Can we contract out of New York's consumer-protection statute, or at least channel the claim?
The authorities cited here establish the claim, its elements, and one express statutory prohibition and voiding, not a general anti-waiver rule. GBL § 349 declares unfair, deceptive, or abusive acts or practices in the conduct of any business, trade or commerce, or in the furnishing of any service in this state, unlawful, and § 349(h) gives any person injured by reason of any deceptive act or deceptive practice made unlawful by the section a private action for an injunction, for actual damages or fifty dollars (whichever is greater), or both, with discretionary trebling of actual damages up to $1,000 for a willful or knowing violation and discretionary attorney's fees to a prevailing plaintiff. Section 349(g) provides that the section applies to all unfair, deceptive, or abusive acts or practices whether or not subject to any other law of this state, and does not supersede, amend or repeal any other law of this state under which the attorney general or any other party is authorized to take any action or conduct any inquiry. Separately, GBL § 399-c(2)(a) bars a written contract for the sale or purchase of consumer goods, entered into on or after that section's effective date and to which a consumer is a party, from containing a 'mandatory arbitration clause', and § 399-c(2)(b) makes the provisions of such a clause null and void without impairing any other provision of the contract. The defined term is narrow: a clause that both requires arbitration before any legal action and makes the arbitrator's decision final as to the consumer and not subject to court review. The same section expressly leaves a non-consumer party free to agree that the award is final as to itself, and it defines 'consumer' as a natural person residing in this state and 'consumer goods' as goods, wares, paid merchandise or services purchased or paid for by a consumer for personal, family or household purposes, so the voiding reaches only the consumer side of a consumer-goods deal. New York's Court of Appeals has also set out the elements of a § 349 claim (consumer-oriented conduct, an act or practice deceptive or misleading in a material way, and injury as a result of the deception), and has explained that the consumer-oriented element precludes a § 349 claim based on 'private contract disputes, unique to the parties'.
The trap
The New York-specific point is what the statute does NOT contain: the published § 349 text contains no general anti-waiver provision of the kind other states' consumer statutes carry, so the drafting question is fought elsewhere, the statutory alternative of $50 where actual damages are lower, the fee award, and the § 349(d) complete defence for practices complying with FTC rules and statutes. Note also that the published text of § 349 now reaches 'unfair' and 'abusive' practices (each separately defined, with the 'substantial injury' element of the unfair test keyed to the federal trade commission act) and not just deceptive ones, while the private right of action in § 349(h) is still worded in terms of DECEPTIVE acts: a mismatch a drafter or a plaintiff must read carefully. The statutory texts cited here carry no effective date, so which text governs a given transaction cannot be answered from them, and that bites hardest on § 399-c, whose prohibition reaches only a contract 'entered into on or after the effective date of this section', a date the section itself never states. The section exempts the medium rather than the advertiser: “Nothing in this section shall apply to any television or radio broadcasting station or to any publisher or printer of a newspaper, magazine or other form of printed advertising, who broadcasts, publishes, or prints the advertisement.” So a broadcaster or printer that merely carried the advertisement is outside § 349, and the claim belongs against whoever put the message out. The limit that actually narrows § 349 exposure is an element of the claim rather than a clause: the consumer-oriented element precludes a claim built on 'private contract disputes, unique to the parties'. It is a thin shield for anyone selling a standard product, though: in Himmelstein, McConnell, Gribben, Donoghue & Joseph, LLP v. Matthew Bender & Co., Inc. the Court of Appeals held there is no textual support in § 349 for narrowing 'consumer' by the use made of the product, and said reliance on the consumer-goods definitions other General Business Law sections carry (§ 399-c among them) is misplaced; the dismissal there was affirmed on the materially misleading element instead, over a partial dissent.
14 authorities
- statuteN.Y. GBS Law § 349enactment date not established
The words that state the rule
(h) In addition to the right of action granted to the attorney general pursuant to this section, any person who has been injured by reason of any deceptive act or deceptive practice made unlawful by this section may bring an action in such person's own name to enjoin such deceptive act or deceptive practice, an action to recover such person's actual damages or fifty dollars, whichever is greater, or both such actions.
- statuteN.Y. GBS Law § 399-Cenactment date not established
The words that state the rule
2. a. Prohibition. No written contract for the sale or purchase of consumer goods, entered into on or after the effective date of this section, to which a consumer is a party, shall contain a mandatory arbitration clause. Nothing contained herein shall be construed to prohibit a non-consumer party from incorporating a provision within such contract that such non-consumer party agrees that the decision of the arbitrator or panel of arbitrators shall be final in its application to such non-consumer party and not subject to court review. b. Mandatory arbitration clause null and void. The provisions of a mandatory arbitration clause shall be null and void. The inclusion of such clause in a written contract for the sale or purchase of consumer goods shall not serve to impair the enforceability of any other provision of such contract.
- statuteN.Y. GBS Law § 399-Cenactment date not established
The words that state the rule
§ 399-c. Mandatory arbitration clauses in certain consumer contracts prohibited. 1. Definitions. a. The term "consumer" shall mean a natural person residing in this state. b. The term "consumer goods" shall mean goods, wares, paid merchandise or services purchased or paid for by a consumer, the intended use or benefit of which is intended for the personal, family or household purposes of such consumer. c. The term "mandatory arbitration clause" shall mean a term or provision contained in a written contract for the sale or purchase of consumer goods which requires the parties to such contract to submit any controversy thereafter arising under such contract to arbitration prior to the commencement of any legal action to enforce the provisions of such contract and which also further provides language to the effect that the decision of the arbitrator or panel of arbitrators in its application to the consumer party shall be final and not subject to court review. d. The term "arbitration" shall mean the use of a decision making forum conducted by an arbitrator or panel of arbitrators within the meaning and subject to the provisions of article seventy-five of the civil practice law and rules.
