New York's highest court has ruled that the federal Truth-in-Lending Act does not pre-empt New York consumer protection laws, upholding a suit brought by then-Attorney General Eliot Spitzer claiming deceptive practices by a nationwide bank and its debt collector.
In a 5-1 ruling, the Appeals Court said federal law prevents states from requiring additional disclosures from credit card issuers. But the judges said New York's laws against fraud and deception simply prohibit misinformation.
"New York's Executive Law and Consumer Practice Act, collectively, do not require respondents to disclose anything," Judge Carmen Beauchamp Ciparick wrote for the majority. "These statutes simply require that they refrain from fraud, deception, and false advertising when communicating with New York consumers."
In the majority opinion, the judges noted that since 1997, Cross Country Bank and collector Applied Card Systems solicited consumers in the subprime market to apply for credit cards they would not qualify for under traditional underwriting guidelines. Spitzer had argued customers were deceived into applying for cards with credit lines up to $2,500, while most actually received far less credit, and card fees were immediately billed against them.