Below are brief articles regarding two consumer protection laws all business owners should know: The Magnuson-Moss Warranty Act and The New Jersey Truth in Consumer Contract Warranty and Notice Act
Magnuson-Moss Warranty Act
If you are an auto dealer in New Jersey, you may have encountered cases involving the Magnuson-Moss Warranty Act (MMWA; 15 U.S.C. § 2301 et seq.). This federal law, passed in 1975, governs warranties on consumer products and is designed to protect consumers from misleading or deceptive warranty practices by manufacturers.
In New Jersey, auto dealers frequently must defend against consumer cases alleging violations of the MMWA by the dealer.
What is the Magnuson-Moss Warranty Act?
The MMWA sets forth certain requirements for warranties on consumer products, including how warranties are written, what they cover, and how they are enforced. The law applies to any written warranty offered by a manufacturer or seller of consumer products. This includes cars, motorcycles and trucks.
Consumer products are not required to have warranties. However, if the manufacturer gives one, it must comply with the MMWA.
The Federal Trade Commission enforces the MMWA.
Under the MMWA, warranties must be clearly written and easy to understand, and they must specify what they cover and what they don’t. The law also prohibits manufacturers from requiring consumers to use specific repair services or parts to maintain warranty coverage, except in limited circumstances.
How Does the MMWA Impact New Jersey Auto Dealers?
As an auto dealer, you may encounter cases where you are accused of violating the MMWA. For example, a purchaser may claim that the warranty on the vehicle she purchased is misleading or deceptive, or that the manufacturer has unfairly denied warranty coverage.
In these cases, it is important to understand the requirements of the MMWA and how they apply to the specific situation. Depending on the facts of the case, you may argue that the warranty was clear and unambiguous, that the purchaser failed to comply with the terms of the warranty, or that the automobile’s manufacturer had a valid reason for denying coverage.
Sometimes, you may also need to consider whether there are any state laws that supplement or conflict with the MMWA. For example, New Jersey’s Consumer Fraud Act (CFA, N.J.S.A. 56:8-1 et seq.)provides additional protections for consumers, and courts may apply both the MMWA and the state law in certain cases.
The New Jersey Truth in Consumer Contract Warranty and Notice Act
Auto dealers operating in New Jersey may encounter consumer claims that involve the New Jersey Truth in Consumer Contract Warranty and Notice Act (TCCWNA; N.J.S.A. §§ 56:12-14 et seq.). The TCCWNA protects consumers from overly broad or unconscionable terms in consumer contracts and warranties. However, there are also defenses available to auto dealers facing TCCWNA claims. Here are some defense-friendly strategies to consider in TCCWNA cases involving auto dealerships:
Attack the plaintiff’s standing
Under the TCCWNA, only “aggrieved consumers” have standing to bring a claim. This means that the plaintiff must have suffered actual harm because of the defendant’s alleged violation of the law. Similar to a class action matter under the CFA, if you can successfully argue that the plaintiff has suffered no harm, or that the harm is too speculative, the case may be dismissed.
Challenge the validity of the contract or warranty terms
The TCCWNA prohibits certain types of provisions in consumer contracts and warranties, such as provisions that either waive a consumer’s rights or impose unreasonable fees and penalties. However, not all provisions are prohibited, and there may be legitimate reasons for including certain terms in contracts or warranties. Therefore, defense attorneys must analyze the specific terms in question and consider whether they are valid and enforceable under New Jersey law.
TCCWNA may not apply
The TCCWNA applies to consumer contracts and warranties, but not all contracts or warranties fall within scope of this law. For example, the law may not apply to contracts or warranties entered for business purposes, or to contracts or warranties that are exempt under federal law.
If you can successfully argue that the TCCWNA does not apply to the specific transaction at issue, the claim may be dismissed.
Any alleged violation was unintentional
Under the TCCWNA, a plaintiff must show that the defendant knowingly violated the law in order to recover damages. If you can show that any alleged violation was made without knowledge, you could avoid, or at least reduce liability.
Likewise, if the defendant business had a good faith belief that the contract or warranty terms were valid and enforceable, the defendant may be able to avoid liability for any alleged violations.
Damages that are too speculative or are not causally related to any alleged violation
In TCCWNA cases, plaintiffs will typically seek damages based on the alleged harm caused by the defendant’s violations of the law. However, as in CFA cases, if you can successfully argue that the damages are too speculative, or that they are not causally related to any alleged violation, you may limit your liability.
Defending against TCCWNA claims involving auto dealerships in New Jersey can be challenging, but there are effective strategies that can help dealers limit their exposure to liability. By challenging the plaintiff’s standing, analyzing the validity of the contract or warranty terms, arguing that the TCCWNA does not apply, showing that any alleged violation was not made knowingly, or arguing that the damages are too speculative or not causally related, you can build a strong defense.
Experienced New Jersey Business Defense Attorneys
The business litigation attorneys at Schiller, Pittenger and Galvin, P.C., have extensive experience successfully representing automobile dealerships, including their owners and employees who are facing customer complaints or state government investigations.
Therefore, if a customer or client has filed a claim or lawsuit against your business over a disputed transaction, contact the civil litigation attorneys in their Scotch Plains office at 908-490-0444 for help. You can also email them here.