CONSUMER LAW 2007 UPDATE
THE JUDGE'S GUIDE TO FEDERAL AND NEW YORK STATE CONSUMER PROTECTION STATUTES
August 1, 2007 . See also:•CONSUMER LAW 2008 UPDATE
•CONSUMER LAW 2006 UPDATE
• CONSUMER LAW 2005 UPDATE
•CONSUMER LAW 2003 UPDATE
•CONSUMER LAW 2001 UPDATE
•CONSUMER LAW 2000 UPDATE
Ever since my days as a City Court Judge sitting in the Small Claims Part[i] I have kept track of reported consumer law cases in New York State Courts. 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[ii]. This Paper, prepared annually for New York State Civil Court Judges, discusses those consumer protection statutes most frequently used in New York State courts.
The Methodology Of This Paper
This Paper reports on recent consumer law cases in New York State Small Claims Courts, City Courts, District Courts, Civil Courts and Supreme Courts and categorizes them by the New York State or Federal consumer protection statutes invoked. For example, the most popular consumer protection statute is New York State General Business Law § 349 [ G.B.L § 349 ] which prohibits deceptive and misleading business practices. Under this category there is a description of cases, by type of product or service involved, which have successfully invoked G.B.L. § 349. Other consumer protection statutes are described within the context of product and service categories such as Cars and Loans and Credit. There also tables of both New York State and Federal consumer protection statutes.
Arbitration, Forum Selection, Choice Of Law Clauses
In addition to reviewing recently reported New YorkState consumer law cases, this Paper discusses several substantive and procedural topics which are important in analyzing consumer cases. First, there has been a dramatic increase in the use of mandatory arbitration, forum selection and choice of law clauses in consumer contracts, particularly, in agreements entered into over the Internet[iii]. The enforceability of such clauses is addressed herein.
Process Issues & Standards Of Proof
Second, there has been a much needed effort by some Courts to analyze the process by which consumer agreements are entered into and the appropriate standards of proof regarding the disposition of disputes that arise therefrom such as summary judgment motions made by credit card issuers[iv], confirmation of arbitration awards[v], deceptive practices used by lenders in home equity loan mortgage closings[vi], changing the price in the middle of the term of a fixed-price contract[vii] and improper debt collection methods[viii].
Consumer Class Actions Too
Article 9 of the C.P.L.R.[ix] allows consumers to aggregate similar claims into class actions. The fact patterns in such class actions often provide useful information on new areas of consumer law. The scope of New York State class actions[x]and a review of all New York State class actions reported between January 2005 to January 2007 appears herein.
Table Of Contents
1] Table of N.Y.S. Consumer Protection Statutes
2] Table of Federal Consumer Protection Statutes
2.1] Recent New York State Consumer Law Articles
3] Deceptive and Misleading Business Practices
[A] History & Philosophy
[B] Consumer Oriented Conduct
[C] Stating A Cognizable Claim
[D] Preemption
[E] Actual Injury Necessary
[F] Threshold Of Deception
[G] Scope Of G.B.L. § 349
[H] Statute Of Limitations
[I] Application To Non-Residents
[J] No Independent Claim Necessary
[K] Territorial Limitations
[L] Types Of Goods & Services Covered By G.B.L. § 349
1] Apartment Rentals
2] Attorney Advertising
3] Aupair Services
4-5] Auctions: Bid Rigging
6] Automotive: Failure To Disclose Contract Terms
6.1] Automotive: Repair Shop Labor Charges
6.2] Automotive: Improper Billings For Services
6.3] Automotive: Defective Ignition Switches
6.4] Automotive: Defective Brake Shoes
6.5] Automotive: Motor Oil Changes
6.6] Automotive: Extended Warranties
6.7] Automotive: Refusal To Pay Arbitrator's Award
6.8] Baldness Products
7] Budget Planning
8] Cable TV: Charging For Unneeded Converter Boxes
8.1] Cable TV: Imposition Of Unauthorized Taxes
9] Cell Phones
9.1] Checking Accounts
10] Clothing Sales
11] Computer Software
12] Credit Cards
13] Currency Conversion
14] Customer Information
15] Defective Dishwashers
16] Door-To-Door Sales
17] Educational Services
17.1] Electricity Rates
18] Employee Scholarship Programs
19] Excessive & Unlawful Bail Bond Fees
19.1] Excessive Modeling Fees
20] Exhibitions & Conferences
20.1] Extended Warranties
20.2] Food: Nutritional Value
20.3] Food: Expiration Dates
21] Furniture Sales
22] Hair Loss Treatment
23] Home Heating Oil Price Increases
24] Home Inspections
25] In Vitro Fertilizations
26] Insurance Coverage & Rates
26.1] Insurance Claims Procedures
27] Internet Marketing & Services
28] " Knock-Off " Telephone Numbers
29] Lasik Eye Surgery
29.1] Layaway Plans
29.2] Leases, Equipment
30] Liquidated Damages Clause
31] Loan Applications
32] Mislabeling
32.1] Monopolistic Business Practices
33] Mortgages: Improper Fees & Charges
34] Mortgages & Home Equity Loans: Closings
35] Movers, Household Goods
35.1] Packaging
36] Professional Networking
37] Privacy Invasion
38] Pyramid Schemes
39] Real Estate Sales
40] Securities
41] Sports Nutrition Products
41.1] Suing Twice On Same Claim
41.2] Tax Advice
42] Termite Inspections
43] Tobacco Products
44] Transportation Services, E-Z Passes
45] Travel Services
46] TV Repair Shops
46.1] Unfair Competition Claims
47] Wedding Singers
4] False Advertising
[A] Unlawful Use Of Name Of Nonprofit Organization
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] Houses, Apartments & Coops
[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
[F] Arbitration Agreements
[G] Real Property Condition Disclosure
[H] Real Property Warranty Of Habitability
[I] Multiple Dwelling Law
7] Insurance
[A] Coverage & Rates
[B] Claims Procedures
8] 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
[F.1] Electronic Fund Transfer Act
[G] Credit Card Cases: Standards Of Proof
[H] Identity Theft
[I] Debt Collection Practices
[J] Fair Debt Collective Practices Act
9] Overcoats Lost At Restaurants
10] Pyramid Schemes
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] Furniture Extended Warranties
[C.2] Health Clubs
[D] Lease Renewals
[E] Licensing To Do Business
[1] Home Improvement Contractors
[2] Used Car Dealers
[3] Debt Collectors
[4] Other Licensed Businesses
[E.1] Massage Therapy
[F] Merchandise Delivery Dates
[F.1] Merchandise Layaway Plans
[F.2] Price Gouging
[G] Refund Policies
[G.1] Retail Installment Sales
[H] Rental Purchase Agreements
[I] Warranty Of Merchantability
[J] Travel Services
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] Confirmation Of Credit Card Arbitration Awards
[C] Forum Selection Clauses
[D] Tariffs; Filed Rate Doctrine
[E] Consumer Class Actions
[F] Reported Class Action Cases: 1/1/2005 - 12/31/2005
1] " Risk Free " Insurance
2] Monopolistic Business Practices
3] Forum Shopping: G.B.L. 340 In Federal Court
4] Fruity Booty Settlement Rejected
5] Listerine As Effective As Floss?