- statuteN.Y. GBS Law § 349enactment date not established
The words that state the rule
(e) Nothing in this section shall apply to any television or radio broadcasting station or to any publisher or printer of a newspaper, magazine or other form of printed advertising, who broadcasts, publishes, or prints the advertisement.
- statuteN.Y. GBS Law § 349enactment date not established
The words that state the rule
(a) Unfair, deceptive, or abusive 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. For the purposes of this section: (1) An act or practice is unfair when it causes or is likely to cause substantial injury which is not reasonably avoidable and is not outweighed by countervailing benefits to consumers or to competition. The term "substantial injury" as used in this subdivision shall have the same meaning as the term "substantial injury" in the federal trade commission act, 15 U.S.C. Section 41 et seq.
- statuteN.Y. GBS Law § 349enactment date not established
The words that state the rule
(2) An act or practice is abusive when: (i) it materially interferes with the ability of a person to understand a term or condition of a product or service; or (ii) it takes unreasonable advantage of: (A) a lack of understanding on the part of a person of the material risks, costs, or conditions of a product or service; (B) the inability of a person to protect such person's interests in selecting or using a product or service; or (C) the reasonable reliance by a person on a person engaging in the act or practice to act in the relying person's interests.
- statuteN.Y. GBS Law § 349enactment date not established
The words that state the rule
(d) In any action or proceeding brought pursuant to this section it shall be a complete defense that the act or practice is, or if in interstate commerce would be, subject to and complies with the rules and regulations of, and the statutes administered by, the federal trade commission or any official department, division, commission or agency of the United States as such rules, regulations or statutes are interpreted by the federal trade commission or such department, division, commission or agency or the federal courts.
- statuteN.Y. GBS Law § 349enactment date not established
The words that state the rule
(g) This section shall apply to all unfair, deceptive, or abusive acts or practices, whether or not subject to any other law of this state, and shall not supersede, amend or repeal any other law of this state under which the attorney general or any other party is authorized to take any action or conduct any inquiry.
- statuteN.Y. GBS Law § 349enactment date not established
The words that state the rule
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.
- case37 N.Y.3d 169Himmelstein, McConnell, Gribben, Donoghue & Joseph, LLP v. Matthew Bender & Co., Inc.N.Y.decided 2021read it at the source ↗
The words that state the rule
The requisite elements of the cause of action are well established. A plaintiff must allege that: (1) the defendant’s conduct was consumer-oriented; (2) the defendant’s act or practice was deceptive or misleading in a material way; and (3) the plaintiff suffered an injury as a result of the deception (GBL § 349 [h]; Plavin v Group Health Inc., 35 NY3d 1, 10 [2020]).
- case37 N.Y.3d 169Himmelstein, McConnell, Gribben, Donoghue & Joseph, LLP v. Matthew Bender & Co., Inc.N.Y.decided 2021read it at the source ↗
The words that state the rule
First, there is no textual support in GBL § 349 for a limitation on the definition of “consumer” based on use. Indeed, any such narrowing of the term “consumer” would be contrary to the legislative intent to protect the public against all forms of deceptive business practices (see GBL § 349 [a]; Karlin, 93 NY2d at 290). To the extent the First Department’s analysis has relied on other statutory definitions of “consumer” or “consumer good” (see Cruz v NYNEX Info. Resources, 263 AD2d 285, 289 [1st Dept 2000]), such reliance is misplaced. The text and purpose of GBL § 349 does not support the importation of other statutory definitions because, unlike other provisions, section 349 broadly prohibits “[d]eceptive acts or practices in the conduct of any business, trade or commerce or in the furnishing of any service in this state” (GBL § 349).
- case37 N.Y.3d 169Himmelstein, McConnell, Gribben, Donoghue & Joseph, LLP v. Matthew Bender & Co., Inc.N.Y.decided 2021read it at the source ↗
The words that state the rule
Second, given the text and purpose of GBL § 349, the Court has explained that an act or practice is consumer-oriented when it has “a broader impact on consumers at large” (Oswego Laborers’ Local 214 Pension Fund v Marine Midland Bank, 85 NY2d 20, 25-27 [1995]; New York Univ. v Continental Ins. Co., 87 NY2d 308, 320 [1995]). For example, the consumer-oriented element precludes a GBL § 349 claim based on “[p]rivate contract disputes, unique to the parties” (Oswego, 85 NY2d at 25).
- case37 N.Y.3d 169Himmelstein, McConnell, Gribben, Donoghue & Joseph, LLP v. Matthew Bender & Co., Inc.N.Y.decided 2021read it at the source ↗
The words that state the rule
However, the amended complaint was properly dismissed because plaintiffs cannot plead the materially misleading element of a GBL § 349 cause of action. A defendant’s actions are materially misleading when they are “likely to mislead a reasonable consumer acting reasonably under the circumstances” (Gaidon v Guardian Life Ins. Co. of Am., 94 NY2d 330, 344 [1999]).
- case37 N.Y.3d 169Himmelstein, McConnell, Gribben, Donoghue & Joseph, LLP v. Matthew Bender & Co., Inc.N.Y.decided 2021read it at the source ↗
The words that state the rule
Order affirmed, with costs. Opinion by Judge Rivera. Chief Judge DiFiore and Judges Stein, Garcia and Wilson concur. Judge Fahey dissents in part in an opinion.
“Defective” means that reading found something to correct. What you are reading is the rule as it stands after that reading.