NY Federal Court Rules that State Statute Prohibiting Additional Fees for Paper Billing Statements Violates First Amendment

The U.S. District Court for the Eastern District of New York ruled that a New York state statute prohibiting additional fees for paper billing statements in certain circumstances violates First Amendment free speech protections.

The plaintiff-consumer alleged that the defendant–national bank’s $3 fee for receiving monthly statements in paper form violated a New York statute prohibiting additional fees for paper billing statements in certain circumstances (the fee statute) and constituted a deceptive act or practice under a separate UDAP statute.  The bank responded that the statutes violate the First Amendment and, in any event, that its conduct did not violate either statute.  The district court agreed that the statutes violated the First Amendment.

Because the fee statute prohibits charges for paper statements but explicitly permits credits or other incentives for opting in to electronic statements, the court reasoned that this “structure regulates the communication of fees.”  Additionally, the court observed that the fee statute permits providing paper billing statements by default and offering an incentive to switch to electronic statements but prohibits providing electronic billing statements by default and charging to switch to paper statements.  According to the court, these two methods would have the same effect in practice.  Thus, the court concluded that the fee statute creates an unconstitutional restriction on commercial speech (i.e., the means of communicating a fee).

For similar reasons, the court concluded that the bank’s billing structure could not constitute a deceptive act or practice under the separate UDAP statute.  Thus, the court dismissed the case in its entirety.