6] Cable TV
7] Illegal Telephone " Slamming "
8] Rental Cars
9] Document Preparation Fees
10] Tax Assessments
11] Arbitration Clauses & Class Actions
12] Vanishing Premiums
13] Labor Disputes
14] Retiree Benefits
15] Mortgages
16] Tenants
17] Document Preservation
18] Shareholder's Suit
19] Corporate Merger
20] Partnership Dispute
21] Notice Issues
21.1] Insurance Dividends
22] Telephone Consumer Protection Act
23] Residential Electricity Contracts
24] Oil & Gas Royalty Payments
25] Street Vendors Unite
26] Inmates
27] Legal Aliens
28] Shelter Allowances
G] Reported Class Action Cases: 1/1/2006 - 21/31/2006
1] Forum Selection Clause Enforced
2] Insurance Dividends
3] Water & Sewer Customers
4] Donnelly Act
5] Telephone Consumer Protection Act
6] Photocopying Costs
7] Tobacco Master Settlement Agreement
8] Outdoor World Settlement
9] Counterfeit Drugs
10] DHL Processing Fees
11] Spraypark Mass Tort
12] Spanish Yellow Pages
13] Demutualization Plan Challenged
14] Stock Exchange Merger
15] Digital Mobile Communications
16] Group Life Insurance Benefits
17] Wage Claims
18] Mortgage Pay-Offs
19] Retiree Benefits
20] Attorneys Fees
21] Electric Rate Overcharges
22] Medical Necessity
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 ];
[B-1] G.B.L. Article 29-H [ Improper Debt Collection ];
[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. §§ 380-s, 380-l [ Identity Theft ];
[G.2] G.B.L. § 394-c [ Dating Services ];
[G.3] 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-q [ New Cars; Sales & Leases ];
[H.2] G.B.L. § 396-t [ Merchandise Layaway Plans ];
[I] G.B.L. § 396-u [ Merchandise Delivery Dates ];
[I.1] G.B.L. § 397 [ Unlawful Use Of Name Of Nonprofit Organization ];
[I.2] G.B.L. § 399-c [ Mandatory Arbitration Clauses In Certain Consumer Contracts Prohibited ];
[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 ];
[L.1] G.B.L. § 601 [ Debt Collection Practices ];
[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 ];
[O.2] G.B.L. § 820 [ Sale Of Outdated Over The Counter Drugs ];
[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. § 302 [ retail Installment Sales ];
[R.2] 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 ];
[W.1] U.C.C. § 2-207(2)(B) [ Additional Contract Terms ];
[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] Education Law § 6512(1) [ Massage Therapy ];
[CC] 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 )];
[C-1] 15 U.S.C. §§ 1692e, 1969k [ Fair Debt Collection Practices Act ];
[C-2] 15 U.S.C. § 1693f [ Electronic Fund Transfer Act ];
[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 ].
2.1] Recent New York State Consumer Law Articles
Banks, Choice-of-Law Clauses and Public Policy, New York Law Journal, March 23, 2007, p. 3( " May a New York court disregard a choice-of-law provision because application of the chosen law would result in enforcement of a pay-when-paid clause, an action contrary to New York public policy? " ).Lender Pays $2.5 Million In Widening Student Loan Probe, New York Law Journal, April 17, 2007, p. 6
( " A San Francisco based lender will pay $2.5 million to end an investigation into claims that it paid more than 60 schools to steer students to take out its loans as an additional 13 lenders were hit with letters or subpoenas in a rapidly expanding probe " ).Duhigg, Bilking the Elderly, With a Corporate Assist, New York Times, May 20, 2007, p. 1
( " The thieves operated from small offices in Toronto and hangar-size rooms in India. Every night, working from lists of names and phone numbers, they called World War II veterans, retired schoolteachers and thousands of other elderly Americans and posed as government and insurance workers updating their files. Then, the criminals emptied their victims' bank accounts " )
Duhigg, For Elderly Investors, Instant Experts Abound, New York Times, July 8, 2007, p. 1 ( steering the elderly into unwise investments ).
Broken Promises, The Insurance Industry Exposed, Trial Magazine, July 2007.
Elsberg, Incorporation of Arbitration Clauses, New York Law Journal, January 6, 2006, p. 4, col. 3( " Where the parties' contract has no arbitration clause, but refers or is related to a separate document that includes an arbitration clause, may one party compel the other to arbitrate? " ).
