§2.10 B. Misrepresentation In A Material Way

• Jurisdiction: New York

B. Misrepresentation in a Material Way

As a preliminary matter, plaintiffs seeking relief under § 349 need not wait for repeated instances of deception in order to satisfy this “material misrepresentation” inquiry. Although courts may look to the recurrence of the transaction as a single factor in determining whether or not the transaction is “consumer-oriented,”²⁶⁵ prospective plaintiffs need not “wait for the development of persistent frauds.”²⁶⁶ New York courts have imposed an objective test to determine whether a particular misrepresentation meets this criterion; the alleged deception must be “likely to mislead a reasonable consumer acting reasonably under the circumstances”²⁶⁷ to be actionable under § 349.

A plaintiff’s knowledge or a defendant’s disclosure of the allegedly deceptive acts often arises as an issue here. If a plaintiff knows or should know of the allegedly deceptive act, it defeats the claim that he “acted reasonably.” But at what point can prospective plaintiffs be charged with knowledge of the allegedly deceptive act? In Oswego Laborers’ Local 214 Pension Fund v. Marine Midland Bank, the plaintiff union alleged that the bank committed a “deceptive act” by failing to notify the union of a federally mandated cap on principal upon which interest could be paid when it opened the account.²⁶⁸ The court first concluded that this was a “consumer-oriented transaction” because of the bank’s uniform method of dealing with all prospective customers, including the plaintiffs.²⁶⁹

The Court found the record inconclusive on the question of “material misrepresentation,” stating that “the Bank’s liability under the statute will depend . . . on whether plaintiffs possessed or could reasonably have obtained the relevant information they now claim the Bank failed to provide.”²⁷⁰ Had the plaintiffs actually known of the federal regulation and opened an account with the bank anyway, it would defeat their claim that they “acted reasonably.”²⁷¹ The Court in Oswego also suggests that where the plaintiffs can discover the allegedly deceptive act with “reasonable” efforts, the plaintiffs cannot claim that they “acted” reasonably upon entering into the transaction.²⁷²

However, a defendant’s mere disclaimer is not enough to defeat a § 349 claim. In Spitzer v. Applied Card Systems, Inc.,²⁷³ the defendants mailed credit card offers to several New York residents, claiming that applicants could receive a credit line of up to $2,500. Most applicants received only...