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May 20th, 2016
National Marketers Face Class Action Suits Under New Jersey Consumer Protection Law
A surge of recent lawsuits brought under a 30 year-old New Jersey consumer protection law has national marketers and their lawyers huddling. Here's a summary of how the law works and why there's exposure for marketers everywhere.
Summary of the law
The New Jersey Truth in Consumer Contract, Warranty, and Notice Act ("TCCWNA") prohibits sellers from presenting consumer-facing communications such as website terms and conditions, advertisements, consumer contracts and other written communications (including gift certificates and restaurant menus) ---- that violate any clearly established legal right of consumers or that try to avoid sellers' responsibilities under New Jersey or federal law. The TCCWNA doesn't create any new rights ---- it just provides consumers with a new remedy to enforce existing rights. In addition, the TCCWNA prohibits generic waiver clauses that attempt to void inapplicable provisions in consumer contracts or notices but do not specify which particular provisions are void for residents of New Jersey. In other words, "in some states, this clause may not apply to you," is not sufficient; the contract must identify which provisions or clauses do not apply to New Jersey residents.Though the TCCWNA has been on the books for over 30 years, the floodgates opened in 2009 when a New Jersey appellate court ruled that TCCWNA claims could be brought as class actions, even if the plaintiffs have suffered no ascertainable loss. Since then, the number of TCCWNA class actions has steadily risen, with a recent uptick in suits over the last several weeks. Why? Three reasons: 1) the law has been interpreted very broadly to apply to purchasers of consumer goods for personal, family or household use, and to any business that "lent its assistance to the transaction" ---- by manufacture, distribution or advertising of the consumer good; 2) there is a very low barrier to class action standing: plaintiffs need not allege any actual harm or reliance, and need not allege that defendant intended to violate the law; and 3) the mandatory minimum civil penalty is $100 per consumer, plus attorney's fees and court costs.
Plaintiffs have successfully alleged violations of the TCCWNA based on provisions that purport to:
- limit sellers' liability;
- exculpate sellers from liability;
- mandate that consumers waive their right to attorney's fees and costs, and
- mandate that consumers waive the right to sue and submit their claims to arbitration.
Recent class actions have targeted leading retailers such as Apple, Burlington Coat Factory, Victoria's Secret, Bed, Bath & Beyond, Toys R Us, and J. Crew. Each of these suits targets the company's website terms and conditions for alleged violations under the TCCWNA.
What to do
To help reduce the risk of receiving a TCCWNA claim, examine all of your consumer-facing communications ---- with a particular focus on website terms and conditions. Consider which clauses may not apply to New Jersey residents.
Pay particular attention to clauses that limit liability or disclaim warranties. There are different ways to approach compliance with the TCCWNA, and we recommend that you tailor your approach to the particular consumer-facing communication at issue.
If you have questions about TCCWNA compliance or other consumer protection issues, or about privacy and data security issues, please contact Terri Seligman, at (212) 826 5580 or firstname.lastname@example.org, Greg Boyd at (212) 826 5581 or email@example.com, Jeremy Goldman at (212) 705 4843 or firstname.lastname@example.org, Jessica Smith at (212) 705 4876 or email@example.com, or any other member of Frankfurt Kurnit's Advertising Group or Privacy & Data Security Group.
Other Advertising Law Alerts
FTC Research Indicates Disclosures Help Consumers Recognize Ads
The FTC has long stated that consumers should be able to recognize an ad as an ad. And if disclosures are necessary to ensure that consumers will recognize that an ad is an ad, then those disclosures must be made in a way that ensures that consumers can understand them.
January 5 2018
New Low-Budget Waiver is Now Available for Digital Commercial Productions
Advertisers and agencies that are signatories to the SAG-AFTRA Commercials Contract can now take advantage of a new waiver issued by SAG-AFTRA and the Joint Policy Committee on Broadcast Talent Union Relations when producing low-budget digital commercials.
November 10 2017
FTC Updates Endorsement Guide FAQs and Settles First-Ever Action Against Individual “Influencers”
Recent developments demonstrate the FTC's continued interest in social media endorsements.
September 11 2017