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An appeals court Tuesday reinstated a class action that accuses a bank of aggressively selling credit cards with hidden fees to low-income consumers. New York’s Appellate Division, 1st Department, said a trial judge had used the wrong standard in summarily dismissing the suit. The plaintiffs, the court said, had clearly pleaded sufficient facts to support a claim of deceptive practices against First Consumers National Bank. The plaintiffs allege the bank used high-pressure sales tactics to sell credit cards to people who were likely to be rejected by most credit card offers. In their complaint, the plaintiffs allege that ads for the cards deceived customers by hiding fees, including annual fees, in a disclosure statement with small type. The complaint alleges deceptive acts in violation of General Business Law � 349, breach of contract, and breach of good faith and fair dealing. The bank moved to dismiss the complaint under Civil Practice Law and Rules �� 3211(a)(1) and (7), relying on their disclosure statements, which were in six-point type. The plaintiffs argued that the statements were inadmissible under CPLR � 4544, which requires eight-point type. Manhattan Supreme Court Justice Charles Ramos granted the motion to dismiss in February 2002, construing the plaintiffs’ reliance on CPLR � 4544 “as an unwarranted attempt to create a private right of action,” according to the appeals court. Noting that the plaintiffs had voluntarily paid certain invoices, the judge said the bank’s disclosure statements barred their claims as a matter of law. In unanimously reversing Justice Ramos’ ruling, the 1st Department said in Sims v. First Consumers National Bank, 2746, that the claims did not rely on CPLR 4544, but constituted three separate causes of action alleging deceptive practices, contract breaches and breaches of good faith. “The standard against which defendant’s pre-answer motion should have been decided is whether or not, ‘accepting the material allegations as true and giving plaintiff the benefit of every reasonable inference … the complaint sets forth sufficient facts such that a cognizable claim … can be discerned,” the court wrote, citing its 2002 ruling in Kralic v. Helmsley, 294 AD2d 234. “Whether the defendants’ conduct was deceptive or misleading is a question of fact,” the court said. The court also pointed out that disclosure statements should be measured against Regulation Z of the federal Truth in Lending Act. The court said Regulation Z “does not preempt state consumer protection laws completely but requires that consumer disclosures be ‘clearly and conspicuously in writing.’” “If a fact-finder concluded that the disclosure statement was not clear or conspicuous as required by Regulation Z, it could invalidate the fee provision or, alternatively, see it as a violation of the implied duty of good faith and fair dealing,” the court wrote. Presiding Justice John T. Buckley and Justices Betty Weinberg Ellerin, Alfred D. Lerner, David Friedman and George D. Marlow concurred on the ruling. Michele Fried Raphael of Wolf Popper, who represents the plaintiffs, said the decision was “an excellent ruling for consumers.” Darryl J. May of Ballard Spahr Andrews & Ingersoll in Philadelphia, lead counsel for the bank, said he could not comment because he had not seen the opinion. Alexander Geiger of Geiger & Rothenberg, who served as local counsel for the bank, could not be reached for comment.

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