A short Google search and perhaps personal experience shows that consumer fraud increases during the holidays. So we thought that a look at the New Jersey Consumer Fraud Act would be helpful.
The Consumer Fraud Act (“CFA”) was created to fight deceptive practices in the sale of services, goods, and real estate. Consumer Fraud is defined as “any unconscionable commercial practice, deception, fraud, false pretense, false promise, or misrepresentation” in relation to the purchase of services, goods, or real estate. In plain English, the CFA provides consumers with the right to bring a lawsuit against sellers of goods, services, or real estate if they have engaged in some sort of deceptive marketing practice.
A violator of the CFA can suffer severe consequences, so it’s first important to understand who and what can be sued. The list includes corporations, partnerships, employees, salespersons, partners, officers, directors, and stockholders. This means that even employees or managers in a business with limited liability protection can still be held personally liable for a violation of the CFA. So it’s important for all business owners and operators to be familiar with the law.
Violations of the CFA can be divided into 3 categories: 1) affirmative acts; 2) knowing omissions; and 3) regulatory violations. An affirmative act is something the seller actually does or says. For example, if a car salesman told you that a car only had 30,000 miles on it, but the car actually had over 100,000 miles on it, then that’s an affirmative misrepresentation. When some affirmative action is taken by a seller, it does not matter whether he or she knew that the statement was false or if the seller intended to deceive. If a false statement was made, then there’s consumer fraud. So in the above example, even if the car salesman really thought the car had 30,000 miles on it or was just simply careless in making that statement, he/she and the business can still be liable for consumer fraud.
A knowing omission is when the seller intentionally does not tell you an important fact that a person in your position would want to know to make a decision to buy. This is something that the seller does not do or say. Unlike an affirmative act, a knowing omission requires the seller to intend to deceive you. So if the car salesman intentionally failed to tell you about the mileage to convince you to buy the car, it would be a knowing omission. But if he or she accidentally failed to tell you, it would not be a knowing omission.
The last category is regulatory violations. Here, the CFA refers to other laws that interpret it. These laws refer to specific conduct or situations that are prohibited by law. They cover things like home improvement contracts and gym memberships. Like affirmative acts, no intent is required by the seller for regulatory violations. After it’s established that one of the above three categories has been satisfied, a consumer must then show that he or she suffered a real loss and that the seller caused it.
If a court finds that the CFA has been violated, there are mandatory triple damages. Also, a violator must pay attorney’s fees. These are severe consequences for a business. That’s why it’s important – for businesses and victims – to consult an attorney with a thorough understanding of the CFA. With the collaboration of Charles J. Vaccaro, J.D. Candidate May 2015, Rutgers School of Law – Newark