General Business Law § 349 Does Not Apply to Private Contract Disputes
General Business Law § 349 was promulgated to address “the impact of deceptive conduct on consumer purchases [and, therefore,] prohibits deceptive acts and practices that misrepresent the nature or quality of products and services.” Himmelstein, McConnell, Gribben, Donoghue & Joseph, LLP v. Matthew Bender & Co., Inc., 37 N.Y.3d 169, 176 (2021) (citing Teller v. Bill Hayes, Ltd., 213 A.D.2d 141, 146 (2nd Dept. 1995).) To state a cause of action under General Business Law § 349, 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. Himmelstein, McConnell, 37 N.Y.3d at 176 (citations omitted). Significantly, a plaintiff need not allege reliance on the deceptive act and, therefore, need not allege that “they would not otherwise have entered into the transaction.” Stutman v. Chemical Bank, 95 N.Y.2d 24 (2000).
The key to the applicability of General Business Law § 349 is “consumer oriented conduct.” An “act or practice is consumer-orientated when it has a broader impact on consumer’s at large.” Himmelstein, 37 N.Y.3d at 177 (citations and internal quotation marks omitted). The Court of Appeals explained “consumer oriented conduct” in the context of a General Business Law § 349 action as follows:
Consumer-oriented conduct does not require a repetition or pattern of deceptive behavior. The statute itself does not require recurring conduct. Moreover, the legislative history makes plain that this law was intended to "afford a practical means of halting consumer frauds at their incipiency without the necessity to wait for the development of persistent frauds" (see, Mem of Governor Rockefeller, 1970 NY Legis Ann, at 472-473). Plaintiff, thus, need not show that the defendant committed the complained-of acts repeatedly — either to the same plaintiff or to other consumers — but instead must demonstrate that the acts or practices have a broader impact on consumers at large. Private contract disputes, unique to the parties, for example, would not fall within the ambit of the statute.
Oswego Laborer’s Local 214 Pension Fund v. Marine Midland Bank, 85 N.Y.2d 20, 25 (1995) (Some citations and internal quotation marks omitted).
General Business Law § 349 has been applied to a variety of situations. See, e.g., Karlin v. IVF America, Inc., 93 N.Y.2d 282 (1999) (in vitro fertilization services); Plavin v. Group Health Inc., 35 N.Y.3d 1 (2020). However, “the consumer-oriented element precludes a General Business Law § 349 claim based on private contract disputes, unique to the parties.” Himmelstein, 37 N.Y.3d at 176 (citations, internal quotation marks and brackets omitted); see also Teller, 213 A.D.2d at 146.
The plaintiff in Kovalenko v. Bhatti General Contracting & Development, LLC, 241 A.D.3d 1540 (2nd Dept. 2025), made a General Business Law § 349 claim against a contractor for the breach of a construction contract. The Second Department reversed the motion court’s denial of the contractor’s motion to dismiss the claim. The Court recognized that a “single shot transaction, which is tailored to meet the purchaser’s wishes and requirements, does not, without more, constitute consumer-oriented conduct for the purposes of General Business Law § 349. Kavalenko, 241 A.D.3d at 1544 (citations, internal quotation marks and brackets omitted). The Court stated:
Here, in the complaint, the plaintiff failed to allege that the defendants’ conduct was consumer-oriented conduct. The plaintiff did not allege that the defendants offered their services to the general consuming public or that the defendants’ acts and practices were of a recurring nature and harmful to the public at large.
Id. (citations omitted).
Interestingly, the United States Court of Appeals for the Second Circuit recently found that a plaintiff’s General Business Law § 349 claim was preempted by the Federal Food, Drug, and Cosmetic Act. Yousefzadeh v. Johnson & Johnson Consumer, Inc., 184 F.4th 130 (2026). There, plaintiffs, buyers of nasal decongestant, brought actions against several drug manufacturers and retailers claiming that the decongestant was produced, marketed, advertised and sold knowing that its active ingredient was not effective as a decongestant. Yousefzadeh, 184 F.4th at 138. The Court held that state consumer protection laws (including General Business Law § 349) were preempted because the manufacturers “followed the FDA's prescribed labeling requirements by designating their decongestants’ purpose as decongestion … [and, therefore, they] cannot now be sued for complying with those FDA specifications. Therefore, the claim that Defendant Manufacturers mislabeled their products by indicating their use for decongestion fails.” Id.
Against this backdrop, we discuss USMMA Sailing Found, Inc. v. Hilb Group of N.Y., LLC, decided by the Appellate Division, Second Department, on October 7, 2026. The plaintiff in USMMA alleged that defendant insurance broker failed to procure “the full scope of insurance coverage requested by the plaintiff for the racing yacht and that the defendant concealed the fact that such coverage was available to the plaintiff at a higher premium.” The defendant moved to dismiss the General Business Law § 349 claim. The motion court denied the motion and the defendant appealed.
The Second Department reversed and, in so doing, stated:
General Business Law § 349(a) declares unlawful all 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. Parties claiming the benefit of General Business Law § 349(h) must, at the threshold, charge conduct that is consumer oriented. The conduct need not be repetitive or recurring but defendant's acts or practices must have a broad impact on consumers at large. Private contract disputes, unique to the parties, do not fall within the ambit of the statute.
Here, accepting as true the facts alleged in the complaint and according the plaintiff the benefit of every possible favorable inference, the plaintiff's allegations that the defendant violated General Business Law § 349(h) failed to state a cause of action. The plaintiff failed to allege that the defendant's acts or practices had a broad impact on consumers at large, and the plaintiff did not assert any facts that would support such an allegation. The allegations in the complaint merely refer to a private contract dispute over the procurement of insurance coverage and the processing of a claim that is unique to these. Accordingly, the Supreme Court should have granted that branch of the defendant's motion which was pursuant to CPLR 3211(a)(7) to dismiss the third cause of action for failure to state a cause of action. [Citations, internal quotation marks, brackets and ellipses omitted.]
Jonathan H. Freiberger is a partner and co-founder of Freiberger Haber LLP.
This article is for informational purposes and is not intended to be and should not be taken as legal advice.
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