Courts Curtail the Application of the Consumer Fraud Act to Consumer Transactions

This article, written for the New Jersey Corporate Counsel Association Newsletter, discusses recent moves by courts to rein in the substantive reach of the Consumer Fraud Act. Although originally enacted to “to combat ‘sharp practices and dealings’ that victimized consumers by luring them into purchases through fraudulent or deceptive means,” over the years the Act has been increasingly interpreted to cover a wide range of transactions involving commercial entities. The article discusses recent rulings that demonstrate how New Jersey courts are unwilling to extend the Act to purchases of merchandise for resale and to negotiated transactions between sophisticated entities for goods and services unavailable to the general public. The desired outcome is a return to the conception of the consumer protection envisioned by the drafters of the Act.

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