A business kept your deposit. Here is how New York sees it.

GBL § 349 · CPLR § 213(2)

Start with the paper, not the phone call.

Every deposit dispute in New York begins with the same question: what did you agree to? Pull the contract, the invoice, the online terms you clicked through, and the confirmation email. Read the cancellation section twice. Three things matter most: whether the deposit is described as refundable, partially refundable, or non-refundable; what cancellation deadlines it sets; and whether the business promised anything it then failed to deliver.

If the document says the deposit is refundable and the vendor will not refund it, you have a straightforward breach of contract. If it says nothing about deposits at all, New York's default rule is that money paid toward a contract the other side did not perform must come back. The hard cases are the ones where the fine print says 'non-refundable', and those are the cases this page is mostly about.

'Non-refundable' is not magic. The penalty rule.

New York courts enforce liquidated-damages clauses, including deposit forfeitures, only when the amount is a reasonable estimate of the harm the business would actually suffer from your cancellation and when that harm was hard to estimate when the contract was signed. A clause that instead operates as a penalty, meaning the amount is grossly disproportionate to any real loss, is unenforceable as a matter of New York common law. The business keeps what it can justify, and owes back the rest.

Apply that to a real example. You put $4,000 down on a $12,000 event nine months out and cancel at month two. The vendor rebooks the date within weeks. Its actual loss might be a few hours of administrative time. Keeping all $4,000 looks like a penalty, and a New York judge is entitled to say so. Contrast a $500 deposit on a $2,000 order of custom cabinets already in production: the vendor's loss is real, and the forfeiture will probably stand.

Two cautions. First, the burden of showing the clause is a penalty is on you, the person challenging it. Second, a vendor who cancelled on you, or who simply failed to perform, cannot hide behind a non-refundable clause at all; that language protects a vendor from your cancellation, not from its own.

When the business is the one that walked away.

If the vendor cancelled, no-showed, shut its doors, or substituted something materially different from what you bought, the analysis gets simpler. A party that fails to perform is not entitled to keep the other side's money. You are owed the deposit back, and in many cases the extra cost of replacing the service on short notice. The vendor that cancels your September date in August and forces you to pay a replacement 30 percent more owes that difference too, at least where the contract did not limit damages.

Partial performance is the middle case. A mover who delivered half your furniture, a caterer who showed up without the bar package you paid for, a dealer who delivered a car with different options: the question is what portion of your money was earned. Keep receipts for what you had to buy elsewhere.

General Business Law § 349 adds teeth.

New York's consumer protection statute, General Business Law § 349, prohibits deceptive acts and practices in the conduct of any business directed at consumers. It is broader than fraud: you do not need to prove the business intended to deceive you, only that its conduct was misleading in a material way to a reasonable consumer and that you were injured as a result. Taking deposits with no intention or ability to perform, advertising one price and charging another, burying material terms, and misrepresenting refund policies have all supported § 349 claims.

The remedies are what make the statute useful in a demand letter. A consumer can recover actual damages or $50, whichever is greater; a court may increase the award up to three times actual damages, capped at $1,000, for willful or knowing violations; and the court may award reasonable attorney's fees to a prevailing plaintiff. The fee provision changes the economics. A business that assumes you will never hire a lawyer over a $1,800 deposit has to reconsider when the letter points out that its own conduct could end up paying the lawyer.

Not every deposit dispute is a § 349 case. A plain disagreement about whether a cancellation was timely is a contract dispute, not a deceptive practice. We only raise the statute when the facts support it, because an overreaching letter is a weaker letter.

Use the chargeback window while it is open.

If you paid by credit card, your fastest remedy may be your bank. Federal law gives you the right to dispute billing errors, including charges for goods or services not delivered as agreed, within 60 days of the statement on which the charge appeared. Card networks separately allow merchant disputes for longer, often up to 120 days from the transaction or the date the service was supposed to be provided, and for future-dated services the clock frequently runs from the failed delivery date rather than the payment date.

