§2.9 A. “Consumer-Oriented” Transaction

• Jurisdiction: New York

A. “Consumer-Oriented” Transaction

A threshold inquiry is whether or not the allegedly deceptive transaction is “consumer-oriented.” “Consumer-oriented” has proven a somewhat misleading term, as the transaction at issue need not involve traditional “consumer products” in order to qualify as “consumer-oriented.”²³⁸ Although the majority of potential § 349 claims fail because they lack “consumer orientation,” the term “consumer-oriented” has been expanded to include a vast array of industries, products, and services, from insurance policies²³⁹ and rental cars²⁴⁰ to fertility clinics²⁴¹ and nonprofit organizations.²⁴²

In Gaidon v. Guardian Life Insurance Co.,²⁴³ the defendants sold a life insurance policy to the plaintiffs. The defendants represented that the insured would have to pay an out-of-pocket premium for the policy for only the first eight years of coverage; when the premiums did not “vanish” as promised, the plaintiffs sued under § 349.²⁴⁴ The plaintiffs alleged that the defendants based this projection on a series of untenable or artificially inflated dividend rates.²⁴⁵ The Court in Gaidon found that the plaintiffs stated a proper § 349 claim. While it suggested that a private dispute over an individual’s policy coverage would not meet the threshold “consumer-oriented” inquiry, the Court concluded that the facts in the present case “involved an extensive marketing scheme that had ‘a broader impact on consumers at large.’”²⁴⁶

One way to think about a consumer-oriented transaction is to compare the transaction in dispute, as New York courts have often done, with a private dispute exclusive to the parties involved. Plaintiffs alleging a violation of § 349 must demonstrate that the defendant’s conduct has a “broader impact on consumers at large.”²⁴⁷ In other words, the alleged deception must “potentially affect[s] similarly situated consumers”²⁴⁸ to qualify as a “consumer-oriented” transaction. A simple contract dispute between two parties may nonetheless be “consumer-oriented” if the contract itself is a standard form used for all would-be contractors.²⁴⁹ Given that “consumer-oriented” transactions must have some impact on the general public, it is unsurprising that many “consumer-oriented” acts are addressed to the general public.²⁵⁰

By contrast, a purely private dispute involves facts “unique to the parties,”²⁵¹ with real consequences falling only upon the plaintiff and defendant. These transactions often involve some “tailor-made” alterations to the terms of the contract to suit one party or the other.²⁵² Non-“consumer-oriented” transactions may only occur once,²⁵³ but typically involve large sums of money.²⁵⁴ The less uniform a contract or transaction is across several different consumers, customers, or clients, the less likely it will be considered “consumer-oriented” within the meaning of § 349.²⁵⁵ Disputes involving naturally unique items, such as authorship rights,²⁵⁶ are also generally not “consumer-oriented.”

New York courts have on rare occasions delineated certain categories of transactions as not generally “consumer-oriented.” Because securities are not negotiated, bought, and sold in the same sense or for the same purpose as a “consumer product,” securities transactions are generally not considered “consumer-oriented.”²⁵⁷ Similarly, the court denied § 349 relief to the plaintiff in Kinkopf v. Triborough Bridge & Tunnel Authority because the charges in his E-Z Pass account “essentially amounted to a use tax”²⁵⁸ not considered “consumer-oriented” for § 349 purposes.

The courts also make clear that where the “core harm” is to a business alone, it does not stem from a “consumer-oriented” transaction despite a consumer’s incidental purchase of the business’s products or services.²⁵⁹ In Vitolo v. Mentor H/S Inc., a plastic surgeon sued a supplier of saline breast implants, alleging that the supplier misrepresented the failure rate of the...