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The New Jersey Consumer Fraud Act —Protecting NJ Consumers from Deceptive Business Practices

January 10, 2023 David L. Stevens

grandparents-receiving-wrong-parcel-post-mistake-2022-02-04-00-40-34-utcThe New Jersey Consumer Fraud Act (the Act) provides some of the broadest protections to consumers in the nation. The Act protects consumers from fraud in almost all aspects of sales and purchases, including deceptive practices by home improvement contractors, fraudulent inducement of contracts by salespeople, and the fraudulent sales of goods and vehicles. The Act prevents merchants, salespeople, and contractors from using deceptive practices in the sales of goods and services to consumers. Almost any deceptive sales practice can violate the Act, even sales where a business is the victim of fraud. All that needs to be shown is the salesperson or contractor intended to mislead the customer when entering a contract for goods or services.

If a salesperson or contractor is found to have violated the Act, they will be forced to pay triple the amount of money paid by the consumer in addition to any attorney’s fees and litigation costs. The Act is extremely strong in its protections, but how can it be implemented?


The purpose of the Act is to prevent a party who has the upper hand in a contract from abusing their power in contracting with a party who may not have the same knowledge. In even simpler terms, it stops one party from committing fraud against the other when entering a contract. This fraud can take the form of lying, misrepresenting facts, or failing to disclose all necessary information.

The key takeaway from the Act is the intent of the parties. The party committing fraud must have intended for the consumer to rely on the facts presented in entering the contract. There is no requirement under the Act to prove that the consumer relief on the misrepresentations.

The purpose of the Act is to prevent salespeople from using “unconscionable,” or unethical, business practices by lying to consumers. What qualifies under the Act as “unconscionable” is determined on a case-by-case basis, but usually relies on a salesperson lying to a consumer in an effort to enter the contract or agreement.



The Auto Industry

The Act explicitly applies to selling, leasing, financing, and repairs of automobiles in New Jersey. The Department of Consumer Affairs has issued specific regulations which car dealers must follow or be subject to the Act. This includes:

  • Misrepresent the mechanical condition of a used motor vehicle;
  • Fail to disclose any defect in the condition of the motor vehicle;
  • Fail to disclose any warranty, service contract, or repair contract;
  • Misrepresent the terms of any warranty, service contract, or financing agreement;
  • Using “bait and switch” advertising tactics’;
  • Lying about the price of the vehicles, including using hidden or undisclosed fees;
  • Charging excess fees greater than those actually incurred;
  • Misleading advertisements or statements;
  • Odometer rollbacks and VIN switches.

To sum up, automotive dealers are not allowed to lie or fail to disclose important information regarding the vehicles they sell. This applies to any vehicle sold for greater than $3,000. In an industry notorious for deceptive practices, New Jersey has attempted to put protections in place for the consumer including both the Act and the widely known Lemon Law.

Home Improvement Industry

Home contractors can often charge exorbitant rates while the homeowner has no knowledge regarding home improvement or construction. The Act specifically requires a contractor to get all contracts in writing and include:

  • The name and address of the contractor;
  • Start and stop dates;
  • A description of all work to be done;
  • A description of the supplies to be used;
  • All warranties;
  • The contractor’s license number with the Department of Consumer Affairs;
  • A copy of the contractor’s general commercial liability policy and the insurance company’s phone number;
  • The total price, including fees and final charges;
  • Specific language on cancellation of the contract.

Often a homeowner has no knowledge of construction and is entirely reliant on the contractor to explain prices and projects. To prevent a consumer from being subject to deceptive practices, contractors are expressly forbidden from:

  • Demanding final payment before the job is complete;
  • Misrepresenting the materials to be used on the job;
  • Failing to get permits, or beginning work before obtaining proper permits;
  • Make disparaging misrepresentations about a competitor;
  • “Bair and switch” tactics;
  • Failing to provide copies of the contract;
  • Insurance certificates or warranties.


Health Clubs and Gyms


With the new year, more and more people are joining gym and health clubs. Most people use their clubs without issue, but some clubs are notoriously difficult to cancel, and often have high-pressure sales tactics, club closings, automatic renewals, and difficult cancellation policies. The Act makes it easier for a consumer to understand exactly what they’re signing up for. Any club that devotes more than 40% of their space to health club services must register with the New Jersey Department of Consumer Affairs. The Act also requires:

  • All health club contracts must be in writing;
  • The consumer must be given a copy of the contract;
  • The contract must list the total price;
  • The contract cannot be for more than three years;
  • The consumer must have the ability to cancel the contract within three days after signing to get a refund;
  • The contract must provide for cancellation upon the member’s death or permanent disability;
  • The contract must provide that the customer can cancel if they move more than 25 miles from the club or an affiliate club;
  • Members cannot be required to renew their contract;
  • A health club cannot require or accept more than a 25% down payment.

While many clubs will still have some sketchy business practices, knowing that the Act allows a consumer to collect damages gives the consumer the upper hand in all aspects of contracting with a club.


Employment Agencies

While there are many rules and regulations that govern employment agencies, most violations of those rules would also be a violation of the Act. The Act has many requirements for employment agencies, including:

  • Any employment agency must be duly licenses with the state of New Jersey;
  • Agencies cannot use deceptive or misleading advertising;
  • All contracts between an agency and job seeker must be in writing;
  • Any contract must clearly state it gives no guarantee of employment;
  • The contract must clearly state all fees ad clearly describe the services to be provided by the agency;
  • The contract must give the employee three calendar days to cancel;
  • The contract must clearly state the fees and services provided by the agency;
  • The agency must provide the employee with a copy of each document signed by the employee;
  • Job seekers cannot be charged more than 1% per day of the fee on the schedule per day if they were discharged without cause or quit with just case;
  • A job seeker who does not report for work or voluntarily quits without just cause within 30 days may not be charged more than 30%;
  • An agency cannot charge a job seeker a fee prior to finding them a job;
  • An agency cannot split fees paid by a job seeker with an employer.

These standards are set specifically to protect prospective employees/job seekers from being taken advantage of by these employment agencies.


We have a record of success in litigating consumer fraud issues. If you suspect you were the victim of fraud as a consumer, the Scura Legal Team is the firm for you. With extensive knowledge in litigation and fraud claims, we can assure you will be in capable hands. If you feel you might require legal counsel or support, please contact our team of lawyers for a free consultation.


David L. Stevens

I have a passion for what I do. There are few things I enjoy more than helping good people and viable businesses find solutions to overwhelming debt.

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