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[xi]. G.B.L. § 349 allows consumers and, possibly, businesses[xii] 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) ".[xiii] 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 "[xiv]. Attorneys fees and costs may be recovered as well.A] History & Philosophy
As stated by Justice Graffeo in the dissenting opinion in Matter of Food Parade, Inc. v. Office of Consumer Affairs[xv],
" This Court has broadly construed general consumer protection laws to effectuate their remedial purposes, applying the state deceptive practices law to a full spectrum of consumer-oriented conduct, from the sale of ' vanishing premium ' life insurance policies...to the provision of infertility services...We have repeatedly emphasized that ( G.B.L. § 349 ) and section 350, its companion...' apply to virtually all economic activity, and their application has been correspondingly broad...The reach of these statutes provide[s] needed authority to cope with the numerous, ever-changing types of false and deceptive business practices which plague consumers in our State '...In determining what types of conduct may be deceptive practices under state law, this Court has applied an objective standard which asks whether the ' representation or omission [ was ] likely to mislead a reasonable consumer acting reasonably under the circumstances '...taking into account not only the impact on the ' average consumer ' but also on ' the vast multitude which the statutes were enacted to safeguard-including the ignorant, the unthinking and the credulous who, in making purchases, do not stop to analyze but are governed by appearances and general impressions '".
B] Consumer Oriented Conduct
To establish a violation of G.B.L. § 349 the consumer must demonstrate that the alleged misconduct has " a broad impact on consumers at large "[xvi], constitutes " consumer-oriented conduct "[xvii] and does not involve private disputes[xviii].
C] Stating A Cognizable Claim
As stated in Small v. Lorillard Tobacco Co.[xix]" 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 ".
In Pelman v. McDonald's Corp.[xx] the Court stated
"...To state a claim for deceptive practices under section 349, a plaintiff must show: (1) that the act, practice or advertisement was consumer-oriented; (2) that the act, practice or advertisement was misleading in a material respect; and (3) that the plaintiff was injured as a result of the deceptive act, practice or advertisement...The standard for whether an act or practice is misleading is objective, requiring a showing that a reasonable consumer would have been misled by the defendant's conduct... Omissions, as well as acts, may form the basis of a deceptive practices claim...traditional showings of reliance and scienter are not required under GBL § 349 ".In Relativity Travel, Ltd.v. JP Morgan Chase Bank [xxi] the Court stated
" the Complaint alleges that Relativity was injured because it paid more for its foreign currency that what was required by the conversion rate applicable at the time of each transaction. Relativity's allegation that it was injured by having been charged an undisclosed additional amount on foreign currency transactions is sufficient to state a ( G.B.L. § 349 ) claim ".
In Baron v. Pfizer, Inc.[xxii] the Court stated that
" for plaintiff to state a cause of action under ( G.B.L. § 349 ) plaintiff needs to allege more than being prescribed a medication for off-label use and paying for such medication since prescribing FDA-approved medications for off-label uses appears to be a common practice in the medical community...plaintiff has failed to connect the allegations regarding defendant's deceptive conduct to any actions taken with regard to the plaintiff ".
A well pled G.B.L. § 349 complaint 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[xxiii] ]. In addition, a G.B.L. § 349 complaint should identify the deceptive advertising and explain why and how the challenged advertising is materially deceptive [ Pelman v. McDonald's Corp.[xxiv] ].
D] Preemption
G.B.L. §§ 349, 350 may be pre-empted by other consumer protection statutes[xxv] [ Stone v. Continental Airlines[xxvi]( airline bumping G.B.L. § 349, 350 claims preempted by federal airline regulations ); People v. Applied Card Systems, Inc.[xxvii]( " We next reject...contention that ( TILA ) preempted petitioner's claims which ) pertain to unfair and deceptive acts and practices " )].
E] Actual Injury Necessary
The complaint must allege actual injury arising from the alleged violations of G.B.L. § 349[xxviii] [ Small v. Lorillard Tobacco Co.[xxix]( 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 ); Shebar v. Metropolitan Life Insurance Co.[xxx]( " Inasmuch as plaintiff asserts that this consumer-oriented conduct was deceptive, material and caused him injury...these allegations sufficiently allege ( a violation of G.B.L. § 349 ) " );Edelman v. O'Toole-Ewald Art Associates, Inc.[xxxi]( appraiser malpractice; " failed to demonstrate, for purposes of ( G.B.L. § 349 ) that he suffered ' actual ' or pecuniary harm " ); Solomon v. Bell Atlantic Corp.[xxxii]
( " 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...'"); Baron v. Pfizer, Inc.[xxxiii]( failure to allege " how defendant's alleged deceptive acts or practices mislead her or her physicians resulting in actual harm to plaintiff " ); Ho v. Visa USA, Inc.[xxxiv] ( consumers' G.B.L. § 349 claim arising from
" retailers being required to accept defendants' debit cards if they want to continue accepting credit cards"dismissed because of " remoteness of their damages from the alleged injurious activity " ]; Goldberg v. Enterprise Rent-A-Car Company[xxxv]
( " Plaintiffs do not allege they were charged for any damage to the rented vehicles, they made no claims on the optional insurance policies they purchased and their security deposits were fully refunded " );Thompson v. Foreign Car Center, Inc.[xxxvi]( car purchaser charges dealer with
" misrepresentations and non-disclosures concerning price, after-market equipment, unauthorized modification and compromised manufacturer warranty protect; G.B.L. § 349 claim dismissed because of failure "to demonstrate that they sustained an actual injury <em>" ); Wendol v. The Guardian Life Ins. Co.[xxxvii]
( " allegations that defendants engaged in a deceptive business practice by using Berkshire instead of Guardian to administer the claims of its policyholders are insufficient to state a claim under ( G.B.L. § 349 ) in the absence of any allegation or proof that any misrepresentation regarding the entity administering the claims caused any actual injury " );Meyerson v. Prime Realty Services, LLC[xxxviii],
( " a privacy invasion claim-and an accompanying request for attorney's fees-may be stated under ( G.B.L. § 349 ) based on nonpecuniary injury " );Weinstock v. J.C. Penney Co.[xxxix]( no actual injury ); Sokoloff v. Town Sports International, Inc.[xl]( " Such claim impermissibly ' sets forth deception as both act and injury ' " ); Goldberg v. Enterprise Rent-A-Car Company, 14 A.D. 3d 417, 789 N.Y.S. 2d 114 ( 2005 )( failure to allege actual harm from failure to disclose data in rental car agreement ); Donahue v. Ferolito, Vultaggio & Sons[xli]
( " ( plaintiff ) failed to establish any actual damages resulting from defendants' alleged deceptive practices and false advertising on the labels " );Levine v. Philip Morris Inc.[xlii]
( " plaintiff must offer evidence that defendant made a misrepresentation...which actually deceived...and which caused her injury " );Han v. Hertz Corp.[xliii]
( " proof that a material deceptive act or practice caused actual-albeit not necessarily pecuniary-harm is required to impose compensatory damages " )].
