By Susan Shin and Claudia Wilner
It may come as a surprise to many that New York, a leader on other consumer protection fronts, has one of the weakest general consumer protection laws in the country. Forty-two other states have “UDAP” statutes—laws that broadly ban unfair and deceptive acts and practices by businesses, and thereby enable people to protect themselves from businesses that engage in harmful conduct. New York’s notoriously weak consumer protection law, contained in section 349 of the General Business Law, bans only deceptive acts and practices.
As a result, New Yorkers lack recourse under state law against any business that harms them through conduct that is unfair or abusive, but arguably not deceptive, such as when a debt collector harasses older adults into giving up their limited, legally protected income—conduct that has harmed many low-income New Yorkers and New Yorkers of color.
For years, advocates have urged lawmakers to “put the U in UDAP” and bring New York in line with those 42 other states. This year, New York can do just that by enacting the Consumer and Small business Protection Act (CSPA), as an urgent matter of racial and economic justice. Gov. Kathy Hochul and the state Senate have pledged to bolster our consumer protection law in this year’s budget. However, it’s imperative that they do so firmly, refusing to yield to industry pressure.
Among other critical improvements, the CSPA would cure New York’s already weak consumer protection law of a debilitating feature ill-advisedly added by our courts. The Court of Appeals has stated that to assert a claim under GBL § 349, one must show that the defendant engaged in “wrongs against the consuming public.” Oswego Laborers’ Local 214 Pension Fund v. Marine Midland Bank, N.A., 85 N.Y.2d 20, 24, 623 N.Y.S.2d 529, 532, 647 N.E.2d 741, 744 (1995); see also Himmelstein, McConnell, Gribben, Donoghue & Joseph, LLP v. Matthew Bender & Co., Inc., 37 N.Y.3d 169, 171 N.E.3d 1192 (2021). Under this court-imposed requirement, it is not enough for a New Yorker to assert that a deceptive practice adversely affected them alone; they must also show that the deceptive acts “have a broader impact on consumers at large.” Oswego Laborers’ Local 214 Pension Fund, 85 N.Y.2d at 25. Citing Genesco Entertainment, a Division of Lymutt Industries, Inc. v. Koch, 593 F. Supp. 743, 753 (S.D.N.Y. 1984)), the Oswego court further stated that “[p]rivate contract disputes, unique to the parties, for example, would not fall within the ambit of the statute.” 85 N.Y.2d at 25.
Genesco Entertainment—which concerned a dispute between a corporate concert promoter and New York City over the leasing of Shea Stadium—was hardly a suitable case from which to derive a broad prohibition that individual New Yorkers could not proceed against a business with a claim of deceptive conduct based on a private contract dispute. In that case, the federal district court determined that the corporate plaintiff had failed to state a claim under GBL § 349 because the corporation had not been subjected to a deceptive practice. The court then opined in dicta that, at any rate, GBL § 349 did not apply to the commercial transaction in question—a “‘single shot transaction’ involving complex arrangements, knowledgeable and experienced parties and large sums of money”—as it was not the kind of transaction for which the average consumer would ever need GBL § 349’s protections. 593 F. Supp. at 752. Inexplicably, though GBL § 349 did not even apply in Genesco Entertainment, the Oswego court nevertheless used the dicta to promulgate an onerous, often unfulfillable standing requirement that severely compromises the law’s remedial purpose to protect New Yorkers from a business’s harmful conduct.
As a result of this baseless requirement, New York courts have routinely found that a business’ misrepresentation is not “consumer-oriented”—and have denied relief—solely because the misrepresentation was made to a single individual or involved a single transaction. Examples include landlord-tenant transactions (see Brake v. Slochowsky & Slochowsky, L.L.P., 504 F. Supp. 3d 103 (E.D.N.Y. 2020) (holding landlord’s attorney’s repeat filing of eviction actions to be a private matter)); disputes with insurance companies (see Zawahir v. Berkshire Life Ins. Co., 22 A.D.3d 841 (App. Div. 2d Dep’t 2005) (finding that insurance company’s cessation of payments under disability policies constituted a private contract dispute and was therefore not consumer-oriented)); nonpayment of wages (seebIn re Domino’s Pizza, 2018 WL 1587593 (S.D.N.Y. Mar. 27, 2018) (finding no consumer-oriented conduct where employer filed fraudulent tax
returns misrepresenting the wages it had paid)); and warranty disputes (see Parrino v. Sperling, 648 N.Y.S.2d 702 (N.Y. App. Div. 2d Dep’t 1996) (dismissing warranty claim under GBL § 349 because the sale of a customized wheelchair was “private in nature”)).
