Refund Request Not Required Prior to Filing New Jersey Consumer Fraud Claim

This posting was written by Jody Coultas, Editor of CCH State Unfair Trade Practices.

Consumers do not have to request a refund or object to a charge prior to filing New Jersey Consumer Fraud Act (CFA) claims against a merchant, according to the New Jersey Supreme Court. The court affirmed the Appellate Division's holding with respect to the CFA claims.

The consumer purchased a new vehicle from a dealership, and paid the full purchase price listed in a document that served as the dealership's invoice. That invoice contained a $117 charged described as a “Registration Fee.” The consumer later learned that the applicable title and registration fee charged by the state motor vehicle commission was significantly less than the fee the dealer charged. The consumer filed a complaint against the dealership, alleging that the fee violated the CFA.

Ascertainable Loss

The dealership argued that the consumer could not maintain the CFA claim because she had not suffered any damages. The consumer never complained about the validity of the fee to the dealership and never asked for a refund. The trial court ruled in favor of the dealership and dismissed the CFA claim, holding that the consumer had not suffered an ascertainable loss. The case eventually made its way to the New Jersey Supreme Court.

The Supreme Court held that a consumer does not have to request a refund or object to an unconscionable fee before filing CFA claims against a merchant. The CFA does not implicitly or explicitly require plaintiffs to attempt to secure a refund from the offending merchant in order to prove an ascertainable loss.

Legislative history and intent played a key part in the court's determination that the CFA should be construed broadly to protect consumers from a wide range of unfair business practices. Reading a pre-suit demand requirement into the CFA would potentially allow the very unfair business practices the CFA was designed to deter, according to the court.

Overpayment v. Diminution of Value

In light of the dealership's concerns that this ruling will lead to unduly harsh consequences for a merchant's honest error, the court noted that the plaintiff's ascertainable loss was the overpayment and would not include any diminution in the value of the vehicle.

Because plaintiffs will not be able to recover based on the vehicle's full value for basic overcharges on the part of the defendant, damage awards will merely correct the merchant's error.

The decision is Bosland v. Warnock Dodge, Inc., CCH State Unfair Trade Practices Law ¶31,774.