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Bosland v. Warnock Dodge, Inc.

197 N.J. 543, 964 A.2d 741 (2009)

CONSUMER FRAUD ACT — The Consumer Fraud Act does not require a consumer to seek a refund from an offending merchant prior to filing a complaint.

A buyer purchased a new car from an auto dealer. She paid the full purchase price listed in the retail buyer’s order that served as her invoice. The order included a $117 charge that was described only as a “registration fee.” The buyer subsequently learned that the registration fee charged by the New Jersey Motor Vehicle Commission was less that the fee the dealer required her to pay. The buyer believed that the difference must have been an additional documentary service fee that was neither disclosed nor itemized as required by applicable automobile sales regulations. Rather than demand a refund of the difference from the dealer, the buyer filed a complaint, primarily seeking damages under the New Jersey Consumer Fraud Act (CFA).

The lower court granted the dealer’s motion to dismiss. In explaining its basis for dismissing the CFA claim, the court held that the buyer had not suffered an ascertainable loss. It also found the fees were not unconscionable because the buyer paid them without objection.

On appeal, the Appellate Division reinstated the CFA claim, rejecting the lower court’s conclusion that the CFA claim was barred by the buyer’s failure to demand a refund prior to filing her lawsuit. The New Jersey Supreme Court accepted the dealer’s petition for certification in order to determine whether an attempt to obtain a refund from a merchant is required prior to pursuing a CFA claim.

The Supreme Court held that the plain language of the CFA does not require a consumer to seek a refund from an offending merchant prior to filing a complaint. The Court ruled that a viable CFA claim merely requires proof of a causal relationship between unlawful conduct by a merchant and an ascertainable loss by a consumer. The Court also would not conclude that a pre-suit demand for a refund is implicit in the CFA based on public policy considerations. The dealer, however, was not happy because the Court ultimately opined that should a precondition to filing a CFA claim exist, it could provide a safe harbor for an offending merchant who boldly imposes inflated charges and accedes to a refund only if requested. Such a requirement would benefit only those consumers alert enough to ask for a refund, and would permit an offending merchant to realize a windfall.

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