F] 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 ][xliv]. 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.[xlv]; Peabody v. Northgate Ford, Inc.[xlvi]( failure to demonstrate that defendants " engaged in practices which were ' likely to mislead a reasonable consumer acting reasonably under the circumstances '" ) ].
G] Scope Of G.B.L. § 349
G.B.L. § 349 applies to a broad spectrum of goods and services [ Karlin v. IVF America[xlvii]( 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[xlviii]
( " encompasses a significantly wider range of deceptive business practices that were never previously condemned by decisional law " );State of New York v. Feldman[xlix] ( G.B.L. § 349
" was intended to be broadly applicable, extending far beyond the reach of common law fraud " )].
H] Statute Of Limitations
G.B.L. § 349 claims are governed by a three-year period of limitations [ C.P.L.R. 241(2) ][l]. G.B.L. § 349 claims accrue when the consumer " has been injured by a deceptive act "[li].I] Application To Non-Residents
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[lii] ] or received services in New York State [ Scott v. Bell Atlantic Corp.[liii] ].J] No Independent Claim Necessary
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.[liv] ].K] Territorial Limitations
In Goshen v. The Mutual Life Ins. Co.[lv] [ consumers of vanishing premium insurance policies ] and Scott v. Bell Atlantic Corp.[lvi], [ consumers of Digital Subscriber Line ( DSL )[lvii] 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[lviii] of the " territorial reach " of G.B.L. § 349 the Court in Truschel v. Juno Online Services, Inc.[lix], 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[lx]., 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 ) " ].
L] Goods, Services & Misconduct 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[lxi] and Anilesh v. Williams[lxii] ( renting illegal apartments ); Yochim v. McGrath[lxiii] ( renting illegal sublets )];
[2] Attorney Advertising [ People v. Law Offices of Andrew F. Capoccia[lxiv]( " The alleged conduct the instant lawsuit seeks to enjoin and punish is false, deceptive and fraudulent advertising practices " ); Aponte v. Raychuk[lxv]( 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[lxvi] ( misrepresenting the qualifications of an abusive aupair to care for handicapped children )];
[4-5] Auctions; Bid Rigging [ State of New York v. Feldman[lxvii] ( 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[lxviii]. ( 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.[lxix]( 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 ); People v. Condor Pontiac[lxx] ( 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 ) " )];
[6.1] Automotive: Repair Shop Labor Charges [ Tate v. Fuccillo Ford, Inc.[lxxi]( While plaintiff agreed to pay $225 to have vehicle towed and transmission " disassembled...to determine the cause of why it was malfunctioning " he did not agreed to have repair shop install a re-manufactured transmission nor did he agree to pay for
" flat labor time " national time standard minimum of 10 hours for a job that took 3 hours to complete[ " defendant's policy of fixing its times to do a given job on a customer's vehicle based on a national time standard rather than being based upon the actual time it took to do the task without so advising each customer of their method of assessing labor costs is ' a deceptive act or practice directed towards consumers and that such...practice resulted in actual injury to a plaintiff '".Damages included, inter alia, the $254.04 cost of obtaining a loan to pay for the authorized labor charges, $776.88 for the labor overcharge and
" $1,000 under GBL 349(h) for ' willfully and knowingly violating ' that statute resulting in the $776.88 overcharge for doing 3 hours of work and charging the plaintiff for 13.3 hours for a total of $2,030.92 " ];
[6.2] Automotive: Improper Billing For Services
[ Joyce v. SI All Tire & Auto Center[lxxii]( " the invoice ( violates G.B.L. § 349 ). Although the bill has the total charge for the labor rendered for each service, it does not set forth the number of hours each service took. It makes it impossible for a consumer to determine if the billing is proper. Neither does the bill set forth the hourly rate " )];
[6.3] Automotive: Defective Ignition Switches [ Ritchie v. Empire Ford Sales, Inc.[lxxiii] ( dealer liable for damages to used car that burned up 4 ½ years after sale )];
[6.4] Automotive: Defective Brake Shoes [ Giarrantano v. Midas Muffler[lxxiv] ( Midas Muffler fails to honor brake shoe warranty )];
[6.5] Automotive: Motor Oil Changes [ Farino v. Jiffy Lube International, Inc.[lxxv]
( 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 )];
[6.6] Automotive: Extended Warranties [ Kim v. BMW of Manhattan, Inc.[lxxvi]( Misrepresented extended warranty;
" The deceptive act that plaintiffs allege here is that, without disclosing to Chun that the Extension could not be cancelled, BMW Manhattan placed the charge for the Extension on his service invoice, and acted as though such placement have BMW Manhattan a mechanic's lien on the Car. Such action constituted a deceptive practice within the meaning of GBL § 349...As a result of that practice, plaintiffs were deprived of the use of the Car for a significant time and Chun was prevented from driving away, while he sat in the Car for several hours, until he had paid for the Extension " )].