File the dispute in writing, attach the contract and your cancellation or the vendor's, and keep it factual. A chargeback does not waive your right to send a demand letter or sue, and the two work well together: the vendor that ignores your emails tends to respond when its processor freezes the funds. Debit cards and Zelle offer weaker protection; wire transfers and cash offer almost none, which is why the demand letter matters more in those cases.

Paid by Zelle, wire, or cash? Vendors that ask for deposits by Zelle, wire, or cash are not always hiding something, but the payment method matters because it removes your fastest remedy. There is no chargeback. Your bank will not claw a Zelle payment back from a merchant you intended to pay, and a wire is final the moment it lands. That puts all the weight on the demand letter and, if necessary, the court. It also means you should send the letter sooner, not later, because the vendor is under no pressure from its processor and will not feel any until a lawyer's envelope arrives.

For cash, proof becomes the issue. A receipt, a text confirming the amount, or a contract reciting the deposit is enough; a bare assertion that you handed over $2,000 is not. If you have none of those, write the vendor now, state the amount and the date you paid it, and see whether the reply admits the payment. Vendors frequently do.

The documents that win deposit cases. Deposit disputes are won on paper, and the paper you need is usually already on your phone. Collect the signed contract or the online terms as they existed when you signed, not as they read today; the payment record; the cancellation notice, yours or theirs, with its date; every message in which the vendor promised, delayed, or refused; and any evidence that the vendor rebooked your date, resold the item, or filled your spot. Social media posts, public booking calendars, and a friend's inquiry about availability all count. Put the file in date order. A demand letter built on a tidy chronology reads very differently from one built on a grievance, and a small claims judge who receives a clean packet decides quickly.

What a demand letter does here.

A demand letter from a New York attorney does four things in a deposit dispute. It recites the contract terms accurately, which matters because vendors often misremember their own paperwork. It states the legal basis for the refund in terms the business or its lawyer will recognize: breach, the penalty rule, and where the facts support it, § 349. It sets a deadline and names the consequence, usually a small claims filing or a civil action with a fee claim. And it creates a record. If you do end up in court, the letter is Exhibit A, and a judge notices who tried to resolve things reasonably.

Our letters are flat fee and handled entirely online through DemandLetterNY, a service of Hochman Law PC. Most deposit disputes involve one letter and, sometimes, one follow-up call. Read more about how flat-fee demand letters work.

When a letter is not the right tool: if the deposit is a few hundred dollars and the vendor is a sole proprietor who has already closed shop, a small claims filing you prepare yourself may make more sense than paying any fee at all. If the business has dissolved and its owner is unreachable, a letter has nowhere to land. We will tell you that at intake.

Small claims, and the clock.

Most deposit disputes fit comfortably in small claims court: up to $10,000 in New York City, $5,000 in city courts outside the city, and $3,000 in town and village courts. You do not need a lawyer, the filing fee is modest, and the vendor's failure to appear results in a default judgment. Our guides to New York small claims court and demand letter versus small claims walk through the process and when each step makes sense.

Timing: a breach-of-contract claim in New York carries a six-year statute of limitations under CPLR § 213(2). A § 349 claim must be brought within three years. Neither deadline is your real constraint; the real constraint is that vendors who keep deposits also tend to change names, close, and reopen. Move while the business still exists.

Read next: your situation, specifically.

• Wedding vendor won't refund your deposit: venues, photographers, caterers, and DJs, including vendors that cancelled on you.
• Moving company disputes: damaged goods, hostage loads, and bait-and-switch estimates, in-state and interstate.
• Gym won't cancel your membership: New York's health club and automatic-renewal rules.
• Camp or daycare tuition refunds: withdrawal, program closure, and enrollment-agreement penalties.
• Car dealer won't return your deposit: undelivered cars, failed financing, and the DMV complaint.
• Final paycheck not paid: not a deposit, but the same problem of a business holding money that is yours.
• Contractor took your deposit: home improvement deposits have their own, stronger protections.