Amend New Jersey’s Consumer Fraud Act
When it was enacted in 1960, New Jersey’s Consumer Fraud Act was praised for being one of nation’s strongest consumer protection laws. Today, it is described as “infirm” and “one of the state’s most complicated statutes.”
Over the years, the CFA has been amended by the legislature and expanded by the courts into an enormous and unwieldy piece of legislation. Its 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 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.
These lawsuits are of dubious social value, but their costs are well known. Legal costs borne by businesses are passed on to consumers in the form of higher prices, fewer innovations, lower wages, and less job creation. These cases also clog the courts, increasing costs, and taking time and resources away from other litigation.
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, like not including a phone number on an estimate, or printing out a contract in the wrong size font.
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.
New Jersey’s Consumer Fraud Act Hall of
The Expansion of New Jersey’s Consumer Fraud Act: Causes and Consequences, Emory University Law School Professor Joanna Shepherd, October 2014.
State Consumer Protection Acts: An Update on Trends, Searle Civil Justice Institute (SCJI), Law & Economics Center, Antonin Scalia Law School, George Mason University, June 2016.