[6.7] Automotive: Refusal To Pay Arbitrator's Award
[ Lipscomb v. Manfredi Motors[lxxvii] ( 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 )];
[6.8] Baldness Products [ Karlin v. IVF[lxxviii] ( reference to unpublished decision applying G.B.L. § 349 to products for treatment of balding and baldness ); Mountz v. Global Vision Products, Inc.[lxxix]
( " 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.[lxxx] ( 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] Cable TV: Charging For Unneeded Converter Boxes
[ In Samuel v. Time Warner, Inc.[lxxxi], a class of cable television subscribers claimed a violation of G.B.L. § 349 and the breach of an implied duty of good faith and fair dealing because defendant allegedly "
is charging its basic customers for converter boxes which they do not need, because the customers subscribe only to channels that are not being converted ...( and ) charges customers for unnecessary remote controls regardless of their level of service ".In sustaining the G.B.L. § 349 claim based, in part, upon " negative option billing "[lxxxii], the Court held that defendant's
" disclosures regarding the need for, and/or benefits of, converter boxes and...remote controls are buried in the Notice, the contents of which are not specifically brought to a new subscriber's attention...a claim for violation of GBL § 349 is stated " ].
[8.1] Cable TV: Imposition Of Unauthorized Taxes
[ In Lawlor v. Cablevision Systems Corp.[lxxxiii]the plaintiff claimed that his monthly bill for Internet service
" contained a charge for ' Taxes and Fees ', Lawlor alleges Cablevision had no legal rights to charge these taxes or fees and seeks to recover ( those charges )...The Agreement for Optimum Online for Commercial Services could be considered misleading " ) ];
[9] Cell Phones [ Naevus International, Inc. v. AT&T Corp.[lxxxiv], ( 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[lxxxv]
( " 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[lxxxvi] ( refusing to refund purchase price in cash for defective and shedding fake fur )];
[11] Computer Software [ Cox v. Microsoft Corp.[lxxxvii]
( " allegations that Microsoft engaged in purposeful, deceptive monopolistic business practices, including entering into secret agreements with computer manufacturers and distributors in inhibit competition and technological development and creating an ' applications barrier ' in its Windows software that...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 competitor's innovations, services and products " )
[12] Credit Cards [ People v. Applied Card Systems, Inc.[lxxxviii]( misrepresenting the availability of certain pre-approved credit limits;
" solicitations were misleading...because a reasonable consumer was led to believe that by signing up for the program, he or she would be protected in case of an income loss due to the conditions described " );People v. Telehublink[lxxxix]
( " 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[xc],
( " 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[xci] ( credit card company misrepresented the application of its low introductory annual percentage rate to cash advances )];
[13] Currency Conversion [ Relativity Travel, Ltd. V. JP Morgan Chase Bank [xcii]
( " Relativity has adequately alleged that the Deposit Account Agreement was deceptive despite the fact that the surcharge is described in that agreement. The issue is not simply whether the Deposit Account Agreement was deceptive, but whether Chase's overall business practices in connection with the charge were deceptive...Viewing Chase's practices as a whole including the failure to list the surcharge on the Account Statement or on Chase's website and the failure to properly inform its representatives about the surcharge are sufficient, if proved, to establish a prima facie case... Relativity's allegation that it was injured by having been charged an undisclosed additional amount on foreign currency transactions is sufficient to state a ( G.B.L. § 349 ) claim " )];
[14] Customer Information [ Anonymous v. CVS Corp.[xciii] ( 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 " )];
[15] Defective Dishwashers [ People v. General Electric Co., Inc[xciv]( 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[xcv],( misrepresented and grossly overpriced water purification system ); Rossi v. 21st Century Concepts, Inc.[xcvi] ( selling misrepresented and overpriced pots and pans )];
[17] Educational Services [ People v. McNair [xcvii]
( " deliberate and material misrepresentations to parents enrolling their children in the Harlem Youth Enrichment Christian Academy...thereby entitling the parents to all fees paid( in the amount of $182,393.00 ); civil penalties pursuant to G.B.L. 350-d of $500 for each deceptive act or $38,500.00 and costs of $2,000.00 pursuant to CPLR § 8303(a)(6) ); Andre v. Pace University[xcviii] ( failing to deliver computer programming course for beginners ); Brown v. Hambric[xcix] ( failure to deliver travel agent education program )];
[17.1] Electricity Rates [ Emilio v. Robinson Oil Corp.[c]
" the act of unilaterally changing the price ( of electricity ) in the middle of the term of a fixed-price contract has been found to constitute a deceptive practice... Therefore, the plaintiff should also be allowed to assert his claim under ( G.B.L. § 349 ) based on the allegation that the defendant unilaterally increased the price in the middle of the renewal term of the contract " );
[18] Employee Scholarship Programs [ Cambridge v. Telemarketing Concepts, Inc.[ci] ( refusal to honor agreement to provide scholarship to employee )];
[19] Excessive & Unlawful Bail Bond Fees [ McKinnon v. International Fidelity Insurance Co.[cii]( misrepresentation of expenses in securing bail bonds )];
[19.1] Excessive Modeling Fees [ Shelton v. Elite Model Management, Inc.[ciii]( models' claims of excessive fees caused
" by reason of any misstatement, misrepresentation, fraud and deceit, or any unlawful act or omission of any licensed person "stated a private right of action under G.B.L. Article 11 and a claim under G.B.L. § 349 )];
