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People v. Lipsitz, 663 N.Y.S.2d 468 (N.Y. Sup. Ct. June 23, 1997)

Summary

In this case, a New York court held that the defendant was subject to personal jurisdiction and liable for violating New York consumer protection laws, even though the defendant conducted its magazine subscription business globally over the Internet.

Analysis

In a case characterized by the court as one "apparently [of] . . . nationwide impression" the Attorney General of New York brought suit to enforce consumer fraud and false advertising laws under New York's consumer protection statute, similar to consumer protection laws of other states, and section 5 of the FTC Act, 15 U.S.C.A. 45 against a business physically located within New York, but using the Internet to conduct its business more globally. The complaint alleged that the defendant had engaged in fraudulent and deceptive trade practices on the Internet by using and mis-using e-mail under various assumed names to sell magazine subscriptions that never arrived or were only delivered for a portion of the paid subscription period. In granting relief, the court first ruled that it had personal jurisdiction over the defendant because the defendants were located in New York, did business in New York and the acts complained of occurred within the state, notwithstanding the fact that the magazine subscriptions were offered for sale to a far greater geographic basis. Nor did prosecution offend the Commerce Clause as the consumer protection statute under which relief was granted was neither designed nor aimed at regulating conduct outside New York's borders. The court then analyzed the defendants' conduct under traditional consumer protection law, and held that the conduct violated New York laws.


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