NEW JERSEY’S CONSUMER FRAUD STATUTE: THE FORFEITURE REMEDY

As explained elsewhere on this blog site and my website, New Jersey’s Consumer Fraud Act (Act) is one of the most pro-consumer statutes in the county. Apart from the fact that it is broadly interpreted in favor of the consumer, it provides the consumer with some devastating remedies, including the ability to recover three times the consumer’s actual damage and a recoupment of litigation costs that may encompass tens of thousands of dollars of attorney fees and expert witness fees. There is another remedy that may be available to the consumer that some lawyers and most litigants are not aware of and that is the ability of a consumer to require a merchant to refund the money received from the consumer and/or have a court declare that the contract between the merchant and consumer is unenforceable.

To date, a number of cases have required a merchant, especially those involved in the home improvement industry, to disgorge money previously received because it was determined that the Act had been violated and that the violation “created the climate” for the dispute with the consumer. Thus, if a home improvement contractor failed to obtain an appropriate written contract as required by law (See my book on home improvement contractor’s legal responsibilities titled “Walk the Chalk Line or Else: A Home Improvement Contractor’s Guide to New Jersey Contractor’s Registration and Consumer Fraud Act” which can be downloaded free on my website at www.ftlucianolaw.com.),
and the consumer claims that the contractor installed a pine door when the agreement was to install an oak door, the absence of a written contract identifying the precise produce to be provided “created the climate” for the controversy. Under these circumstances, a judge can determine that a violation under the Act occurred; that the oral agreement is unenforceable; and, that all money paid to the contractor must be returned to the consumer. Although, some courts have applied this extreme sanction even when there is a mere technical violation, most will not, and that is especially so, if the consumer is capable of obtaining an unnecessary windfall.

My experiences are that most trial judges are somewhat reluctant to release the complete arsenal of weapons provided to a consumer under the Act, unless there is serious departure from the responsibilities required by the Act and its legislative and administrative counterparts.