New Jersey Expands Consumer Fraud Act to Cover Online Auction Seller

In a huge win for consumers in New Jersey and throughout the United States, the New Jersey Supreme Court decided today in the case of Real v. Radir Wheels, Inc.that New Jersey’s consumer fraud act applies to an individual online auction seller who fraudulently described the product that was being sold to a consumer.  The Supreme Court upheld the trial court’s award of triple damages and attorneys’ fees to the buyer, even in spite of the fact that the buyer was not a New Jersey resident.  If you are a victim of an unconscionable sales or advertising practice over the internet or in person by any seller, contact a New Jersey consumer fraud lawyer for assistance.

Plaintiff Lyle Real was a Missouri resident who sought to purchase a vintage Corvette over the internet.  Mr. Real came upon an advertisement posted by defendant Richard Conklin, which described a Corvette defendant had posted for sale as a “one owner car,” with a “good frame,” the soft top was described as good, and the advertisement stated that the car contained the “original radio/cassette.”  In the section of the advertisement describing the condition of the car, the advertisement stated that the seats were “a little worn.”  Based on that advertisement, Mr. Real bid $13,651 for the 1970 Corvette.   After placing the bid, but before the close of the auction, Mr. Real phoned the defendant and was assured that the condition of the Corvette was as described in the advertisement and that the car could be driven from New Jersey to Missouri.

At the close of the auction, Mr. Real was the high-bidder and the winner of the Corvette.   Defendant then called Mr. Real and advised him that the car could not be driven from New Jersey to Missouri because the automatic headlights did not work, the windshield wipers did not work, and the car lacked a spare tire.  None of these defects was disclosed in the advertisement or in any telephone conversations.  Mr. Real elected to have the vehicle shipped to Missouri.  Upon receiving the vehicle, he discovered that the car’s frame was rusted in half and disqualified the vehicle from registration in Missouri, the convertible top was in poor condition, the seats were ripped in various places, the driver’s seat frame was broken, the radio/cassette was not original, the engine hesitated, and the carburetor was out of tune.  Plaintiff essentially paid $13,000 for a car that was worth about $5,000.  Mr. Real brought suit against the plaintiff in Superior Court in New Jersey and asserted claims under, among others, the New Jersey Consumer Fraud Act.

Defendant Conklin argued that he is not a “dealer,” as defined in the Consumer Fraud Act, and therefore he is not subject to the Consumer Fraud Act’s reach and remedies, which include triple damages and attorneys’ fees.  In analyzing this case, the Supreme Court first noted that the scope of the Consumer Fraud Act is wide and deep.  The Consumer Fraud Act applies to all advertisements, which are defined to  include any attempt to directly or indirectly to induce any person to enter or not enter into any obligation or acquire any title or interest in any merchandise.  The term “merchandise” includes any objects, wares, goods, commodities, services or anything offered, directly or indirectly to the public for sale.  Finally, the Consumer Fraud Act defines a “person” as any natural person, or his legal representative, partnership, corporation, company, trust,  business entity or association, and any agent, employee, salesman, partner, officer, director, member, stockholder, trustee or trustent. 

The Supreme Court then noted that the Consumer Fraud Act has been applied in a wide variety of contexts, including: undisclosed document fee charges on a new car purchase, residential siding products, overcharges in summary dispossess complaints, overcharges on loan interest, arbitration of mortgage claims, rent-to-own contracts, car repairs, car warranty claims, carpet sales, and pre-paid phone cards.  The Court then noted that the Consumer Fraud Act applies to “any person,” and the definition of “person” is very broad.  The defendant in this case was not exempted from the reach of the Consumer Fraud Act because he was not a member of a learned profession or a highly regulated industry. 

Defendant also argued that the Consumer Fraud Act should only apply to traditional dealers, citing a case that held that individual home sellers are not subject to the Consumer Fraud Act, unlike professionals engaged by homesellers, who are subject to the Act.  Defendant argued that the only remedy against an individual seller should be under New Jersey’s Used Car Lemon Law.  However, the Court noted that by its very terms, the Used Car Lemon Law is intended to supplement, and not to preempt the Consumer Fraud Act.  Therefore, defendant Conklin was subject to the Consumer Fraud Act, and having engaged in an unconscionable sales and advertising practice, the plaintiff was awarded $8,651 in damages (representing the difference between the amount he paid for the car and its actual value), which was tripled to $25,953.  Plaintiff was also awarded attorneys’ fees and costs of suit.

The New Jersey Consumer Fraud Act provides very broad protection to New Jersey consumers and consumers from other states who are involved in transactions with New Jersey merchants.  If you are a victim of an unconscionable commercial practice by any merchant or seller, contact a New Jersey consumer fraud lawyer for an analysis of your case.

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