Is there individual liability for consumer fraud?

The New Jersey Consumer Fraud Act and individual liability
The definitional section of the New Jersey Consumer Fraud Act is straightforward re: The Act to persons. The New Jersey Supreme Court has explained that the Act is wide-ranging remedial legislation and should be liberally interpreted to effectuate its remedial purposes. Despite the plain language of the statute and the express statements made by the New Jersey Supreme Court, there have been various businesses and/or individuals who have argued that the New Jersey Consumer Fraud Act did not apply to them. There are some exceptions to the application of the New Jersey Consumer Fraud Act; however, these exceptions are limited. Generally, lawyers, utilities and hospitals are exempt from the New Jersey Consumer Fraud Act. The primary reason that these particular businesses are exempt from the New Jersey Consumer Fraud Act is that they have their self-contained regulatory bodies. As an example, lawyers are regulated by the Supreme Court and not by the Consumer Fraud Act.

There have been cases which have interpreted the seller’s of real estate, individual sellers, to be exempt from the wide-ranging penalties of the New Jersey Consumer Fraud Act. The New Jersey Supreme Court recently decided a case that held the definitional section of the Act is self-explanatory in that it applies to all persons. This means that if you individually sell a particular product, you will be subject to the provisions of the New Jersey Consumer Fraud Act if you are a person. A person could be an individual or a legal fiction such as a corporation. In Lyle Real v. Radir Wheels, Inc. and Richard Conklin, the individual defendant, Richard Conklin, argued that he was not subject to the penalties of the New Jersey Consumer Fraud Act and that he is exempt from liability. The Appellate Division dismissed the case but ultimately the Supreme Court held that since he is a person under the Act, he is subject to the restrictions of the New Jersey Consumer Fraud Act.

This interpretation of the New Jersey Consumer Fraud Act has wide-ranging implications. I would estimate that the significant implication is with regard to the sale of real estate. If the seller of the home misrepresents immaterial fact or fails to advise the purchasers of a material fact with the intent to deceive, there would be liability under the New Jersey Consumer Fraud Act.

CARTON AND RUDNICK