NEW YORK DECEPTIVE PRACTICE STATUTES
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1. Section 349 Business Law Statute
Section 349 (a) states, "Deceptive acts or practices in the conduct of any
business, trade or commerce or in the
furnishing of any service in this state are hereby declared unlawful."
2. Damages and counsel fees
Section 349 (f) states:
"any person who has been injured by reason of any violation of this section
may bring an action in his own name to enjoin such unlawful act or practice, an
action to recover his actual damages or fifty dollars, whichever is greater, or
both such actions. The court may, in its discretion, increase the award of
damages to an amount not to exceed three times the actual damages up to one
thousand dollars, if the court finds the defendant willfully or knowingly
violated this section. The court may award reasonable attorney`s fees to a
prevailing plaintiff."
Many states have triple damages which provide an incentive for defendants to
settle, but the weak New York statute provides no such remedy. the
plaintiff can only secure his actual damage after a trial so that a defendant is
likely to offer to settle for less than such amount. Unlike New
Jersey, the coiunsel fee provision is stated as "may," not mandatory.
A. Penalty for offenses against elderly
In addition to any liability for damages or a civil penalty imposed pursuant
to sections three hundred forty-nine, three hundred fifty-c and three hundred
fifty-d of this
chapter, regarding deceptive practices and false advertising, and subdivision
twelve of section sixty-three of the executive law, regarding proceedings by the
attorney general for equitable relief against fraudulent or illegal consumer
fraud, a person or entity who engages in any conduct prohibited by said
provisions of law, and whose conduct is perpetrated against one or more elderly
persons, may be liable for an additional civil penalty not to exceed ten
thousand dollars, if the factors in paragraph (b) of this subdivision are
present.
(b) In determining whether to impose a supplemental civil penalty pursuant to
paragraph (a) of this subdivision, and the amount of any
such penalty, the court shall consider, in addition to other appropriate
factors, the extent to which the following factors are present:
(1) Whether the defendant knew that the defendant`s conduct was directed to one
or more elderly persons or whether the defendant`s
conduct was in willful disregard of the rights of an elderly person;
(2) Whether the defendant`s conduct caused an elderly person or persons to
suffer severe loss or encumbrance of a primary residence,
principal employment or source of income, substantial loss of property set aside
for retirement or for personal and family care and
maintenance, substantial loss of payments received under a pension or retirement
plan or a government benefits program; or assets essential to
the health or welfare of the elderly person or whether one or more elderly
persons were substantially more vulnerable to the defendant`s
conduct because of age, poor health, infirmity, impaired understanding,
restricted mobility, or disability, and actually suffered physical,
emotional, or economic damage resulting from the defendant`s conduct.
3. Caselaw
A. Deceptive Mortgage Fees
The court in Negrin v. Norwest
Mortgage, Inc. stated: (N.Y.App.Div. 11/15/1999)
The plaintiff's second cause of action alleges that by imposing the unlawful
and fabricated fax fee and a "recording fee" of $13.50, the defendant engaged in
acts of consumer fraud in violation of General Business Law § 349. The Supreme
Court dismissed that cause of action by finding "there was nothing deceptive
about [the] imposition [of the challenged fees]". This Conclusion cannot
withstand scrutiny. Under General Business Law § 349(a), deceptive acts or
practices in the conduct of any business conducted in this State are unlawful
(see, Karlin v IVF Am., 93 NY2d 282; New York Univ. v Continental Ins. Co., 87
NY2d 308). The essential elements of a cause of action alleging consumer fraud
in violation of General Business Law § 349 are that the defendant engaged in a
consumer-oriented misleading practice and that the plaintiff was injured thereby
(see, New York Univ. v Continental Ins. Co., supra; Oswego Laborers' Local 214
Pension Fund v Marine Midland Bank, 85 NY2d 20; Teller v Bill Hayes, Ltd., 213
AD2d 141).
There is ample authority to support the plaintiff's consumer fraud claims.
The decision in Oswego Laborers' Local 214 Pension Fund v Marine Midland Bank
(supra) is instructive. There, the plaintiff union desired to open certain
interest earning savings accounts with the defendant bank. However, the
defendant's representative allegedly opened less advantageous accounts, causing
the union to lose more than $30,000 in interest.
