The New Jersey Consumer Fraud Act Requires an Ascertainable Loss

To satisfy the ascertainable loss requirement, the plaintiff need prove only that he/she has purchased the item partially as a result of an unfair or deceptive practice or act and that the item is different from that for which he/she bargained. If one sets out to purchase two things, and for the price paid receives only one, the conclusion seems inescapable that there has been an ascertainable loss. Whenever a consumer has received something other than what he/she has bargained for, he/she has suffered a loss of money or property. That loss is ascertainable if it is measurable, even though the precise amount of the loss is not known. When the product fails to measure up to reasonable expectations based on the representations made, the consumer has been injured: he has suffered a loss. He has lost benefits of the product, which he was led to believe he had purchased. Miller v. American Family Publishing, 284 N.J.Super 67, 88 (App.Div. 1995). The New Jersey Supreme Court has held that a consumer debt, which is a result of consumer fraud, can be an ascertainable loss. Cox v. Sears Roebuck & Co. 138 N.J. 2, 21-23 (1994)
In an ordinary breach-of-contract case, the function of damages is simply to make the injured party whole, and courts do not assess penalties against the breaching party. However, the goals of the Act are different. Although one purpose of the legislation is clearly remedial in that it seeks to compensate a victim’s loss, the Act also punishes the wrongdoer by awarding a victim treble damages, attorney’s fees, filing fees, and costs. In that sense, the Act serves as a deterrent. Therefore, in determining whether plaintiff has established a loss under the Act, we are guided by, but not bound to, strict contract principles. *** We conclude that an improper debt or lien against a consumer-fraud plaintiff may constitute a loss under the Act, because the consumer is not obligated to pay an indebtedness arising out of conduct that violates the Act.

Therefore the plaintiff need only prove that the contract or debt resulted from fraud or consumer fraud and it would then be the defendant’s burden to prove setoff. In Lotito v. Mercedes Benz, 328 N.J.Super. 491 (App.Div 2000), the Court held that the burden of proof shifted to the defendant after the plaintiff proved he made all the payments on the lease. Lotito was a breach of warranty case, not a consumer fraud case, but the equities are the same. The Consumer Fraud Act is to be generally construed since it is remedial legislation.

The Lotito Court held:
Generally, burdens of proof are not allocated in statutory law but are left to the courts as matters of procedure. In re Will of Smith, 108 N.J. 257, 264, 528 A.2d 918 (1987). Judicial allocation of the burden of persuasion “can vary depending upon the type of proceedings, the comparative interests of the parties, the relative litigational strengths or weaknesses of the parties, the access of the parties to proof, and the objectives to be served by the evidence in the context of the particular proceeding.” Romano v. Kimmelman, 96 N.J. 66, 89, 474 A.2d 1 (1984). Obviously, the lessee has no interest in establishing the value of the use of the vehicle and the lessor has every interest in proving that the value of the use equaled or exceeded the amounts paid by the lessee. In addition, the lessor, because of the nature of its business, is in a far better position to provide evidence of the value of use. Although generally the party seeking damages has the burden of proof, Caldwell v. Haynes, 136 N.J. 422, 436, 643 A.2d 564 (1994), Lotito should be viewed as having satisfied that burden by proving what he had paid. The burden of proving the claimed offset for the value of use fairly belongs on the party in breach in these circumstances. Cf. Block v. Diana, 252 N.J.Super. 650, 657-58, 600 A.2d 520 (App.Div.), certif. denied, 127 N.J. 564, 606 A.2d 375 (1992). Id at 512.

Plaintiff must demonstrate the case by a preponderance of the evidence. See Liberty Mutual v. Budge, 186 N.J. 163 (2006).

The appellate Division recently revisited the issue of ascertainable loss pertaining to defective cars in Thiedeman v. Mercedez Benz, 183 N.J. 234, 248 (2005).

To repeat, plaintiffs have a car with a defect in a significant component, which defect is present in every replacement of that component, and will likely manifest itself at some future time. We believe that common knowledge, indeed common sense, compels a conclusion that the value of the vehicle is impaired to a measurable, if presently unknowable degree. Can it possibly be doubted that if the Flahertys sought to sell their vehicle on the used car market, and advised prospective buyers of the fuel-sending unit problem, that they would receive less than if the vehicle had no such defect? We think not. This proposition is “so universally known that [it] cannot reasonably be the subject of dispute,” N.J .R.E. 201(b)(1), and is, therefore, subject to judicial notice by us. N.J.R.E. 202(b). The loss we posit is not simply a loss of consumer expectation or an unquantifiable benefit-of-the-bargain loss. There is more here than just a sense of unease in driving a car that has a potential problem that could impact on safety. There is a loss in value, not simply a loss of expectation.

The New Jersey Supreme Court has been clear in this issue. The defendant cannot reap the benefit of their own fraudulent actions. They cannot retain the benefits of a debt or a transaction which was improperly and illegally created. For the Supreme Court to hold to the contrary, they would only encourage fraudulent conduct wherein defendants could claim that claimants somehow received the benefit of the defendants’ fraudulent acts. Had the defendant NOT OMITTED the negative equity in the retail installment sales contract, clearly the transaction could not have been completed/approved. The New Jersey Supreme Court in Cox specifically held that a debt which is illegally or improperly created constituted an ascertainable loss under the New Jersey Consumer Fraud Act. Indicative of the defendant’s intent is its failure to have a copy of the retail agreement in their files. Apparently, the defendant attempted to hide their illegal and improper actions.
This interpretation of the application of the Consumer Fraud Act by the New Jersey Supreme Court is consistent with the statutory framework pertaining to remedies for fraud.
N.J.S.A. 2A:32-1. Remedies of person defrauded.

Whenever there is fraud in the execution or consideration of a contract, the person defrauded at any time thereafter may institute a civil action, to recover the money owing on such contract although, by its terms, the debt contracted or the money secured to be paid thereby is not then due or payable; and the person defrauded may, upon discovery of the fraud, either rescind the contract entirely and recover the money or property obtained by the fraud, or, sue on the contract to recover thereon.
The plaintiff in such an action shall have all rights to which he would be entitled if the debt or obligation was due and payable at the time of the commencement of the action.

The aforementioned statute clearly permits the plaintiff to obtain the entirety of the monies that were obtained by fraud. See also Jones v. Sportelli 166 N.J. Super 383, 392 (Law Div. 1979); Cogar v. T &R Motors 331 N.J. Super 1997 (App. Div. 2000); This should be the entire contract or the entire amount financed in excess of $21,000. The specific statute creates the ascertainable loss of the contract price. Thereafter, the trebling is mandatory under the New Jersey Consumer Fraud Act. Moreover, the rights secured under the New Jersey Consumer Fraud Act are cumulative to other rights and remedies and not exclusive. See N.J.S.A. 56:8-2.13.