[20] Exhibitions and Conferences [ Sharknet Inc. v. Telemarketing, NY Inc.[civ] ( misrepresenting length of and number of persons attending Internet exhibition )];
[20.1] Extended Warranties
[ " 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 "[cv]; Dvoskin v. Levitz Furniture Co., Inc.[cvi] ( one year and five year furniture extended warranties;
" the solicitation and sale of an extended warranty to be honored by an entity that is different from the selling party is inherently deceptive if an express representation is not made disclosing who the purported contracting party is. It is reasonable to assume that the purchaser will believe the warranty is with the Seller to whom she gave consideration, unless there is an express representation to the contrary. The providing of a vague two page sales brochure, after the sale transaction, which brochure does not identify the new party...and which contains no signature or address is clearly deceptive " );Kim v. BMW of Manhattan, Inc.[cvii]( misrepresented extended warranty; $50 statutory damages awarded under G.B.L. 349(h)); Giarratano v. Midas Muffler[cviii] ( 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;
" the Midas Warranty Certificate was misleading and deceptive in that it promised the replacement of worn brake pads free of charge and then emasculated that promise by requiring plaintiff to pay for additional brake system repairs which Midas would deem necessary and proper " );Petrello v. Winks Furniture[cix] ( misrepresenting a sofa as being covered in Ultrasuede HP and protected by a 5 year warranty )];
[20.2] Food : Nutritional Value [ Pelman v. McDonald's Corp[cx]. ( misrepresentation of nutritional value of food products );
[20.3] Food : Expiration Dates In Matter of Food Parade, Inc. v. Office of Consumer Affairs [cxi], the Court of Appeals stated that
" Many consumer goods bear expiration dates, as required by law. In the case before us, a supermarket displayed a number of products bearing expired dates. We must decide whether this is a deceptive trade practice within the meaning of the Nassau County Administrative Code [ Nassau County Administrative Code § 21-10.2 which is not preempted by G.B.L. § 820 governing sale of outdated over-the-counter drugs ]. We hold that offering such products for sale is not deceptive unless the retailer alters or disguises the expiration dates. Without doubt, the Legislature may prohibit and punish the sale of certain outdates or state products. We cannot, however, fit such sales or displays into the code's ' deceptive trade practice ' prescription ".See also Matter of Stop & Shop Supermarket Companies, Inc. V. Office of Consumer Affairs of County of Nassau[cxii]
( " A supermarket's mere display and sale of expired items is not a deceptive trade practice under Nassau County Administrative Code § 21-10.2(b)(1)(d) " );
[21] Furniture Sales [ Petrello v. Winks Furniture[cxiii] ( misrepresenting a sofa as being covered in Ultrasuede HP and protected by a 5 year warranty ); Walker v. Winks Furniture[cxiv] ( falsely promising to deliver furniture within one week ); Filpo v. Credit Express Furniture Inc.[cxv] ( failing to inform Spanish speaking consumers of a three day cancellation period ); Colon v. Rent-A-Center, Inc.[cxvi] ( 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.[cxvii] ( " 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 Price Increases [ Matter of Wilco Energy Corp.[cxviii]
( " Wilco solicited contracts from the public and, after entering into approximately 143 contracts, unilaterally changed their terms. This was not a private transaction occurring on a single occasion but rather, conduct which affected numerous consumers...Wilco'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.[cxix] ( civil engineer liable for failing to discover wet basement ) ];
[25] In Vitro Fertilization [ Karlin v. IVF America, Inc. [cxx] ( misrepresentations of in vitro fertilization rates of success )];
[26] Insurance Coverage & Rates [ Gaidon v. Guardian Life Insurance Co. & Goshen v. Mutual Life Insurance Co.[cxxi] ( 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.[cxxii] ( misrepresentations with respect to the terms " Flexible Premium Variable Life Insurance Policy " ); Beller v. William Penn Life Ins. Co.[cxxiii]
( " Here, the subject insurance contract imposed a continuing duty upon the defendant to consider the factors comprising the cost of insurance before changing rates and to review the cost of insurance rates at least once every five years to determine if a change should be made...we find that the complaint sufficiently states a ( G.B.L. § 349 ) cause of action " );Skibinsky v. State Farm Fire and Casualty Co.[cxxiv] ( misrepresentation of the coverage of a " builder's risk " insurance policy ); Brenkus v. Metropolitan Life Ins. Co.[cxxv] ( misrepresentations by insurance agent as to amount of life insurance coverage ); Makastchian v. Oxford Health Plans, Inc.[cxxvi] ( 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 )];
[26.1] Insurance Claims Procedures [ Shebar v. Metropolitan Life Insurance Co.[cxxvii]
( " Allegations that despite promises to the contrary in its standard-form policy sold to the public, defendants made practice of ' not investigating claims for long-term disability benefits in good faith, in a timely fashion, and in accordance with acceptable medical standards... when the person submitting the claim...is relatively young and suffers from a mental illness ', stated cause of action pursuant to ( G.B.L. ) § 349 " );Makuch v. New York Central Mutual Fire Ins. Co.[cxxviii] ( " 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 " ); Acquista v. New York Life Ins. Co.[cxxix] (
" 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.[cxxx] ( automobile insurance company fails to provide timely defense to insured )].
[27] Internet Marketing Services [ Zurakov v. Register.Com, Inc.[cxxxi]
( " 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.[cxxxii]
( " 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[cxxxiii] ( failing to deliver purchased magazine subscriptions ); Scott v. Bell Atlantic Corp.[cxxxiv], ( misrepresented Digital Subscriber Line ( DSL )[cxxxv] Internet services ).
