The Consumer Fraud Act (“CFA”) gives consumers the right to sue sellers of goods, services, or real estate if they have engaged in deceptive marketing practices. To bring a claim under the CFA you have to prove three things: 1) the existence of an “unlawful act;” 2) one must have suffered an ascertainable or concrete loss; and 3) the seller’s unlawful conduct must have caused that ascertainable loss. There does not have to be any direct contact between the buyer and seller, there only needs to be a connection between the unlawful conduct and the loss.
From my last blog, you know that there are three major things that make an “unlawful act” under the CFA: 1) affirmative acts; 2) knowing omissions; and 3) regulatory violations. Once one of these can be shown, you have to then prove an “ascertainable loss.” That means a loss that is concrete and measureable. For example, even if a seller engaged in unlawful conduct and a consumer did not buy the product or service and was never actually charged for it, there is no loss. Next, you must also prove that the “ascertainable loss” suffered was caused by the Seller’s fraudulent practices. In other words, if it were not for the seller’s deceptive practices, you would not have bought the product or service.
In the case of Real v. Radir Wheels, Inc., the person suing put in a bid on a car in an internet auction. The car was advertised to be in fair condition with some minor defects. The bid $13,000, based on the ad. Before finalizing the deal, the buyer asked the seller over the phone if he could drive the car from New Jersey to his home in Missouri. The seller said this could be done and the car was in good condition. But after the sale, the buyer was told that it would not be safe to make the trip. When the car was delivered the buyer took it to a mechanic and found that there were significant problems. He had paid $13,000 for a car worth $5,000 to $8,000. In his lawsuit, he claimed that the seller intentionally misled him, that the car was “merchandise” as defined under the CFA and that the plaintiff had an ascertainable loss. The court found this was a “textbook” violation of the CFA and awarded money damages.
To defend a claim under the CFA, a seller or business should first see if the buyer can satisfy all three elements listed above. For instance, in Green v. Green Mountain Coffee Roasters, Inc., the court dismissed the plaintiff’s CFA claim because the plaintiff failed to show an ascertainable loss when he bought an allegedly defective coffee maker. The court said that there was no claim of how much was paid for the coffee maker and how much other comparable coffees makers made by Green Mountain’s competitors cost.
There is also what is known as a “learned professional” exception to the law. This means that lawyers, doctors, and other licensed professionals who provide services within the scope of those licenses are not subject to the CFA.
If you believe you have a CFA claim against a business or if a CFA claim has been brought against your business, it would be wise to consult with an attorney. For businesses, there is a lot at stake if a claim has been brought against you. It’s also a good idea for businesses to consult with a lawyer, even without a claim being brought, to help limit the chances of violating the CFA. It’s a complex law that can be difficult to navigate. With the collaboration of Charles J. Vaccaro, J.D. Candidate May 2015, Rutgers School of Law – Newark.