In reinstating the union's consumer fraud claim, the Court of Appeals noted
that in enacting General Business Law § 349, the Legislature sought to protect
the consuming public from deceptive practices aimed at them. The practices
proscribed by the statute are those likely to have a broader impact on
consumers-at-large. The court further noted that a plaintiff must prove that the
defendant acted deceptively in a meaningful way, resulting in injury to the
consumer. Though cognizant of a potential flood of litigation, the court
concluded that insofar as the bank allegedly steered the union into a less
advantageous account without providing full disclosure of the pertinent facts,
the plaintiff alleged a viable claim of consumer fraud.
[46] Other cases have upheld consumer fraud claims asserted against banks based
on allegedly deceptive consumer practices. Indeed, in two closely analogous
cases, consumer fraud claims were sustained based upon the imposition of
unwarranted fees. In Littlefield v Goldome Bank (142 AD2d 978), the plaintiff
opened savings accounts for his two minor children in 1981. In 1984 the bank
began charging a quarterly fee of $3 for accounts with balances below $250. The
plaintiff alleged that this fee was unilaterally imposed without notice on
existing accounts. The plaintiff commenced a purported class action alleging
that the bank engaged in deceptive practices by unilaterally imposing improper
fees. The Supreme_Court dismissed the plaintiff's General Business Law § 349
cause of action, but the Appellate Division, Fourth Department reinstated it,
holding that the allegations were sufficient to state a consumer fraud claim on
behalf of the purported class. The instant action is very similar insofar as it
seeks to vindicate the rights of a class of consumers allegedly subjected to
unwarranted fees.
equally persuasive is Bauer v Mellon Mtge. Co. (178 Misc 2d 234, mod sub
nom. Walts v First Union Mtg. Corp., supra). That case involved class action
claims against mortgagees who allegedly failed to notify mortgagors when they
had reached the required 75% loan to value ratio that would entitle them to be
relieved of private mortgage insurance obligations. The defendants moved to
dismiss pursuant to CPLR 3211(a)(7) but the Supreme Court denied the motion in
part, crediting the plaintiff's allegations that by failing to notify mortgagors
when their PMI payments could cease, the mortgagee banks misled them into
continuing to make unnecessary payments. In pertinent part the Appellate
Division, First Department agreed, stating:
"Plaintiffs have adequately alleged a materially deceptive practice aimed
at consumers in that Mellon and First Union continued to bill them for PMI
premiums, thereby inducing them to believe that they were required to pay them,
even after plaintiffs' principal balance dropped below the 75% ratio set forth
in Insurance Law § 6503". (Walts v First Union Mtg. Corp., supra, at 430).
The instant plaintiff has raised very similar allegations. Allegations of a
bank's unilateral imposition of illegal and/or unwarranted fees upon its
customers states a valid claim of consumer fraud.
The defendant contends that the plaintiff received a payoff statement
revealing the fax fee and recording charges five weeks prior to the closing, and
thus this case falls within the rule that consumer fraud claims may not be
predicated upon fully disclosed facts (see, Sands v Ticketmaster-N.Y., Inc., 207
AD2d 687). However, this argument is unpersuasive. The plaintiff was at
Norwest's mercy. If she wanted her mortgage satisfied to enable her to sell her
condominium and move, the plaintiff had no choice but to pay the $23.50. Any
reasonable person would conclude, as the plaintiff did, that the only sane thing
to do was to pay the charges rather than jeopardize the closing and the sale of
her condominium. As this court reasoned in Teller v Bill Hayes, Ltd. (213 AD2d
141), the typical act of consumer fraud involves an individual consumer who
falls victim to a commercial entity which enjoys a "disparity of bargaining
power" (Teller v Bill Hayes, Ltd., supra, at 149). Indeed, the instant
controversy over the sum of $23.50 is exactly the kind of small-money dispute to
which_General Business Law § 349 was meant to apply (see, Teller v Bill Hayes,
Ltd., supra, at 148; Genesco Entertainment, a Div. of Lymutt Industries, Inc. v
Koch, 593 F Supp 743). While the individual amount sought may be modest, the
rights to be vindicated are far greater (see, Scavo v Allstate Ins. Co., 238
AD2d 571).
For the foregoing reasons, Norwest's alleged unilateral imposition of a $10
fax fee, and a $13.50 recording fee, for a service not even performed by the
mortgagee, constitute examples, prima facie, of consumer fraud
New York, deception, consumer fraud, claim, lawyer, fraud, deceptive practice, consumer fraud, New York, deceptive practice, attorney, deceptive practice attorney.
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