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Proposed Bill Seeks to Limit Consumer Fraud Claims to Consumers Only, Not Businesses

By Michael J. Fekete

Despite years of judicial expansion, the New Jersey Consumer Fraud Act (CFA) may soon see its remedial and expansive reach significantly curtailed. This curtailment comes in the form of proposed Bill A-3333, which was introduced in the New Jersey Assembly early in the last quarter of 2010. The primary changes proposed to the CFA are: (1) discretionary, as opposed to mandatory treble damages for violations of the CFA; (2) a reduction or cap on the amount of Attorneys' fees that can be awarded; and (3) explicit non-applicability of the CFA to businesses. 

While the Bill seeks to cap the amount of attorney's fees and bestow upon courts of this State more discretion in awarding treble damages, the Bill does not alter or amend the provisions of the CFA mandating a refund and awarding attorneys' fees where an unlawful practice is shown to have occurred. See, Cox v. Sears Roebuck & Co., 138 N.J. 2, 24 (1994) (award of attorneys fees required where 'plaintiff can prove that defendant committed an unlawful practice, even if the victim cannot show any ascertainable loss and thus cannot recover treble damages.') Accord, Artistic Lawn & Landscape Company, Inc. v. Smith, 381 N.J. Super. 75, 80 (2005) ('The refund provision of the C.F.A. is a statutory remedy, not based on proving damages.').

Most importantly, if passed, the CFA will explicitly exclude a 'business' from the definition of 'consumer.' Such exclusion will have a number of beneficial effects including, but not limited to, elimination of aggressive, kitchen-sink tactics whereby CFA claims are asserted in commercial disputes between companies.

Full post as published by New Jersey Law Blog on January 11, 2011 (boomark / email).