Amend New Jersey’s Consumer Fraud Act
The popular grocery store chain Wegmans spent the better part of 2015 defending itself against a class action lawsuit filed by plaintiffs who insisted that bread baked in the store could not be advertised as “fresh baked” if it was not 100% made from scratch at that location. This half-baked lawsuit was finally dismissed because the plaintiffs did not (and probably could not) indicate what products they were suing over, who had bought the offending products, and why exactly they felt misled. This is just one example of the types of abusive lawsuits that New Jersey’s Consumer Fraud Act (CFA) encourages.
Since its creation in 1960, the CFA has been amended by the legislature and expanded by the courts into an enormous and unwieldy piece of legislation. The state’s Law Revision Commission, which has been tasked with cleaning up the statute, has noted that in its current form, the CFA is “infirm” and “one of the state’s most complicated statutes.”
The complexity and lack of clarity, combined with the promise of triple damages and attorneys’ fees for successful litigants, has made the law a magnet for lawsuits. A recent study actually found that the number of lawsuits filed under the Act increased 447% from 2000 to 2009. This is not because there was significantly more fraud going on in New Jersey during this period, but because attorneys are systematically targeting businesses for CFA violations.
Businesses owners who are sued under the CFA have little choice but to settle the case brought against them. Fighting a CFA claim is prohibitively expensive, and is often futile since judges are not empowered to be lenient, even in cases where the supposed “fraud” is something technical like not including a phone number on an estimate, or printing out a contract in the wrong size font.
It is time for the legislature to step in and amend the CFA so that it targets real fraudsters without entrapping businesses that are not trying to rip-off their customers, but who happen to make an honest mistake.
NJCJI urges the legislature to:
- Require consumers to ask for their money back or for the alleged fraud to be fixed prior to bringing suit.
- Allow the court discretion in awarding treble (aka triple) damages, as is common in other states.
- Require plaintiffs to prove that they relied on the misrepresentation they are suing over when they purchased the product or service.
- Limit the CFA to transactions occurring in the State of New Jersey or to transactions with New Jersey residents.
- Limit the award of attorney’s fees and costs to those fees reasonably attributable to the CFA claim.
- Limit the CFA’s applicability against industries that are already subject to the Federal Trade Commission and other regulatory structures.
Current Action on this Issue
NJCJI is working with legislators to develop a bill that would incorporate the reforms above.
NJCJI is also monitoring the efforts of the Law Revision Commission to clean up and streamline the statute.