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Financial Services Law Insights and Observations

New York law prohibiting paper billing statement fees is an unconstitutional restriction of commercial speech

Courts State Issues National Bank Act Fees Class Action First Amendment


On March 16, the U.S. District Court for the Northern District of New York dismissed a putative class action with prejudice over whether a national bank violated state law by charging a fee for paper billing statements in certain circumstances. The consumer’s suit alleged violations of N.Y. Gen. Bus. Law § 399-zzz as well as N.Y. Gen. Bus. Law § 349, which prohibits deceptive acts and practices. The bank argued, among other things, that (i) the consumer’s § 399-zzz claim was preempted by the National Bank Act (NBA); (ii) the consumer’s interpretation of § 399-zzz “would prevent [the bank] from exercising its federally authorized power to charge non-interest fees”; (iii) § 399-zzz is unconstitutional under the First Amendment because it limits the bank’s communication of fees and pricing to consumers; (iv) the statute does not apply to national banking institutions like the defendant; and (v) the statute does not prohibit the conduct at issue. The court disagreed, ruling that § 399-zzz is not preempted by the NBA because paper statement fees are not limited to only banking institutions. Moreover the court determined that the state statute is a rule of general application and “does not prevent or significantly interfere with [the bank’s] exercise of its powers.” However, the court ultimately dismissed the consumer’s action, agreeing that § 399-zzz constitutes an unconstitutional restriction on the bank’s First Amendment right of commercial speech under intermediate scrutiny. According to the court, § 399-zzz regulates “how businesses can communicate their fees” by “prohibit[ing] businesses from charging consumers for receiving a paper statement” but permits businesses “to offer consumers a credit for receiving an electronic statement instead of a paper statement.” The court also ruled that the consumer failed to state a claim for a deceptive act or practice because §399-zzz unconstitutionally infringes on the bank’s First Amendment rights.

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