Jump To Navigation

Business Owners Can be Sued Under the New Jersey Consumer Fraud Act

By: Thomas W. Hartmann
The Hartmann Law Firm LLC

Tom.Hartmann@Gmail.com; 908 769 6888

The New Jersey Consumer Fraud Act ("CFA") may be the most powerful consumer protection act in the country. It protects consumers against fraud, misrepresentations, omissions and unconscionable commercial practices. Should an entity or merchant who provides services violate the principles of the CFA, that entity or merchant is potentially liable for triple the damages (or ascertainable loss) of the consumer and the consumer's attorney fees.

Business owners may think that they are personally protected from the CFA if they have dealt with the consumer through a business entity such as a corporation or limited liability company. This is not necessarily so.

A business owner, not just the business, is considered a "person" under the CFA and is subject to personal liability as outlined by the New Jersey Supreme Court in Allen v. V and A Bros., Inc., 208 N.J. 114, 131 (2011). As an overarching principle, the Allen Court stated:

In light of the broad remedial purposes of the CFA and the expansive sweep of the definition of 'person,' it is clear that an individual who commits an affirmative act or a knowing omission that the CFA has made actionable can be liable individually. Although the statute would also impose liability on the individual's corporate employer for such an affirmative act, there is no basis on which to conclude that the statute meant to limit recourse to the corporation, and thereby to shield the individual from any liability in doing so.

In discussing individual liability further, the Allen Court noted, particularly as to the Home Improvement Practices regulations at issue there, "a distinction can be drawn between the principals of the corporation and its employees. The principals may be broadly liable because they are the ones who set the policies..." Allen v. V and A Bros., Inc., 208 N.J. 114, 134.

According to the Court, the concept of individual liability does not violate statutory protections of the Business Corporation Act, which might shield a business owner from liability under traditional piercing the corporate veil theories. Allen v. V and A Bros., Inc., 208 N.J. 114, 135.

If you are a business owner, you should be particularly cautious to insure that both you and your business fully comply with obligations under the CFA, starting with the initial meeting with the consumer, drafting the contract and complying with the CFA through the course of performance. From a business management perspective, it may be wise to consult with counsel to insure that your contract and standard practices meet your obligations under the CFA.

Contact Us

Bold labels are required.

Contact Information
disclaimer.

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

close

Contact

The Hartmann Law Firm LLC

56 Ellison Rd
Watchung, NJ 07069
Telephone: 908-731-6976 
Toll Free: 877-223-9930
Fax: 908-462-3808
Map and Directions
Contact My Office

Learn More About The Hartmann Law Firm LLC

LinkedIn Twitter Facebook AVVO