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Under New Jersey Law, it violates the New Jersey Consumer Fraud Act to make an affirmative misrepresentation of fact as the seller attempted sale of a product. It does not matter that nobody has been misled but there is the capacity to mislead, which is the primary ingredient of consumer fraud.

There has been an investigation opened by the Federal Trade Commission which has been resolved recently with Kellogg. It appears as though Kellogg was misrepresenting the benefits of Frosted Mini-Wheats. Kellogg was making claims on their advertising that Frosted Mini-Wheats was “clinically shown to improve kids’ attentiveness by 20%”. The FTC opened an investigation because they claimed that it was false and violated federal law. It appears as though the complaint was based on a certain study which demonstrated the improved attentiveness of the children. According to the FTC news release, this was in fact not accurate. It appeared as though just under 11% had better attentiveness. It appears as though the commission approved to the administrative complaint and the proposed consent agreement. It is open to public comment for 30 days beginning and continuing through May 19, 2009.

Public Citizen

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The New Jersey Attorney General’s Office, through the Division of Consumer Affairs, conducts investigations and files suits on behalf of the state against various businesses alleged to have potentially committed acts in violation of New Jersey Law. As an example, there was a press release on June 5, 2009 indicating that the state filed suits against Air Duct Cleaning Services. The defendants, United Air Care, Inc. and Indoor Air Care, LLC were alleged to have advertised “whole-house duct cleaning” for $39.95 to $69.95. The Attorney General’s Office is then alleging that the businesses induced the consumers to purchase more expensive services. It appears also that these businesses were not licensed or registered as home improvement contractors with the Division of Consumer Affairs. The Attorney General’s Office, through the Division of Consumer Affairs, filed an eight-count complaint alleging violations of the New Jersey Consumer Fraud Act, Contractor Registration Act and Home Improvement Practices Regulations. The Attorney General’s Office is alleging bait and switch advertising, failure to register, providing coupons of failing to honor those services, causing damage to consumer’s home and then failing to fix those damages, misrepresenting receipt of refunds or reimbursements, requiring consumers to sign estimates and not providing copies of those, and deceptive advertising.

This is but just one of various investigations and a complaint that the state has opened up in the last few years. Another example is on June 3, 2009, the state reached settlement with Rubin & Raine of New Jersey LLC. This pertained to certain collection efforts on behalf of Pascack Valley Hospital. Also, on April 14, 2009, the Division of Consumer Affairs issued a press release indicating that a tax preparation firm which was sued had reached settlement. The business involved was Malqui Financial Group, Inc. and Fast Tax Express Corp., both of which did business as Malqui Tax.

The Division of Consumer Affairs recently reached settlement with Rubin & Raine, Inc. and Rubin & Raine of New Jersey, LLC. There was no admission of any wrongdoing and they agreed to comply with the State Consumer Fraud Act and Collection Agency Statute and Fair Debt Collection Practices Act.

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The New Jersey Consumer Fraud Act and individual liability

The definitional section of the New Jersey Consumer Fraud Act is straightforward re: The Act to persons. The New Jersey Supreme Court has explained that the Act is wide-ranging remedial legislation and should be liberally interpreted to effectuate its remedial purposes. Despite the plain language of the statute and the express statements made by the New Jersey Supreme Court, there have been various businesses and/or individuals who have argued that the New Jersey Consumer Fraud Act did not apply to them. There are some exceptions to the application of the New Jersey Consumer Fraud Act; however, these exceptions are limited. Generally, lawyers, utilities and hospitals are exempt from the New Jersey Consumer Fraud Act. The primary reason that these particular businesses are exempt from the New Jersey Consumer Fraud Act is that they have their self-contained regulatory bodies. As an example, lawyers are regulated by the Supreme Court and not by the Consumer Fraud Act.

There have been cases which have interpreted the seller’s of real estate, individual sellers, to be exempt from the wide-ranging penalties of the New Jersey Consumer Fraud Act. The New Jersey Supreme Court recently decided a case that held the definitional section of the Act is self-explanatory in that it applies to all persons. This means that if you individually sell a particular product, you will be subject to the provisions of the New Jersey Consumer Fraud Act if you are a person. A person could be an individual or a legal fiction such as a corporation. In Lyle Real v. Radir Wheels, Inc. and Richard Conklin, the individual defendant, Richard Conklin, argued that he was not subject to the penalties of the New Jersey Consumer Fraud Act and that he is exempt from liability. The Appellate Division dismissed the case but ultimately the Supreme Court held that since he is a person under the Act, he is subject to the restrictions of the New Jersey Consumer Fraud Act.

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What is a consumer to do when a major manufacturer declares a bankruptcy?

