Consumer Protection Law 2007Update

In Matter of Food Parade, Inc. v. Office of Consumer Affairs, a majority of 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 (§21-10.2). . . . 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 Without doubt, the Legislature may prohibit and punish the sale of certain outdated or stale products. We cannot, however, fit such sales or displays into the code's ‘deceptive trade practice' prescription." In Northeast Wine Development, LLC v/ Service-Universal Distributors, Inc., a case in which a retail wine store sued a wine wholesaler alleging a GBL §349 violation in "that defendant has unlawfully refused to sell it certain brands of wine and liquor at the prices listed in defendant's mandatory filings with defendant New York State Liquor Authority," the Court of Appeals found the GBL §349, 350 claim "untenable because the acts alleged do not have the requisite impact on consumers."

And in Matter of DaimlerChrysler Corp. v. Spitzer, the Court of Appeals, noting that "the Legislature enacted the New Car Lemon Law (GBL §198-a) to provide New York consumers greater protection than that afforded by automobile manufacturers' express warranties," found that "We do not read the repair presumption as requiring a consumer to establish that the vehicle defect continued to exist until the trial or hearing date . . . once a consumer has met the four-repair threshold the presumption arise regardless of whether the manufacturer later remedies the problem."

Credit Cards

In People v. Applied Card Systems, Inc., a case involving misrepresentations of 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") the Court found that "petitioner successfully established his claims pursuant to (GBL §349 and 350)" and modified the damages awarded.

Home Contractor Licensing

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 (CPLR §3015(e)). In Flax v. Hommel, the Court held that "Since Hommel was not individually licensed pursuant to Nassau County Administrative Code §21-11.2 at the time the contract was entered and the work performed, the alleged contract . . . was unenforceable."

New House Warranty

GBL §777 provides, among other things, for a statutory housing merchant warranty for the sale of a new house (but not a custom house). In Farrell v. Lane Residential Inc., after a seven-day trial, the Court found that the developer had violated GBL §777-a regarding various defects and awarded as damages the cost to cure the defects was $35,952. Although the plaintiffs sought damages for the "stigma [that] has attached to the property" (see Putnam v. State of New York) the Court denied the request for a failure to present "any comparable market data."

Arbitration Agreements

In Baronoff v. Kean Development Co., Inc., the petitioners entered into construction contracts with respondent to manage and direct renovation of two properties. The agreement contained an arbitration clause which respondent sought to enforce after petitioners terminated the agreement refusing to pay the balance due. Relying upon Ragucci v. Professional Construction Services, the Court, in "a case of first impression," found that GBL §399-c barred the mandatory arbitration clause and, further, that petitioners' claims were not pre-empted by the Federal Arbitration Act (While the FAA may in some cases pre-empt a state statute such as §399-c, it may only do so in transactions "affecting commerce.").

Electronic Funds Transfers

In Household Finance Realty Corp. v. Dunlap, a mortgage foreclosure proceeding arising from defendant's failure to make timely payments, the Court denied plaintiff's summary motion since it was undisputed "the funds were available in defendant's account to cover the preauthorized debit amount" noting that the Electronic Funds Transfer Act (EFTA) was enacted to "‘provide a basic framework establishing the rights, liabilities and responsibilities of participants in electronic fund transfer systems' . . . Its purpose is to ‘assure that mortgages, insurance policies and other important obligations are not declared in default due to late payment caused by a system breakdown' . . . As a consumer protect measure, §1693j of the EFTA suspends the consumer's obligation to make payment‘ (i)f a system malfunction prevents the effectuation of an electronic fund transfer initiated by (the) consumer to another person and such other person has agreed to accept payment by such means.'"

In Kudelko v. Dalessio, the Court declined to apply retroactively to an identity theft scheme, GBL §§380-s and 380-1 which provides a statutory cause of action for damages (actual and punitive) for identity theft ("Identity theft has become a prevalent and growing problem in our society with individuals having their credit ratings damaged or destroyed and causing untold financial burdens on these innocent victims. As stated above the New York State Legislature, recognizing this special category of fraudulent conduct, gave individuals certain civil remedies when they suffered this harm") but did find that a claim for fraud was stated and the jury could decide liability, actual and punitive damages, if appropriate.

Debt Collectors

In Centurion Capital Corp. v. Druce, the 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 GBL §349 by "bringing two actions for the same claim . . . is sufficient to state a (GBL §349) cause of action."

. . . Regardless of respondent's desire to anticipate market fluctuations to remain competitive, notwithstanding the price at which it purchased that supply, is precisely the manipulation and unfair advantage GBL §396-r is designed to forestall.  By Ronald B. Goodman

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