THE NEW JERSEY CONSUMER FRAUD ACT (CFA) IMPOSES STRICT LIABILITY FOR VIOLATION OF REGULATIONS PROMULGATED PURSUANT TO THE CFA
Background of the Consumer Fraud Act (“CFA or the “Act”)
The New Jersey Consumer Fraud Act, N.J.S.A. 56:8-1 et seq., (the “CFA” or the “ACT”) in pertinent parts, provides as follows:
The act, use or employment by any person of any unconscionable commercial practice, deception, fraud, false pretense, false promise, misrepresentation, or the knowing, concealment, suppression, or omission of any material fact with intent that others rely upon such concealment, suppression or omission, in connection with the sale or advertisement of any merchandise or real estate, or with the subsequent performance of such person as aforesaid, whether or not any person has in fact been misled, deceived or damaged thereby, is declared to be an unlawful practice….”
N.J.S.A. 56:8-2. (Emphasis added).
Act provides for recovery of damages as follows:
Any person who suffers any ascertainable loss of moneys or property, real or personal, as a result of the use or employment by another person of any method, act, or practice declared unlawful under this act or the act hereby amended and supplemented may bring an action or assert a counterclaim therefore in any court of competent jurisdiction. In any action under this section the court shall, in addition to any other appropriate legal or equitable relief, award threefold the damages sustained by any person in interest. In all actions under this section, including those brought by the Attorney General, the court shall also award reasonable attorneys’ fees, filing fees and reasonable costs of suit.
N.J.S.A. 56:8-19 (bold added).
The ACT defines ““merchandise” as “any objects, wares, goods, commodities, services or anything offered, directly or indirectly to the public for sale…N.J.S.A 56:8-1(c)
The CFA was enacted by the Legislature in 1960 and was designed to address “sharp practices and dealings in the marketing of merchandise and real estate whereby the consumer could be victimized by being lured into a purchase through fraudulent, deceptive or other similar kind of selling or advertising practices.” Daaleman v. Elizabethtown Gas Co., 77 N.J. 267 1978). See also, Thiedemann v. Mercedes-Benz U.S., LLC, 183 N.J. 233, 245 (2005) (the purpose of the CFA was “to address rampant consumer complaints about fraudulent practices in the marketplace and to deter such conduct by merchants.”); Barry v. Arrow Pontiac Inc., 100 N.J. 57, 69 (1985) (the CFA was passed in response to widespread complaints about selling practices that victimize consumers. It was designed to prevent deception, fraud or falsity, whether by acts of commission or omission, in connection with the sale and advertisement of merchandise and real estate.”)
The CFA is one of the strongest consumer protection statutes in the country, and the Supreme Court of New Jersey has declared that since this Act is a remedial statute, it is to be interpreted liberally and broadly in favor of consumers. Cox v. Sears Roebuck & Co., 138 N. J. 2, 15 (1994) (The CFA is “construed liberally in favor of consumers.”); Levin v. Lewis, 179 N.J.Super. 193, 200 (App. Div. 1981) (the CFA is “construed liberally in favor of protecting consumers….”); Scibek v. Longette, 339 N.J. Super 72, 78 (App. Div. 2001) ;( “’ [t]he Act is to be applied broadly in light of the statute’s remedial purpose… [and] is to be liberally construed in favor of the consumer.” (Citation omitted); see also, Gennari v. Weichert Co. Realtors, 148 N.J. 582, 604 (1997); Lemelledo v. Beneficial Management Corp. of America, 289 N. J. Super. 489, 495 (App. Div. 1996).
In Cox, the Supreme Court spoke of the expansion of the Act beyond its initial goal of protecting innocent individuals consumers from ‘”shifty [and] fast talking” merchants.” The Court explained the expansion of the Act as follows:
Although initially designed to combat ‘sharp practices and dealings’ that victimized consumers by luring them into purchases through fraudulent or deceptive means, [quoting D’Ercole Sales, Inc. v. Fruehauf Corp., 206 N. J. Super. 11, 23 [citation omitted] (App. Div.1985), the Act is no longer aimed solely at shifty, fast-talking and deceptive merchant[s]’ but reaches ‘nonsoliciting artisans’ as well. Ibid. Thus, the Act is designed to protect the public even when a merchant acts in good faith. Ibid. Moreover, we are mindful that the Act’s provision authorizing consumers to bring their own private actions is integral to fulfilling the legislative purposes, and that those purposes are advanced as well by courts’ affording the Attorney General “the broadest kind of power to act in the interest of the consumer public.” [Quoting Levin v. Lewis, 179 N. J. Super. 193, 200 (App. Div. 1981)
Cox, supra, 138 N. J. at 16 (Emphasis added).
The CFA can be violated in one of three ways- Affirmative Acts, Knowing Omissions, and Regulatory Violations
In Cox v. Sears, Roebuck & Company, 138 N.J. 2, 24 (1994), our Supreme Court stated that to violate the CFA, a person must commit an “’unlawful practice’” which falls into three (3) general categories:
(1) Affirmative acts,
(2) Knowing omissions, and
(3) Regulation violations.
Id. at 17.
The first two are found in the language of N.J.S.A. 56:8-2 and the third is based on regulations enacted under N.J.S.A. 56:8-4. Id. (citations omitted).
Proof of any of the three (3) categories of unlawful acts –affirmative acts, knowing omission or regulation violations- is “sufficient to establish unlawful conduct under the [CFA].” Id. at 19. Cox, supra.
When the violation consists of an affirmative act “intent is not an essential element and the plaintiff need not prove that the defendant intended to commit an unlawful act.” Id. at 17-18. (Citing Chattin v. Cape May Green, Inc., 124 N.J. 520, 522 (1991))
“A practice can be unlawful even if no person was in fact misled or deceived thereby. [citation omitted]. The capacity to mislead is the prime ingredient of all types of consumer fraud.” Id. at 17 (citation omitted).
Violation of Regulations Promulgated Pursuant to the ACT is a STRICT LIABILITY OFFENSE.
The “third category of unlawful acts consists of violations of specific regulations promulgated under the Act. In those instances, intent is not an element of the unlawful practice, and the regulations impose strict liability for such violations.” Cox, Supra, at 18-19 (citation omitted) (emphasis added). According to the court, “[t]he parties subject to the regulations are assumed to be familiar with them, so that any violation of the regulations, regardless of intent or moral culpability, constitutes a violation of the Act. “ Id. at 18-19 (citation omitted); Bosland v. Warnock Dodge, Inc. 197 N.J. 543, 556 ( “…, intent is not an element if the claim is based on a defendant’s alleged violation of a regulation, because ‘the regulations impose strict liability for such violations.’”)(Citation omitted)(Emphasis added).
A merchant’s subjective good faith does not excuse technical noncompliance with regulations promulgated under the CFA. State v.Hudson Furniture Co. 165 N.J.Super. 516, 518 (App. Div. 1979). The act is broadly designed to protect the public, even when a merchant acts in good faith, and regardless of attempt to deceive. Skeer v. EMK Motors, Inc. 187, N.J. Super. 465, 470 (App. Div. 1982).
See also, Lemelledo v. Beneficial Mgmt. Corp. of Am., 150 N.J. 255, 265 (1997)(“Proof of a violation of a regulation promulgated under the CFA is enough to establish an ‘unlawful practice’ and wrongful conduct under the Act, ‘regardless of intent or moral culpability…’ In those instances, intent is not an element of the unlawful practice, and the regulations impose strict liability for such violations.’”(Citing and quoting Cox v. Sears Roebuck & Co., 138 N.J. 2, 18-19 (1994)).