...restaurant, the delivery of which is evidenced by a check or receipt therefor and for which no fee or charge is exacted...'" [207] ]allows the consumer to recover actual damages upon proof of a bailment and/or negligence [208] . The enforceability of liability limiting clauses for lost clothing will often depend upon adequacy of notice [ Tannenbaum v. New York Dry Cleaning, Inc. [209] ( clause on dry cleaning claim ticket limiting liability for lost or damaged clothing to $20.00 void for lack of adequate notice ); White v. Burlington Coat Factory [210] ( $100 liability limitation in storage receipt enforced for $1,000 ripped and damaged beaver coat )].
9] Pyramid Schemes: G.B.L. § 359-fff
"' ( a pyramid scheme ) is one in which a participant pays money...and in return receives (1) the right to sell products, and (2) the right to earn rewards for recruiting other participants into the scheme '" . [211]Pyramid schemes are sham money making schemes which prey upon consumers eager for quick riches. General Business Law § 359-fff [ " GBL § 359-fff " ] prohibits " chain distributor schemes " or pyramid schemes voiding the contracts upon which they are based. Pyramid schemes were used in Brown v. Hambric [212] to sell travel agent education programs
[ " There is nothing new ' about NU-Concepts. It is an old scheme, simply, repackaged for a new audience of gullible consumers mesmerized by the glamour of travel industry and hungry for free or reduced cost travel services " ]and in C.T.V., Inc. v. Curlen [213] , to sell bogus " Beat The System Program " certificates. While, at least, one Court has found that only the Attorney General may enforce a violation of GBL 359-fff , other Courts have found that GBL 359-fff [214] gives consumers a private right of action [215] , a violation of which also constitutes a per se violation of GBL 349 which provides for treble damages, attorneys fees and costs [216] .
10] Real Property, Apartments & Co-Ops
[A] Real Property Condition Disclosure Act: R.P.L. §§ 462-465
With some exceptions [ Real Property Law § 463 ] Real Property Law § 462 [ " RPL " ] requires sellers of residential real property to file a disclosure statement detailing known defects. Sellers are not required to undertake an inspection but must answer 48 questions about the condition of the real property. A failure to file such a disclosure statement allows the buyer to receive a $500 credit against the agreed upon price at closing [ RPL § 465 ] . A seller who files such a disclosure statement
" shall be liable only for a willful failure to perform the requirements of this article. For such a wilfull failure, the seller shall be liable for the actual damages suffered by the buyer in addition to any other existing equitable or statutory relief " [ RPL 465(2) ].For an excellent discussion of this statute see Malach v. Chuang [217]( improper completion of disclosure form regarding water damage caused by swimming pool; only monetary remedy available is $500 credit to purchaser; by accepting disclosure form with answers " unknown " purchasers waived claims of defects )].
[B] Warranty Of Habitability: R.P.L. § 235-b
Tenants in Spatz v. Axelrod Management Co. [218] and coop owners in Seecharin v. Radford Court Apartment Corp. [219]brought actions for damages done to their apartments by the negligence of landlords, managing agents or others, i.e., water damage from external or internal sources. Such a claim may invoke Real Property Law § 235-b [ " RPL § 235-b " ] , a statutory warranty of habitability in every residential lease " that the premises...are fit for human habitation ". RPL § 235-b" has provided consumers with a powerful remedy to encourage landlords to maintain apartments in a decent, livable condition "[220]and may be used affirmatively in a claim for property damage[221] or as a defense in a landlord's action for unpaid rent[222] . Recoverable damages may include apartment repairs, loss of personal property and discomfort and disruption[223] .
[C] Duty To Keep Rental Premises In Good Repair: M.D.L. § 78.
In Goode v. Bay Towers Apartments Corp. [224] the tenant sought damages from his landlord arising from burst water pipes under Multiple Dwelling Law § 78 which provides that " Every multiple dwelling...shall be kept in good repair ". The Court applied the doctrine of res ipsa loquitur and awarded damages of $264.87 for damaged sneakers and clothing, $319.22 for bedding and $214.98 for a Playstation and joystick.11] Retail Sales & Leases
[A] Consumer Contract Type Size: C.P.L.R. § 4544
C.P.L.R. § 4544 provides that" any printed contract... involving a consumer transaction...where the print is not clear and legible or is less that eight points in depth...May not be received in evidence in any trial ".C.P.L.R. § 4544 has been applied in consumer cases involving property stolen from a health club locker [225] , car rental agreements [226] , home improvement contracts [227] , insurance policies [228] , dry cleaning contracts[229] and financial brokerage agreements[230] . However, this consumer protection statute is not available if the consumer also relies upon the same size type[231] and does not apply to cruise passenger contracts which are, typically, in smaller type size and are governed by maritime law [ see e.g., Lerner v. Karageorgis Lines, Inc. [232] ( maritime law preempts state consumer protection statute regarding type size; cruise passenger contracts may be in 4 point type ) and may not apply if it conflicts with federal Regulation Z
[ Sims v. First Consumers National Bank [233] ( " Regulation Z does not preempt state consumer protection laws completely but requires that consumer disclosures be ' clearly and conspicuously in writing ' ( 12 CFR 226.5(a)(1)) and, considering type size and placement, this is often a question of fact " )].
[A-1] Dating Services: G.B.L. § 394-c
G.B.L. § 394-c applies to a social referral service which charges a" fee for providing matching of members of the opposite sex, by use of computer or any other means, for the purpose of dating and general social contact "and provides for disclosures, a three day cancellation requirement, a Dating Service Consumer Bill of Rights, a private right of action for individuals seeking actual damages or $50.00 which ever is greater and licensing in cities of 1 million residents [ Grossman v. MatchNet [234] ( plaintiff failed to allege that
" she sustained any ' actual harm ' from defendant's failure to include provisions mandated by the Dating Services Law. Plaintiff has not alleged that she ever sought to cancel or suspend her subscription ( or that any rights were denied her ) " ].
[B] Dogs And Cat Sales: G.B.L. § 752
Disputes involving pet animals are often brought in Small Claims Courts [ see e.g., Mongelli v. Cabral[235]( " The plaintiffs ...and the defendants...are exotic bird lovers. It is their passion for exotic birds, particularly, for Peaches, a five year old white Cockatoo, which is at the heart of this controversy" );Mathew v. Klinger [236]
( " Cookie was a much loved Pekinese who swallowed a chicken bone and died seven days later. Could Cookie's life have been saved had the defendant Veterinarians discovered the presence of the chicken bone sooner? " );O'Brien v. Exotic Pet Warehouse, Inc. [237] ( pet store negligently clipped the wings of Bogey, an African Grey Parrot, who flew away ); Nardi v. Gonzalez [238]
( " Bianca and Pepe are diminutive, curly coated Bichon Frises ( who were viciously attacked by ) Ace...a large 5 year old German Shepherd weighing 110 pounds " );Mercurio v. Weber [239] ( two dogs burned with hair dryer by dog groomer, one dies and one survives, damages discussed ); Lewis v. Al DiDonna [240] ( pet dog dies from overdose of prescription drug, Feldene, mislabeled " 1 pill twice daily ' when should have been " one pill every other day " )].
General Business Law §§ 752 et seq applies to the sale of dogs and cats by pet dealers and gives consumers rescission rights fourteen days after purchase if a licensed veterinarian
" certifies such animal to be unfit for purchase due to illness, a congenital malformation which adversely affects the health of the animal, or the presence of symptoms of a contagious or infectious disease " [ GBL § 753 ].