The “Ascertainable Loss” Requirement Under the New Jersey Consumer Fraud Act
In response to widespread complaints about selling practices that victimized consumers, the New Jersey Legislature passed the Consumer Fraud Act.  The Act was designed to be one of the strongest consumer laws in the nation. Under the Act, a plaintiff who successfully proves both an unlawful practice and a resulting “ascertainable loss” is entitled to an award of treble (triple) damages and attorney’s fees. Under the Act, “consumer” is defined to include businesses as well as individuals.
Unlawful practices under the Consumer Fraud Act generally fall within the following categories:
1. Affirmative acts. This conduct involves any unconscionable commercial practice, deception, fraud, false pretense, false promise or misrepresentation. Courts in New Jersey have held that to constitute consumer fraud, the business practice in question must be misleading and stand outside the norm of reasonable business practice such that it will victimize the average consumer. The courts have also recognized a distinction between misrepresentations of fact which are actionable under the Consumer Fraud Act and “mere puffery” about a product that will not support relief. See e.g., Gennari v. Weichert Realty Co., 148 N.J. 582 (1997). However, with respect to an affirmative act, an aggrieved consumer is not required to show any intent to mislead.
2. Acts of omission. This conduct involves the “knowing concealment, suppression or omission of any material fact.” Here, the aggrieved consumer must show that the defendant acted with knowledge. Intent is an essential element of the fraud.
3. Violation of administrative regulations enacted to interpret the Act itself. The administrative regulations adopted pursuant to the Act spell out numerous selling or advertising practices in particular areas of consumer sales that are either required or prohibited. These areas include the sale or advertisement of merchandise or real estate, home improvements and/or renovations, as well as the sale of automobiles. As is the case with affirmative acts, an aggrieved consumer does not have to establish an intent to evade or violate the regulatory requirements. The law imposes strict liability upon a defendant once the violation is established.
As stated by the New Jersey Supreme Court, in Gennari, supra, the history of the Consumer Fraud Act is one of “constant expansion of consumer protection.” However, this does not mean that an aggrieved consumer is automatically entitled to an award of treble damages and attorney’s fees once it is shown that the defendant has engaged in an unlawful practice. Subsequent decisions have made it increasingly clear that in order to recover under the Consumer Fraud Act, a private plaintiff must also show both an “ascertainable loss” and a causal connection between the defendant’s unlawful conduct and the plaintiff’s ascertainable loss.
To be “ascertainable,” the loss must be quantifiable or measurable. While an estimate of damages calculated within a reasonable degree of certainty is usually sufficient, claims for treble damages and attorney’s fees under the Act are often denied because the loss is too speculative. For example, in Thiedemann v. Mercedes-Benz USA, LLC ,183 N.J. 234 (2005), several car owners purchased vehicles that had defective fuel gauges which did not properly read a “full” tank of gasoline. While the owners may have been inconvenienced, all repairs were performed by the manufacturer under warranty at no cost to the owners. The New Jersey Supreme Court held that the argument that there is a “future hypothetical diminution in value” of the car was too speculative to satisfy the ascertainable loss requirement. There, the plaintiffs made no attempt to sell their vehicle nor did they present any expert evidence to support an inference of loss in value, i.e., that the resale market for the specific vehicle had been skewed by the “defect.” The Court further stated that the absence of any such evidence was fatal to plaintiffs’ claim.
Other times, claims for damages and attorney’s fees are denied because a consumer is unable to show that he has suffered an ascertainable loss caused by or directly related to the defendant’s unlawful conduct. For example, in Pron v. Carlton Pools, Inc., 373 N.J. Super. 103 (App. Div. 2004), a pool contractor committed a technical violation of the Consumer Fraud Act when he hired electrical and gas subcontractors to install the lighting and heating systems, despite assurances that all work would be performed by his company. The court concluded that the subsequent damage to the plaster finish of the pool was completely unrelated to the defendant’s misrepresentation. Since the plaintiff could not show that his loss was caused by the contractor’s technical violation, the Consumer Fraud Act claims were dismissed.
Our firm has successfully represented businesses and individuals in this area. We have litigated claims for both plaintiffs and defendants under the Consumer Fraud Act. This area of the law is specialized and litigants are well advised to seek experienced counsel to represent them in connection with consumer fraud claims.