The Illinois Consumer Fraud Act is one of the most powerful tools a plaintiff can wield against a business. It reaches unfair and deceptive practices, and it comes with the prospect of damages and attorney’s fees. That power tempts plaintiffs to recast every grievance as consumer fraud—including grievances that are really about a contract someone else signed. A recent Illinois decision draws a firm boundary: a consumer fraud claim cannot be built solely on the alleged breach of a contract between third parties. Arcangel v. Yardi Systems, Inc., 2026 IL App (1st) 242062 (May 22, 2026).
The plaintiff, a tenant, paid rent through a software company’s online payment platform. When he paid by credit card, he was charged a 3.5% surcharge. He alleged that the applicable card-network rules permitted only a 3% surcharge, so the 3.5% charge violated those rules—rules embodied in a contract between the network and the payment processor, not between the processor and him. On that theory, he brought a claim under the Consumer Fraud Act. The trial court dismissed, and the appellate court affirmed, holding both that a consumer fraud claim cannot be premised solely on a violation of a third-party contract, and that the plaintiff had not adequately alleged unfair or deceptive conduct.
You cannot enforce someone else’s contract through the Act
The first holding is the cleaner one. The Consumer Fraud Act is not a vehicle for enforcing contracts to which the plaintiff is not a party. The card-network rules the plaintiff invoked governed the relationship between the network and the processor. That a surcharge may have exceeded what those rules allowed did not, by itself, make the charge “unfair” or “deceptive” toward the consumer. The Act targets unfair and deceptive practices—not every deviation from a private agreement between other businesses. Letting a consumer sue under the Act to enforce a third-party contract would transform a consumer-protection statute into a roving enforcement mechanism for commercial agreements he had no role in making.
Unfair requires oppression; deceptive requires a false impression
The second holding fills in why the conduct itself did not qualify. To be “unfair,” a practice generally must offend public policy, be immoral or unethical, or be oppressive—causing substantial injury the consumer cannot reasonably avoid. The court found no oppression, for a simple reason: the consumer had a meaningful alternative. The platform offered a fee-free autopay option that let tenants pay directly from a bank account. A fee is not oppressive when the consumer can readily avoid it. Limiting someone to a single option is only unfair if that sole option is itself unfair—and here it was not, because a free path existed alongside the surcharged one.
The deception theory failed too. An omission is not actionable as fraud unless it creates an affirmatively false impression, as opposed to a merely incomplete one. The plaintiff could not show that the surcharge disclosure misled him in that affirmative way. Without a false impression, there was no deceptive act.
Notably, the court did not slam the door on every claim of this kind. It left open the possibility that a properly framed claim—against a processor or a landlord, on different facts—might survive. Its holding was narrower and precise: the Act cannot be used to enforce a third-party contract, and the surcharge here, avoidable through a free alternative, was neither unfair nor deceptive.
So What?
For businesses that charge fees—payment processors, landlords, platforms, service providers—and for consumers weighing a claim, the decision maps the real contours of the Act.
Businesses: offer a genuine, free alternative. The surcharge survived because tenants could avoid it entirely through fee-free autopay. A meaningful, no-cost option is powerful protection against an “unfairness” claim, because a fee a consumer can readily avoid is not oppressive.
Disclose fees clearly and affirmatively. The deception claim failed for lack of an affirmatively false impression. Clear, accurate, up-front disclosure of surcharges and their amount is the way to keep an omission from becoming an actionable deceptive act.
Plaintiffs: do not dress a third-party contract dispute in consumer-fraud clothing. If your theory is that a business violated a contract it has with someone else, the Consumer Fraud Act is likely the wrong tool. You need conduct that is independently unfair or deceptive toward you—not merely a breach of an agreement you were never part of.
Frame the claim against the right defendant on the right theory. The court signaled that a differently framed claim might survive. Whether a fee practice is actionable can turn on who you sue and what independent unfairness or deception you can allege—so build the claim around conduct directed at the consumer, not around a private commercial rulebook.
Sophisticated fee structures still need consumer-facing fairness. Behind-the-scenes network rules are between the businesses that agreed to them. What matters under the Act is how the practice affects the consumer: Is there a false impression? Is there an unavoidable, oppressive harm? Answer those questions, and you will know where a claim stands.
The Consumer Fraud Act protects consumers from unfair and deceptive practices—not from every fee they dislike, and not from breaches of contracts they never signed. A charge a customer can avoid for free, disclosed without any false impression, is neither unfair nor deceptive. Businesses that build in a real alternative and disclose plainly give themselves the strongest defense the Act allows.
David Seidman is the principal and founder of Seidman Law Group, LLC. He serves as outside general counsel for companies, which requires him to consider a diverse range of corporate, dispute resolution and avoidance, contract drafting and negotiation, real estate, and other issues. He can be reached at david@seidmanlawgroup.com or 312-399-7390.
This blog post is not legal advice. Please consult an experienced attorney to assist with your legal issues.
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