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What Contractors Have to Fear from New Jersey’s Consumer Fraud Act

by | Jun 21, 2021 | Firm News

By Zhen Liu, Staff Writer


The New Jersey Consumer Fraud Act (“NJCFA”) arguably grants the strongest protections against consumer fraud in the nation.  The Act protects consumers from unconscionable commercial practices such as fraud, misrepresentation, and deception involved in the sale of goods and services, including home improvement contracts.  The NJCFA defines contractors as persons engaged in the business of making or selling home improvements and requires all contractors to be registered with the State of New Jersey.  Pursuant to N.J.A.C. 13:45A-16.1, “home improvement” means the remodeling, altering, painting, repairing, or modernizing of residential or noncommercial property or the making of additions thereto, and includes the construction, installation, replacement, improvement, or repair of driveways, sidewalks, swimming pools, fences, porches, windows, doors, garages, basements, and floor coverings, etc.

The NJCFA imposes numerous requirements on home improvement contractors and is applied broadly and liberally construed in favor of consumers to root out consumer fraud. A contractor that does not comply with these requirements exposes itself to being sued by customers, often homeowners.  After a contractor completes a job, however, the customer may not want to make the final payment.  A contractor that wants to ensure he or she gets paid for the work should also make sure they complied with the NJCFA because sometimes the customer might threaten a fraud claim as a way to try to avoid having to pay for the work.

Both the New Jersey Legislature and the New Jersey Division of Consumer Affairs have recognized that home improvement contracting is particularly susceptible to consumer fraud violations.  In response, additional regulations under the New Jersey Administrative Code and the Contractors Registration Act were adopted to supplement the existing NJCFA as applied to home improvement contractors.  The result is an extensive, complex regulatory scheme governing home improvement contractors.

Specifically, under the NJCFA and the Home Improvement Practice Regulations (“Regulations”), the written contract must clearly and accurately, and in understandable language, set forth the terms and conditions of the contract, including the following:

  • A detailed description of the work to be done and materials to be used.
  • A start date and an end date.
  • The total price to be paid by the homeowner, including finance charges.
  • The legal name and business address of the seller or agent who negotiated the contract for the seller.
  • A description of any mortgage or security interest to be taken in connection with the sale or financing of the home improvements.
  • A statement of any guarantee or warranty with regard to products, materials, labor and services made by the contractor.

In addition to the requirements, the NJCFA and the Regulations make it unlawful for contractors to engage in the following practices:

  • Misrepresenting that a buyer’s home will be used as a model in order to mislead the buyer into believing he will receive a price reduction or other compensation.
  • Misrepresenting the products or materials to be used.
  • Using “bait selling” tactics such as discouraging products in order to induce a buyer to purchase higher priced items, substituting materials without buyer’s consent, and misrepresenting that certain products have a long delivery time or are unavailable so as to induce buyer to purchase higher priced items.
  • Offering gifts, free items or bonuses without disclosing the term and conditions of the offer.
  • Misrepresenting pricing and financing terms.
  • Making misrepresentations about a competitor, such as claiming that the work of a competitor was performed by the seller or that a seller’s products, materials or workmanship are equal to or superior to that of a competitor.
  • Failing to begin work in a timely manner. Changes in dates and time periods stated in the contract must be agreed to in writing by the parties. The work must begin and be completed within the time periods stated in the contract, unless a delay occurs for reasons beyond the contractor’s control, in which event the contractor must give written notice to Buyer of the reasons for the delay and indicate new start and end dates.
  • Commencing work before all applicable code requirements are met and construction permits are obtained. If final inspections are required by the local building code, the contractor must provide the homeowner with copies of the inspection certificates prior to final payment or when requested by the homeowner.
  • Failure to provide written copies of any applicable warranties, including any exclusions to the scope and duration of the warranties at the time the contractor places the bid and at the time of contracting.


Generally, to succeed on a consumer fraud claim under the NJCFA, a homeowner must show: (1) unlawful conduct by the defendants; (2) an ascertainable loss on the part of the plaintiff; and (3) a causal relationship between the defendants’ unlawful conduct and the plaintiff’s ascertainable loss.  Accordingly, the homeowner must show that he or she suffered an ascertainable loss as a result of the unlawful practice but need not prove that the defendant’s unlawful behavior was the sole cause of that loss.

An unlawful practice may arise from an affirmative act, a knowing omission, or a violation of an administrative regulation. A showing of intent is not an element if the claimed unlawful practice is an affirmative act or a regulatory violation.  

In addition, recovery of attorneys’ fees is a statutory remedy expressly permitted under the NJCFA, so long as the party seeking such remedy proves an actual violation of the NJCFA, notwithstanding lack of proof of actual damages caused by any such violation.  According to the Supreme Court, “a consumer-fraud plaintiff can recover reasonable attorneys’ fees, filing fees, and costs if that plaintiff can prove that the defendant committed an unlawful practice, even if the victim cannot show any ascertainable loss and thus cannot recover treble damages.”


Contractors should be fully aware of the requirements of the NJCFA, since the costs of non-compliance can be costly.  Violations of the NJCFA can be prevented by careful compliance with its provisions by both contractors – and homeowners.  The best defense to a technical violation of the regulations is to ensure that the contract itself has no violations, and the best way to do this is to have a contract written without any violations.  Both the homeowners and home improvement contractors should work together to make sure all of the requirements are addressed early and stated in the written contract to ensure compliance and avoid misunderstandings – and litigation.

Staff Writer Zhen Liu is a recent graduate from Seton Hall Law School, where she was a member of the Asian Pacific American Lawyers Association. She specializes in Family Law and serves as research assistant to associate reporters of The American Law Institute. 

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