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Herisko v. Fleetway Chrysler Plymouth, Inc.

A-3622-98T5 (N.J. Super. App. Div. 2000) (Unpublished)

CONSUMER FRAUD; AUTOMOBILES—Failure to post an advertisement that contained prices is an unlawful trade practice for an automobile dealer, and a buyer is entitled to prove a causal relationship to a loss caused by such failure.

A buyer purchased a vehicle from a dealer for $16,995 and received a $2,000 trade-in allowance for its old car. About two weeks earlier, the dealer had advertised the same vehicle in the newspaper for $14,489. The buyer admitted that it did not see the advertisement prior to purchase. Nonetheless, it brought an action pursuant to the Consumer Fraud Act in the amount of the difference between the purchase price and the advertised price. In its answer, the dealer asserted that the advertisement was a misprint made by its advertising agency and moved for summary judgment, arguing that the buyer did not sustain damages because the buyer did not see the advertisement before it bought the car and therefore was never misled. In a cross-motion, the buyer alleged that during the month in question, the dealer advertised on local radio that it would pay $3,000 for trade-in toward the purchase of any of its “present stock” of vehicles, new or used. Therefore, the buyer argued that the dealer’s conduct violated the “bait and switch” regulation promulgated under the Consumer Fraud Act. The lower court found for the dealer because “there was no bargaining, there was no reliance” shown by the buyer and, therefore, “there wasn’t an ascertainable loss.” On appeal, the Court pointed out that a private citizen must establish both of the following requirements to obtain damages under the Act: (1) the seller committed an unlawful practice, and (2) the buyer suffered an ascertainable loss. If a consumer fraud plaintiff proves both an unlawful practice and an ascertainable loss, an award of treble damages and attorneys’ fees is mandatory pursuant to the Act. Regarding the first requirement, “nlawful practices fall into three general categories: affirmative acts, knowing omissions, and regulation violations.” Violation of the regulations, regardless of intent, is a violation of the Act. The Appellate Division agreed with the lower court that the “bait and switch” regulation was inapplicable. There was no hint of a plan or scheme to lure the buyer to the dealership and then sell the car at the inflated price. However, another regulation requires on-site disclosure of advertised prices for automobiles. Though nothing in the record disclosed any information about the posting of the newspaper advertising, the Court remanded the matter to the lower court for a determination of whether a violation of that regulation occurred. With respect to the “causation” provision of the regulations, under a “bait and switch” analysis, there was no ascertainable loss, but the Court recognized that the buyer might be able to prove a violation of the regulations that required the posting of a copy of the advertisement and its causal relationship to a loss. Therefore, it was left to the lower court to determine, on remand, whether or not the advertisement was a mistake. Further, the Court pointed out that reasonable attorneys’ fees and costs must be awarded under the Act if it is determined that the seller committed an unlawful practice.


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