The New Jersey Consumer Fraud Act (NJCFA, N.J.S.A. 56:8-1 et seq.), is a powerful consumer protection law that gives New Jersey customers the right to sue businesses for fraud, misrepresentation, and other unlawful practices. The NJCFA prohibits businesses from engaging in any unconscionable, fraudulent, or deceptive practices. In recent years, there has been an uptick in the number of NJCFA lawsuits filed against businesses, particularly auto dealerships. While these lawsuits can be costly and time-consuming to defend, there are some steps businesses can take to prevent claims under the New Jersey Consumer Fraud Act.
Have Clear Policies and Procedures in Place
The first step any business can take to reduce its risk of an NJCFA lawsuit is to have clear policies and procedures in place governing customer interactions. You should tailor these policies to your specific business. However, well-drafted policies and procedures typically cover topics such as return/exchange procedures, advertised specials and pricing, financing terms, and more.
Train Your Employees
Training your employees on these policies and procedures—and holding them accountable to following them—is critical to ensuring compliance. Make sure they know the policies and procedures and document their training.
Be Truthful in Your Advertising and Promotions
Another way to reduce your risk of an NJCFA claim is to make sure that your advertising and promotions are truthful and not misleading. This means avoiding false or unsubstantiated claimsand using clear and conspicuous disclaimers where needed. This includes complying with any statutory requirements regulations enforced by the Division of Consumer Affairs that specific to the business’s industry. In some cases, violating a State statute or regulation, even if there is no intent to deceive, may be a per se violation of the NJCFA.
In short, be upfront about all material terms and conditions.
Additionally, if you run a special or promotion, be sure you can deliver on what you’ve promised. Nothing will anger a customer more—and increase your chances of getting sued—than bait-and-switch tactics.
Avoid Unfair Sales Practices
In addition to being truthful in your advertising, it’s important to avoid unfair sales practices that could cause an NJCFA lawsuit. This includes things like high-pressure sales tactics, making promises you can’t keep, failing to disclose material information, hiding the true cost of a purchase, or engaging in deception or fraud.
Practices That Violate the NJCFA
The NJCFA identifies several specific illegal actions by businesses and their employees:
And there are more-many more.
The NJCFA imposes strict liability on businesses that engage in unconscionable, fraudulent, or deceptive practices.
Penalties Under the NJCFA
If your business is accused of violating the NJCFA, you could face significant penalties, including attorneys’ fees, and treble damages.
If your business is found to have violated the NJCFA, you will pay damages to the consumer who was harmed. Treble damages are three times the amount of actual damages suffered by the consumer and can also be quite large.
In addition, under the NJCFA, consumers may recover their attorneys’ fees from the businesses that violate the Act. As you can see, the potential financial exposure for violating the NJCFA can be significant.
Experienced New Jersey Consumer Fraud Act Defense Attorneys
The NJCFA has existed since 1960. As amended over the years, it is one of the strongest consumer protection statutes in the country. However, as with most laws to protect citizens, it can be misused by the intended beneficiaries of the statute. The business litigation attorneys at Schiller, Pittenger & Gaffney, P.C., have extensive experience successfully representing businesses, owners and their employees who are facing NJCFA claims and suits.
Therefore, if your business is facing a NCFA claim, contact the civil litigation attorneys in their Scotch Plains office at 908-490-0444 for help. You can also email them here.