The New Jersey Consumer Fraud Act, N.J.S.A. § 56:8-2 (“NJCFA”), prohibits: “The act, use or employment by any person of any unconscionable commercial practice, deception, fraud, false pretense, false promise, [or] misrepresentation . . . in connection with the sale or advertisement of any merchandise.” “Merchandise” includes “any . . . services or anything offered, directly or indirectly to the public for sale.” Id. § 56:8-l (c). “Person” includes “any . . . corporation, company, . . . business entity . . . .” Id.
After the NJCFA was amended in 1971, it provided New Jersey consumers with a right of action to obtain compensation of three times a claimed loss as well as reimbursement for their attorneys’ fees. As a result, it is one of the strongest consumer protection laws in the nation. And, for over fifty years, it has been considered remedial and liberally construed in favor of protecting consumers. In fact, “[t]he history of the [NJCFA] is one of constant expansion of consumer protection.” Gennari v. Weichert Co. Realtors, 148 N.J. 582, 604 (1997) (imposing liability on a builder and his wife, who was an officer in the builder’s corporation and a Weichert realtor, for affirmative misrepresentation of the builder’s experience and qualifications). Ultimately, the Act’s goal is not simply to compensate consumers – it is to deter others from engaging in prohibited practices in the future.
Home Improvement Contractors are often unintentionally in the crosshairs of this powerful law because if a claimed violation is the result of a defendant’s affirmative act, intent is not an essential element. More to the point, NJCFA claims based on regulatory violations are akin to affirmative acts and have no intent requirement. Bosland v. Warnock Dodge, Inc., 197 N.J. 543, 964 A.2d 741, 749 (2009) (“Because plaintiff’s complaint is based on a claimed regulatory violation, she is not required to prove defendant’s intent.”).
Home improvement contracts that are not signed, contain no start and end dates, contain no contractor license number, fail to provide the New Jersey Department of Consumer Affairs hotline number, fail to include the contractor’s certificate of insurance, and fail to provide consumer notice of the three-day cooling off period, etc., are deemed regulatory failures that can give rise to a NJCFA claim without any showing these failures were intentional.
Plaintiffs’ filing a NJCFA action would only have to show that the home improvement contractor caused an “ascertainable loss” connected to the regulatory violation – which could be the amount paid for the remediations that took place after they moved in given, they did not receive the benefit of the bargain. The NJCFA does not, however, even require that the ascertainable loss be in the form of incurred repair expenses. Distilled to its essence, “to demonstrate a loss, a victim must simply supply an estimate of damages, calculated within a reasonable degree of certainty. The victim is not required actually to spend the money for the repairs before becoming entitled to press a claim.”
Contractors in billing disputes often learn the hard way about the NJCFA and how powerful a tool it is to reduce a valid unpaid invoice to almost nothing when up against a claim based on a regulatory miscue. The most tragic aspect of this scenario is that almost all business owner protection insurance policies – the low-cost policies most contractors purchase, will exclude NJCFA claims and do not provide a defense after suit is filed.
Licenz provides home improvement contractors with a full suite of services – including a customized contract and regulatory compliance assistance, at a low flat rate so that home improvement contractors doing business in New Jersey satisfy these important requirements under the Contractors’ Registration Act and other regulations.
