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Oct 27
2016

You Can’t Handle the Truth! … in Consumer Contract, Warranty and Notice Act

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As Halloween has people thinking of ghosts and ghouls, creative plaintiffs’ attorneys have turned an arcane New Jersey law into a true source of fright for virtually anybody who offers services that are even potentially available within the Garden State.

The law at issue is the New Jersey Truth in Consumer Contract, Warranty, and Notice Act (“TCCWNA”), which was enacted in 1981 with good intentions: to prevent businesses from advertising terms that violate state law in order to cow consumers into doing business under those terms even though they were unenforceable.  For example, a storage space rental company might violate the law by requiring a consumer to release it from liability for personal injuries on company property, even though such a waiver is unenforceable under New Jersey Law.  The statute provides seemingly modest damages of $100 per violation.

But the TCCWNA does not require a consumer to actually have been hurt by any illegal term or provision and, in fact, it allows for a cause of action to be brought even by a mere “prospective consumer.”  In 1981, this likely made little difference to brick-and-mortar businesses, for whom the only individuals who may have seen a violative contract or term would be those who sought it out.  But in the age of the Internet, everybody is a potential consumer, and one may shop for dozens of products from the comfort of one’s own desk in a single afternoon.  Each time that one of these individuals views the website and, even theoretically, considers purchasing a product or service, that individual becomes a potential plaintiff under the TCCWNA.

This has opened the door to suits against virtually any retailer that has a website that can be accessed in New Jersey—unless the terms offered by such retailers are fully compliant with New Jersey law or clearly indicate what provisions would be invalid in New Jersey, there is a chance that those retailers could be found to violate the TCCWNA.  And although statutory damages of $100 may not seem scary, those damages are awarded on a per-violation—that is, per-consumer—basis.  And plaintiffs’ attorneys have begun to bring class actions alleging that every single New Jerseyan who has accessed a given website is a “potential consumer” under the statute, opening the door to potentially massive liability.

The news is not all bleak: a federal judge in New Jersey recently dismissed a TCCWNA case against the car rental company Hertz relying on a recent Supreme Court case that bars lawsuits by plaintiffs who have suffered no more than a “bare procedural harm” without any real injury.  But it is not yet clear if other judges will follow suit, and even if they do, that ruling will not help defendants who may find themselves stuck in state court.  Until the courts or the New Jersey legislature provide clearer and more meaningful protection, businesses may find themselves being forced to comply with New Jersey law no matter where they may be located.

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About Ifrah Law

FTC Beat is authored by the Ifrah Law Firm, a Washington DC-based law firm specializing in the defense of government investigations and litigation. Our client base spans many regulated industries, particularly e-business, e-commerce, government contracts, gaming and healthcare.

Ifrah Law focuses on federal criminal defense, government contract defense and procurement, health care, and financial services litigation and fraud defense. Further, the firm's E-Commerce attorneys and internet marketing attorneys are leaders in internet advertising, data privacy, online fraud and abuse law, iGaming law.

The commentary and cases included in this blog are contributed by founding partner Jeff Ifrah, partners Michelle Cohen and George Calhoun, counsels Jeff Hamlin and Drew Barnholtz, and associates Rachel Hirsch, Nicole Kardell, Steven Eichorn, David Yellin, and Jessica Feil. These posts are edited by Jeff Ifrah. We look forward to hearing your thoughts and comments!

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