Unfair Trade Practices
All states have laws that protect consumers by preventing businesses from engaging in unfair trade practices. The scope of protection depends on the statutory language. In New York, the primary unfair trade practices statute is General Business Law §§ 349-350-f. Section 349 applies to material deceptive acts and practices. If your business is sued in New York or another state for unfair trade practices, or if it has been harmed by another entity’s unscrupulous conduct, the commercial litigation lawyers at Klapper & Fass can build a robust case on your behalf.Unfair Trade Practices Claims Under New York Law
New York General Business Law § 349 prohibits deceptive trade practices or acts. It has a broad application and covers nearly every economic activity. The state attorney general can bring an enforcement action to enjoin unlawful acts or practices and to obtain restitution of money or property that is obtained directly or indirectly through the alleged unlawful practices or acts. The attorney general has to give notice to a business accused of this kind of conduct, and an opportunity to show in writing within five business days why the acts or practices at issue should not be enjoined, unless giving notice is against the public interest.
In addition, an injured person can bring a private lawsuit against the business to enjoin the deceptive act or practice, or to recover actual damages or $50, whichever amount is greater. In the case of willful or knowing violations, the court can increase the monetary damages award to an amount of not more than three times the actual damages, up to $1,000.
Parties entitled to bring a private lawsuit under General Business Law § 349 include corporate competitors, not just consumers. To recover under the statute, the plaintiff, whether a competitor or a consumer, must show that:
- The defendant engaged in an act or practice that was materially deceptive;
- The challenged act or practice was consumer-oriented; and
- The consumer suffered an injury because of the deceptive act or practice.
An act or practice is considered materially deceptive if it is likely to affect a consumer's choice of goods or actions related to the goods.
A plaintiff bringing an unfair trade practices lawsuit will need to show that the deceptive acts or practices claimed were part of a pattern directed at the public generally. Actions and practices have been found sufficiently consumer-oriented when they were standard or routine practices that potentially affected similarly situated consumers. For example, when an insurance company has not provided proper notice of a change in coverage, the lack of notice has been construed as an unfair trade practice.
In contrast to a claim under General Business Law § 350, which governs deceptive advertisements and product labels, a plaintiff suing under § 349 does not need to prove that a defendant intended to mislead the plaintiff or even that the consumer relied on the act or practice in an unfair trade practice claim. The conduct does not have to be at the level of fraud to be actionable, and even an omission can count as an unfair trade practice. Mere "puffery" is not actionable in New York. However, the deception itself cannot be the only harm the plaintiff alleges. The injury must be actual, although it need not be pecuniary.
If your business has been targeted by the attorney general, a competitor, or a consumer, we can help you mount a vigorous defense against an unfair trade practice claim, along with any related causes of action that may be brought. Some potential defenses include that the plaintiff failed to file within three years of the last act claimed to be deceptive, that the act or practice did not affect the public, that the plaintiff suffered no actual harm, or that the act was not misleading.
Additionally, a complete defense is available under the statute if the act or practice that the plaintiff claims is deceptive complies with the Federal Trade Commission's rules, regulations, or administered statutes, or the rules and regulations of any official United States department that governs the business practice at issue.
We can also assist you in crafting and prosecuting an unfair trade practices claim if your business has been subject to unfair or illegal conduct by another company.Consult a New York Lawyer Skilled in Business Disputes
The business dispute attorneys at Klapper & Fass have handled complex and novel cases in New York and beyond. Our experienced litigators can help you defend against or bring an unfair trade practices claim. Our offices in White Plains and Manhattan serve the five boroughs of New York as well as states throughout the nation, including Pennsylvania and Florida. Contact us at 914.287.6466 or via our online form.