On February 27, 2026, the United States District Court for the Eastern District of New York issued a significant ruling in Hastings v. TD Bank, N.A., dismissing with prejudice a putative class action challenging TD Bank’s $3 monthly fee for paper account statements. The court held that New York General Business Law Section 399-zzz (“Section 399-zzz”), which prohibits businesses from charging consumers fees for receiving paper billing statements, is unconstitutional because it violates the First Amendment’s protection of commercial speech. This decision follows and adopts the reasoning of an earlier Northern District of New York decision in Manship v. TD Bank, N.A.

I. Background

Plaintiff Joshua Hastings, a New York resident who maintained a checking account with TD Bank since at least 2024, alleged that TD Bank’s practice of charging a $3 monthly fee for paper statements violated Section 399-zzz. Section 399-zzz provides that no business entity shall charge a consumer an additional rate or fee when the consumer chooses to receive a paper billing statement, though it expressly permits businesses to offer consumers a credit or other incentive to elect paperless billing options. The statute further provides that every violation shall be deemed a deceptive act or practice subject to enforcement under the consumer protection provisions of the General Business Law.

II. The Court’s Holdings

A. Section 399-zzz Violates Defendant’s First Amendment Rights

The court’s critical holding was that Section 399-zzz regulates speech, not merely conduct, and fails to survive intermediate scrutiny under the First Amendment. The court found that the statute regulates how businesses communicate their fees because it permits banks to deprive customers who receive paper statements of a credit given to those who receive paperless statements, while simultaneously restricting banks from labeling this deprivation as a “fee”.

Applying the four-part test for commercial speech regulations in Central Hudson Gas & Elec. Corp. v. Pub. Serv. Comm’n of N.Y., the court concluded that while the government’s interest in consumer protection is substantial, Section 399-zzz does not directly advance that interest. In essence, the statute prohibits businesses from setting the default position as paperless statements and charging customers a fee when they affirmatively choose paper statements but permits businesses to set the default as paper statements and give a credit or incentive to customers who choose paperless statements. The court found the two approaches have little practical difference. Therefore, the court held, Section 399-zzz does not directly advance the government’s interest and does not survive intermediate scrutiny.

B. Plaintiff’s Claim is Not Preempted by the NBA

TD Bank argued that Section 399-zzz is preempted by the National Bank Act (“NBA”). The court rejected this argument, holding that Section 399-zzz is not preempted because the statute does not “prevent or significantly interfere” with the exercise of national banks’ powers. The court agreed with the earlier Manship decision’s reasoning that paper statement fees do not involve banking concepts or principles and are therefore distinct from non-interest banking fees subject to federal regulatory authority. The court further noted that Section 399-zzz does not significantly interfere with a bank’s power to charge customers for paper statements because the bank could circumvent the statute by restructuring its pricing as a credit rather than a fee.

C. Severability

The court rejected the plaintiff’s argument that the unconstitutional portion of the statute (the “credit or other incentive” provision) should be severed to preserve the remainder. Under New York severability law, the court found that excising the credit provision would undermine both the statute’s original text and its legislative history, as the bill’s primary sponsor expressly recognized that the legislation does not prohibit companies from providing incentives for paperless billing.

D. Plaintiff Fails to State a Claim under Section 349

Since Section 399-zzz was found unconstitutional, the plaintiff could not establish a violation to support his claim under Section 349 of the General Business Law for deceptive acts or practices.

E. Leave to Amend

The court dismissed the complaint with prejudice, declining to grant leave to amend because the deficiency in plaintiff’s claims is substantive and cannot be cured through better pleading.

III. Conclusion

This decision helps provide some clarity for financial institutions operating in New York that charge, or are considering charging, fees for paper account statements. While Section 399-zzz remains in effect, this ruling together with the earlier Manship decision, establishes persuasive authority that the statute is unconstitutional. Financial institutions should note, however, that this is a district court decision and is not binding on other courts, and the decision is subject to appeal.

We will continue to monitor developments in this area, as an appeal or contrary rulings in other districts could alter the legal landscape.

Please note this is a general overview of developments in the law and does not constitute legal advice. Nothing herein creates an attorney-client relationship between the sender and the recipient. If you have any questions about this decision or Section 399-zzz, please feel free to contact Joseph D. Simon at (516) 357-3710 or via email at jsimon@cullenllp.com, Elizabeth A. Murphy at (516) 296-9154, or via email at emurphy@cullenllp.com, David Curatolo at (516) 357-3773 or via email at dcuratolo@cullenllp.com, or Gabriela Morales at (516) 357-3850 or via email at gmorales@cullenllp.com.