To be clear: This “consumer-oriented” standard effectively requires all private litigation under GBL § 349 to emulate class action litigation, which was never the Legislature’s intent; has no support in the text of the law; and renders the law ineffectual as a deterrent against harmful conduct by businesses.
New York is one of only six states with this kind of debilitating requirement. See National Consumer Law Center, Unfair and Deceptive Acts and Practices 11.4.3.1 (10th ed. 2021), updated at www.nclc.org/library. Other jurisdictions, such as Connecticut and Colorado, have amended or are in the process of amending their UDAP statutes to state explicitly that their residents need not show any public interest or public injury and that a single bad act may give rise to UDAP liability. See, e.g., Conn. Gen. Stat. Ann. § 42-110g (“[p]roof of public interest or public injury shall not be required in any action brought under this section”) and CO HB24-1014 (proposing in Section 2: “[e]vidence that a person has engaged in an unfair or a deceptive trade practice: (a) is prima facie evidence of intent to injure competitors and to destroy or substantially lessen competition; and (b) is sufficient to establish a significant impact to the public.”).
UDAP laws are intentionally broad and flexible, in order to protect people against evolving and unforeseeable schemes without needing to enumerate issue-specific fixes—which would, at any rate, inevitably lag behind the invention of new schemes for taking advantage of people, especially low-income people and people of color. In that vein, the New York State Legislature intended for GBL § 349 to apply broadly and protect against all deceptive acts by businesses that would harm New Yorkers. See Report of the Committee on New York State Antitrust Law of the Antitrust Law Section of the New York State Bar Association: A Proposed New State Law Making Deceptive Acts or Practices Unlawful, 1968 N.Y. St. B.A. Antitrust L. Symp. 114, 121 (CCH ed.) (noting that the statute was drafted “to include all economic activity”).
Not only has the court-imposed “consumer-oriented” requirement improperly narrowed the scope of New York’s general consumer protection statute, in contravention of the Legislature’s mandate, the requirement has severely undermined the Legislature’s goal of increasing private enforcement of GBL § 349 by “grant[ing] individuals the right to sue for injuries resulting from consumer fraud.” 980 McKinney’s Session Laws 1867 (Memorandum of Gov. Carey). Requiring a showing of public impact prevents individuals from seeking to deter harmful conduct by businesses before that conduct harms others.
New York must take immediate corrective action so that its UDAP law can provide meaningful and effective protection to its residents against businesses’ harmful conduct. Commendably, Governor Hochul made banning unfair and abusive practices in New York part of her 2024 State of the State address and her fiscal year 2025 budget includes a bill that would ban unfair and abusive business practices. Unfortunately, her bill would not eliminate the unnecessary and burdensome requirement that an individual New Yorker show that a business’s conduct has a public impact—all to the satisfaction of the business lobby, which has been working overtime to keep New York’s consumer protection law as toothless as possible. By contrast, the CSPA, included in the state Senate’s budget proposal (TED, Part JJ), would both ban unfair and abusive business practices and eliminate the onerous consumer-oriented requirement.
Any legislation that falls short of eliminating this court-imposed “consumer-oriented” barrier will render other much-needed reforms to GBL § 349—such as a ban on unfair and abusive business practices—all but meaningless in practice. New Yorkers will remain unprotected against deceptive business conduct, nor will they benefit from any new ban on unfair or abusive conduct. New York must act this session to eliminate this judicially-created barrier and fulfill GBL § 349’s legislative purpose once and for all, by explicitly stating that GBL § 349 bans unfair, deceptive, or abusive acts or practices regardless of whether individual New Yorkers can show that the harmful conduct affects the public at large.
Susan Shin is legal director at New Economy Project. Claudia Wilner is director of litigation and advocacy at the National Center for Law and Economic Justice.