On the issue of long arm jurisdiction over sellers of items on EBay see Sayeedi v. Walser[cxxxvi]
( " EBay is a popular internet service that provides consumers with a way to buy and sell new or used goods in an auction style format over the internet.In 1995 EBay was one of the first to pioneer what has now become a ubiquitous form of e-commerce. As facilitators and providers of Ebay-type services continue to increase in popularity courts are, not surprisingly, faced with the task of applying settled law to modern technological dilemmas...No evidence ( to ) indicate Defendant may be purposely availing himself specifically to the business of New Yorkers or any desire to take advantage of New York law. The Defendant was prepared to sell his Chevrolet engine to whoever the highest bidder happened to be regardless of the state in which they happened to reside "; no basis for the assertion of long arm jurisdiction found " )];
[28] " Knock-Off " Telephone Numbers [ Drizin v. Sprint Corp.[cxxxvii]
( " 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[cxxxviii] ( medical malpractice and deceptive advertising arising from lasik eye surgery )];
[29.1] Layaway Plans [ Amiekumo v. Vanbro Motors, Inc.[cxxxix]( 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 ];
[29.2] Leases, Equipment [ Sterling National Bank v. Kings Manor Estates[cxl]
( " The defendants...claim that the equipment lease was tainted by fraud and deception in the inception, was unconscionable and gave rise to unjust enrichment...the bank plaintiff, knowing of the fraudulent conduct, purchased the instant equipment lease at a deep discount, and by demanding payment thereunder acted in a manner violating...( G.B.L. § 349 ) " )];
[30] Liquidated Damages Clause [ Morgan Services, Inc. v. Episcopal Church Home & Affiliates Life Care Community, Inc[cxli] ( 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.[cxlii] ( 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[cxliii]( pet dog dies from overdose of prescription drug, Feldene, mislabeled " 1 pill twice daily ' when should have been " one pill every other day )];
[32.1] Monopolistic Business Practices [ Cox v. Microsoft Corporation[cxliv] ( monopolistic activities are covered by G.B.L. § 349;
" 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...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 competitor's innovations, services and products " );
[33] Mortgages: Improper Fees & Charges [ Fontana v. Champion Mortgage Co., Inc.[cxlv] ( " defendant's calculation of interest properly included the date it received the payoff check...because the bank's interest calculation conformed to the terms of the mortgage note, the proposed cause of action alleging a violation of ( G.B.L. § 349 was properly dismissed )); Kidd v. Delta Funding Corp.[cxlvi]( " 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 " ); Lum v. New Century Mortgage Corp.[cxlvii]
( " Here, there was no materially misleading statement, as the record indicated that the ( Yield Spread Premium ), which is not illegal per se, was disclosed to the plaintiff );Walts v. First Union Mortgage Corp[cxlviii]. ( consumers induced to pay for private mortgage insurance beyond requirements under New York Insurance Law § 6503 ); Negrin v. Norwest Mortgage, Inc.[cxlix] ( mortgagors desirous of paying off mortgages charged illegal and unwarranted fax and recording fees ); Trang v. HSBC Mortgage Corp., USA[cl] ( $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] Mortgages & Home Equity Loans: Improper Closings [ Bonior v. Citibank, N.A.[cli]
( " The Court will set forth below several ' problems ' with this closing that might have been remedied by the active participation of legal counsel for the borrowers as well for the other participants ".The Court found that the lenders had violated G.B.L. § 349 by (1) failing to advise the borrowers of a right to counsel, (2) use of contradictory and ambiguous documents containing no prepayment penalty clauses and charging an early closing fee, (3) failing to disclose relationships settlement agents and (4) document discrepancies
" The most serious is that the equity source agreement and the mortgage are to be interpreted under the laws of different states, New York and California respectively ";damages of $50.00 against each lender awarded pursuant to G.B.L. § 349(h) )].
[35] Movers; Household Goods [ Goretsky v. ½ Price Movers, Inc[clii]. ( " failure to unload the household goods and hold them ' hostage ' is a deceptive practice under " G.B.L. § 349 )];
[35.1] Packaging [ Sclafani v. Barilla America, Inc.[cliii]( deceptive packaging of retail food products )];
[36] Professional Networking [ BNI New York Ltd. v. DeSanto[cliv] ( enforcing an unconscionable membership fee promissory note ) ];
[37] Privacy [ Anonymous v. CVS Corp[clv]. ( 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[clvi] ( same ); Meyerson v. Prime Realty Services, LLC[clvii]
,( " landlord deceptively represented that ( tenant ) was required by law to provide personal and confidential information, including... social security number in order to secure renewal lease and avoid eviction " ) ];
[38] Pyramid Schemes [ C.T.V. Inc. v. Curlen[clviii] ( selling bogus " Beat The System Program " certificates ); Brown v. Hambric[clix] ( selling misrepresented instant travel agent credentials and educational services )];
[39] Real Estate Sales [ Gutterman v. Romano Real Estate[clx] ( 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[clxi] ( deceptive advertisement and sale of condominium units ); B.S.L. One Owners Corp. v. Key Intl. Mfg. Inc.[clxii]( deceptive sale of shares in a cooperative corporation ); Breakwaters Townhouses Ass'n. v. Breakwaters of Buffalo, Inc.[clxiii]( condominium units ); Latiuk v. Faber Const. Co.[clxiv]( deceptive design and construction of home ); Polonetsky v. Better Homes Depot, Inc.[clxv]( 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.[clxvi] ( G.B.L. § 349 provides no relief for consumers alleging injury arising from the deceptive or misleading acts of a trading company ); Yeger v. E* Trade Securities LLC,[clxvii]
( " Although plaintiffs argue that the statute on its face, applies to virtually all economic activity, courts have held that federally regulated securities transactions are outside the ambit of section 349 " );Fesseha v. TD Waterhouse Investor Services, Inc.[clxviii]( " 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.[clxix]
( " 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.[clxx]( G.B.L. § 349 covers securities transactions )];
[41] Sports Nutrition Products [ Morelli v. Weider Nutrition Group, Inc.[clxxi],( manufacturer of Steel Bars, a high-protein nutrition bar, misrepresented the amount of fat, vitamins, minerals and sodium therein )];
[41.1] Suing Twice On Same Claim [ In Centurion Capital Corp. v. Druce[clxxii] ( plaintiff, a purchaser of credit card debt, was held to be a debt collector as defined in Administrative Code of City of New York § 20-489 and because it was not licensed its claims against defendant must be dismissed. In addition, defendant's counterclaim asserting that plaintiff violated G.B.L. § 349 by
" bringing two actions for the same claim...is sufficient to state a ( G.B.L. § 349 ) cause of action " )].
