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Hoffman v., Inc.

404 N.J. Super. 415, 962 A.2d 532 (App. Div. 2009)

CONSUMER FRAUD ACT — Merely having a hold placed a consumer’s credit card does not constitute experiencing an ascertainable loss for the purposes of the Consumer Fraud Act even though the hold may prevent the consumer from utilizing all of his or her otherwise available credit.

A consumer, who was also an attorney, ordered merchandise from a television retailer’s website. He paid using a credit card which was approved by the retailer. His order confirmation notified him that he was also being billed for a shipping charge for a free bonus item that was included in the order. The following day, he sued the retailer alleging consumer and common law fraud. Specifically, he alleged that the retailer engaged in deceitful advertising. The consumer was unaware that the items were on back order and that his credit card had not been charged. After the retailer learned about the suit, it cancelled the order and never billed for it. After learning that the consumer had brought a number of similar actions against other television retailers, this retailer brought a counterclaim for abuse of process. The lower court dismissed the consumer’s fraud claims because the consumer had not established an ascertainable loss. It also dismissed the retailer’s counterclaim.

On appeal, the Appellate Division pointed out that the retailer’s advertisement clearly disclosed a shipping and handling charge for bonus items and that its invoice showed a charge reflecting the sum of the shipping charges for the ordered merchandise and the free bonus. It also pointed out that the consumer was on the retailer’s “do not sell” list. According to the consumer, this was the only reason that his order was cancelled. The Court additionally noted that the other retailers who were the subject of the consumer’s earlier actions ended up settling with him. The Court then rejected the consumer’s claim that he had suffered ascertainable losses from the hold placed on his credit card even though this prevented him from utilizing the available credit.

The Court agreed with the lower court that the consumer had not established an ascertainable loss. Additionally, it rejected the consumer’s argument that the authorization hold constituted a debt or a lien, or that retailer’s sale of its customers’ personal information to a third party in any way could have constituted an ascertainable loss. The consumer’s argument that he relied to his detriment on the retailer’s misrepresentation regarding the sale of customer information was also rejected. The Court found that, even with the lessened burden of proof for the consumer’s common law claims, the consumer never established an ascertainable loss. It also found the consumer’s arguments to be disingenuous because, during the lower court proceedings, it was revealed that while this case was pending, he had ordered additional items from the same retailer using a different name and address.

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