Many people are asking this question in light of the anticipated bankruptcy of General Motors and the currently filed bankruptcy of Daimler Chrysler. Many consumers and vehicle purchasers feel that they are without an option with regard to making a claim for breach of warranty or Lemon Law under New Jersey law or any other law. There are various other claims associated with the sale of a vehicle which do not necessarily require the presence of the manufacturer as the defendant. There are various claims which a purchaser of a vehicle can make against the seller of a vehicle. In the case in which the seller and the manufacturer are bankrupt and there are still remaining claims against the finance company, assuming it was financed through the selling dealership. Quite frequently, the finance companies are holders of the retails on the sales contract and are subject to the holder rule. The holder rule requires that the holder of the paper, usually a finance company, is subject to all claims that the purchaser of the automobile will have against the seller. In addition, the holder of the paper would have all the defenses that the seller of the automobile would have.
So hypothetically, if an individual were to purchase a vehicle from a Chrysler dealer and the dealer was still in business, the plaintiff would have most of his claims against the selling dealer as well as the finance company, if the appropriate steps were taken. The exception to this would be the Lemon Law claim, since New Jersey Lemon Law applies to new car dealers only. There are various other theories which could potentially be made against the finance company, which have been demonstrated by New Jersey case law. In Lotito v. Mercedes Benz, the court held that because of the close proximity and nature of identities between the finance company and the manufacturer, the plaintiff in essence has the same or substantially similar claims against the finance company as it would against the manufacturer due to the nature and extent of the relationship between these parties.
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It is not uncommon for the very employees upon whom the dealership relies to have complaints with upper management or ownership. My experience over the years has demonstrated that the dealership employees were subject to the same type of “trickery” to which the consumers are subject. In my experience, it is still common for the upper-level management and/or ownership to implement schemes or plans, intentionally or unintentionally, that reduce the commissionable gross proceeds for the salesman. The salesman and a large portion of the dealership employees rely upon the basic profit on the sale and financing of automobiles. I have seen cases where the dealerships have violated the pay plans by claiming various alleged “fictitious” costs. It is these costs, when added to the initial cost of the automobile, which reduces the gross commissionable proceeds for the dealership employees.

As an example, if a dealership acquired a vehicle at auction for $5,000 and it is placed on the books at $9,000, in my opinion the salesman has been denied the appropriate profit on the increased cost of the vehicle.

Further, hypothetically, if a dealership principal owned companies which supplied the gap or other after-market products, what would the appropriate costs be attributable to this product? The “captive” company could price a product wherein there is no profit for the dealership, thus funneling the profits into the subsidiary, which is owned and controlled by the dealership principals and/or management team. In my opinion, the sales staff or the employees have a claim against the ownership for this type of conduct.

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CAR DEALERSHIP SELLS CAR TO TWO BLIND PEOPLE.

This is not a joke. It is true.

The names will be withheld until suit is filed BUT today I saw, possibly, the worst case in the many years that I have been doing this type of work.

Both of my clients are legally blind, the primary obligor and the cosigner. They do not even have a driver’s license, nor are they permitted to drive. The dealership even got the car registered and insured. The customer was at the dealership with his cane and his glasses. When they told me the story it was hard to believe. They are both legally blind.

To make matters even worse, the car is a mess. It looks like it was in a prior accident with a different hood and various parts are melted on the interior of the car. They were told the car had only one prior owner, when in fact it had two.

The following are the causes of action (theories of liability) against the dealer and/or the lender:

• Consumer Fraud-deceptive conduct. Cox v. Sears.
• Fraud • Breach of contract • Breach of good faith and fair dealings. Wilson v. Hess
• Revocation. Cuesta v. Classic
• Negligence • Discrimination against disabled persons, the blind. Law against discrimination.
• Declaratory relief that the contract is void ab initio (from the beginning)
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I recently filed a demand for an arbitration under the American Arbitration Association consumer rules against a New Jersey dealership in South Jersey. The hearing is concluded and a decision should be rendered soon. I will start from the beginning and explain how arbitration works, as opposed to a court case filed in Superior Court.

Remember all defendants are presumed innocent and the plaintiff has the obligation to prove the case.

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The Asbury Park Press has reported that a credit reporting company in Howell NJ has been sued by the State. According to the story, the name of the company is United Credit Adjusters. It is alleged that they accepted fees and failed to perform the represented services. The complaint also alleges that they were misrepresenting the effects of bankruptcy filings and representing that they could reduce credit card debt by almost 50%!

This story must be filed under the heading “if it is too good to be true it probably is.” There are very fully reviewed in this economy strict Federal regulations and Statutes governing credit repair that should be carefully reviewed.

The most important thing to remember is that no credit repair organization is permitted to charge in advance of services performed.

Section 404
(b) Payment in Advance.–No credit repair organization may charge or receive any money or other valuable consideration for the performance of any service which the credit repair organization has agreed to perform for any consumer before such service is fully performed.

There is also a right to cancel under the Federal Statute.
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New Jersey has a Division of Banking and Insurance.. There is a special division for banking. Most people forget that car dealerships have a banking license and are subject to regulation by the Division of Banking and Insurance. You can complete the following form and file a complaint against the dealership pertaining to banking issues.

The following information is contained on the website pertaining to filing a complaint.

How to File a Complaint

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