[41.2] Tax Advice [ Mintz v. American Tax Relief[clxxiii]
( " the second and fourth mailing unambiguously state that recipients of the ( post ) cards ' can be helped Today ' with their ' Unbearable Monthly Payment Plan(s) ' and that defendant can stop wage garnishments, bank seizures and assessment of interest and penalties. These two mailing...make explicit promises which...Cannot be described as ' puffery ' and could...be found to be purposely misleading and deceptive " ];
[42] Termite Inspections [ Anunziatta v. Orkin Exterminating Co., Inc.[clxxiv]( 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.,[clxxv]( 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[clxxvi] ( E-Z pass contract fails to reveal necessary information to customers wishing to make a claim and " on its face constitutes a deceptive practice " ), rev'd[clxxvii] ( toll is a use tax and not consumer oriented transaction )];
[45] Travel Services [ Meachum v. Outdoor World Corp.[clxxviii] ( misrepresenting availability and quality of vacation campgrounds; Malek v. Societe Air France[clxxix]( provision of substitute flight and its destination did not mislead " plaintiff in any material way " ); Vallery v. Bermuda Star Line, Inc.[clxxx] ( misrepresented cruise ); Pellegrini v. Landmark Travel Group[clxxxi] ( refundability of tour operator tickets misrepresented ); People v. P.U. Travel, Inc.[clxxxii]( 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[clxxxiii].( 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 )" )];
[46.1] Unfair Competition Claims [ Not Covered By G.B.L. § 349 ][ In Leider v. Ralfe[clxxxiv], an action involving control of the diamond market, the Court held that there was no violation of G.B.L. § 349
( " Plaintiffs contend that De Beers' broad-scale manipulation and pollution of the diamond market is deceptive unto itself. I see no principled distinction between this allegation and a generic antitrust scheme, albeit on a substantially larger scale than most. Plaintiffs cannot escape the fact that...New York has chosen not to include ' unfair competition ' or ' unfair ' practices in its consumer protection statute, language that bespeaks a significantly broader reach " )];
[47] Wedding Singers [ Bridget Griffin-Amiel v. Frank Terris Orchestras[clxxxv] ( the bait and switch[clxxxvi] 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[clxxxvii].
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.[clxxxviii] ( defective ' high speed ' Internet services falsely advertised ); Card v. Chase Manhattan Bank[clxxxix] ( 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 "[cxc].G.B.L. § 350 covers a broad spectrum of misconduct [ Karlin v. IVF America[cxci]
( " ( 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[cxcii] ( 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 " );People v.McNair [cxciii]
( " deliberate and material misrepresentations to parents enrolling their children in the Harlem Youth Enrichment Christian Academy...thereby entitling the parents to all fees paid ( in the amount of $182,393.00 ); civil penalties pursuant to G.B.L. 350-d of $500 for each deceptive act or $38,500.00 and costs of $2,000.00 pursuant to CPLR § 8303(a)(6)" )].
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.[cxciv]( G.B.L. § 350 requires proof of reliance ); Leider v. Ralfe[cxcv] ( G.B.L. § 350 requires proof of reliance ); Gale v. International Business Machines Corp.[cxcvi]
( " Reliance is not an element of a claim under ( G.B.L. § 349 )...claims under ( G.B.L. § 350 )...do require proof of reliance " )].
[A] Unlawful Use Of Name Of Nonprofit Organization
G.B.L. § 397 provides that" no person...shall use for advertising purposes...the name...of any non-profit corporation ...without having first obtained the written consent of such non-profit corporation ".In Metropolitan Opera Association, Inc. v. Figaro Systems, Inc.[cxcvii] the Met charged a New Mexico company with unlawfully using its name in advertising promoting its
" ' Simultext ' system which defendant claims can display a simultaneous translation of an opera as it occurs on a stage and that defendant represented that its system is installed at the Met " )].
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[cxcviii] ( Used Car Lemon Law ), express warranty[cxcix], implied warranty of merchantability[cc] ( U.C.C. §§ 2-314, 2-318 ), Vehicle and Traffic Law [ V&T ] § 417, strict products liability[cci] ] appears in Ritchie v. Empire Ford Sales, Inc.[ccii], 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.[cciii], 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 "[cciv].In Giarratano v. Midas Muffler[ccv], 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 "[ccvi] ].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[ccvii]. See also: Chun v. BMW of Manhattan, Inc.[ccviii]( misrepresented extended automobile warranty; G.B.L. § 349(h) statutory damages of $50 awarded ).
[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[ccix] ( 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[ccx]( 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; 2-A-212, 2-A-213; 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[ccxi] ]. 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[ccxii]., ( 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.[ccxiii] ( disclaimer not conspicuous ); Mollins v. Nissan Motor Co., Inc.[ccxiv]
( " documentary evidence conclusively establishes all express warranties, implied warranties of merchantability and implied warranties of fitness for a particular purpose were fully and properly disclaimed " )].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.[ccxv] ]
[D] Magnuson-Moss Warranty Act & Leased Vehicles: 15 U.S.C. §§ 2301 et seq
In Tarantino v. DaimlerChrysler Corp.[ccxvi], DiCinto v. Daimler Chrysler Corp.[ccxvii] and Carter-Wright v. DaimlerChrysler Corp.[ccxviii], 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.[ccxix], the Court of Appeals held that the Magnuson-Moss Warranty Act does not apply