The capacity to mislead is the prime ingredient in all types of consumer fraud. See Cox v. Sears Roebuck & Co., 138 N.J. 2,17 (1995).
An excellent example of deceptive, but truthful conduct, is contained in Miller v. American Family Publishing, 284 N.J. Super 67, 76 (App. Div. 1995), where the Court held that the plaintiffs establish a prima facie case and the defendant’s Motion for Summary Judgment should be denied. In Miller, the plaintiffs contended that the defendant’s advertising materials were deceptive and violated the New Jersey Consumer Fraud Act in three respects. First, plaintiff said that the defendants deliberately planted the impression that the chances of winning in its sweepstakes were enhanced by ordering a magazine subscription. Second, plaintiffs claimed that those who responded to defendant’s earlier mailings were, thereafter, urged to submit further responses from misrepresentations that they had survived a “winnowing down” process which had placed them in a select group of finalists and had increased their chances of winning. Thirdly, plaintiffs pointed to defendant’s “alert” to sweepstakes participants who had not ordered the magazines, implying that a continued failure to subscribe would lead to their being dropped from the contest. The Court held as follows:
” . . . here the entire tenor of the defendant’s promotional literature has the capacity to mislead. It misleads by strongly implying that purchase of a magazine subscription will enhance one’s chances of winning the sweepstakes. It misleads by saying (not just implying) that the contestant to whom the mailing is addressed has survived some earlier thinning-out process and now has an enhanced likelihood of success in the sweepstakes. And, it misleads by indicating that if the reader does not buy a subscription, he or she will be dropped from any opportunity to win the sweepstakes.” Id. at 83.
The Court held specifically that neither the defendant’s disclaimers, nor the literal truth of the solicitations, constituted a defense to any of the plaintiffs’ claims. Id. at 84.
Miller was pre-dated by the case of Barry v. Arrow Pontiac, 193 N.J. Super 613 (1984), (App. Div. 1984), wherein the Appellate Division held that the automobile dealership advertising “dealer invoice” prices was inherently deceptive. The Court held as follows:
“When a dealer advertises that he is selling a car for what it costs, the reader can easily be misled into believing that if he purchased the car, he would be getting a bargain, not realizing that the advertiser’s idea of the cost may include a portion of overhead and payment to manufacturers, which would be later refunded.”
As can be seen by the applicable case law, the New Jersey Courts have a long history and strong tradition of prohibiting deceptive conduct.
In respect of what constitutes an “unconscionable commercial practice, this Court explained in Kugler v. Romain that unconscionability is “an amorphous concept obviously designed to establish a broad business ethic.” The standard of conduct that the term “unconscionable” implies is lack of “good faith, honesty in fact and observance of fair dealing.” Id. at 544, 279 A.2d 640.106. See Herner v. House of America,349 N.J.Super 89 (App.Div 2002)
The model civil jury charge defines the following:
“Deception” is conduct misleading to an average consumer. It does not matter that at a later time it could have been explained to a more knowledgeable and inquisitive consumer, nor need the conduct or advertisement actually have misled the plaintiffs. The fact that the defendants may have acted in good faith is unimportant. It is the capacity to mislead that is important.
“Unconscionable commercial practice” is an activity in the public marketplace which is basically unfair or unjust and/or which materially departs from standards of good faith, honesty in fact and fair dealing. To find a commercial practice to be unconscionable, there should be factual dishonesty and a lack of fair dealing.
“Fraud” is a perversion of the truth, a misstatement or a falsehood communicated to another person creating the possibility that the other person will be cheated
See the model jury instruction for consumer fraud section 4.23
The term unconscionable must be interpreted liberally to effectuate the remedial purpose of the Consumer Fraud Act. Associates Home Equity Services v. Troup 343 N.J.Super 254, 278 (App.Div 2001).
Similar principles have been affirmed in the Federal system. In Kraft v. F.T.C., 970 F. 2d. 311, 7th. Cir. (1992), the Circuit Court held that the company’s advertisements were deceptive, despite the fact that they were literally true. In Kraft, the defendant claimed that cheese slices had five ounces of milk and, thus, were concentrated with calcium. There was subscript in the advertisement indicating that a cheese slice has 70 percent of the calcium of five ounces of milk. The ad was literally true, but inherently deceptive, nonetheless. The 7th Circuit upheld the FTC’s determination that the ad was misleading and deceptive. Any misrepresentations that are capable of being interpreted as misleading, should be construed against the defendant. See Continental Wax Corp. v. FTC, 330 F. Supp. 475, (2nd Cir. 1964); Simeon Management Corp. v. FTC, 579 F. Supp. 1137 (9th Cir. 1978).