This blog discusses an interesting consumer fraud case that was discussed by a N.J. court because the plaintiff never actually used the purportedly fraudulently described product.
Here are the facts of the case:
Plaintiff was an attorney representing himself, filed a proposed class action alleging that the defendant merchant had engaged in consumer fraud by falsely marketing a hair growth product. Defendant had placed an advertisement in the New York Post (a newspaper) for a topical hair-restoration product (the Product). Defendant had claimed that the Product would regrow “a thick, full head of hair, even after years of balding.” Defendant also claimed that the Product was “the world’s first and only hair loss solution that revives dead hair follicles” and regrows hair “in just 30 days.” The advertisement displayed a before-and-after image of the back of a man’s head. The before picture showed a balding head and the after picture showed a full head of hair and no bald spots.
Plaintiff saw defendant’s newspaper advertisement, placed an order, and paid $108.90 and purchased the Product. After purchasing the Product, plaintiff conducted research on the Product and concluded that defendant’s claims in its advertisements were “misrepresentations of material fact.” That same day, plaintiff filed a proposed class action alleging defendant violated the Act. It was undisputed that plaintiff did not use the Product before filing his lawsuit against defendant.
In his complaint, plaintiff alleged defendant’s conduct constituted an “unconscionable commercial practice,” “deception,” “fraud,” “misrepresentation,” and “knowing concealment” in violation of the Act. Plaintiff did not allege that the Product was harmful or that he had used, examined, or tested the Product.
Defendant’s answer was that plaintiff had received a full refund of the purchase price and all fees he paid to defendant. Plaintiff did not dispute that he received the refund.
Plaintiff could not prove its case under the N.J. Consumer Fraud Act
To state a claim under the Act, a private litigant must allege specific facts that, if proven, would establish: “(1) unlawful conduct by the defendant[]; (2) an ascertainable loss on the part of the plaintiff; and (3) a casual relationship between the defendant’s unlawful conduct and the plaintiff’s ascertainable loss.”
An unlawful practice, as defined by the Consumer Fraud Act, is “any unconscionable commercial practice, deception, fraud, false pretense, false promise, [or] misrepresentation . . . in connection with the sale or advertisement of any merchandise . . .” An ascertainable loss is a loss that is “quantifiable or measurable;” it is not “hypothetical or illusory.” “Examples of an ascertainable loss are an out-of-pocket expense, and the replacement cost of a defective product.” A consumer merely needs to demonstrate that he or she suffered and ascertainable loss ‘as a result of’ the unlawful practice.”
In his complaint, plaintiff alleges that his ascertainable loss was the $108.90 that he paid for the Product but received a product that was different from the one promised by defendant. Plaintiff does not allege that the Product is harmful and in his certification he did not challenge that he did not use the Product before filing his complaint. Plaintiff also did not state he ever intended to use the Product. Under those undisputed facts, the purchase price could only be an ascertainable loss if plaintiff could show that he did not get what he paid for.
The problem with plaintiff’s case was he failed to establish ascertainable loss under the Act. He failed to demonstrate that he used the Product and it did not produce hair growth as advertised. Just as importantly, plaintiff has not explained how he would demonstrate that the Product does not perform as advertised. Consequently, plaintiff’s claim of loss was purely hypothetical. Evidence of loss must be presented with “some certainty demonstrating that it is capable of calculation”.
Plaintiff argued that he need not use the Product to state a claim under the Act. That may be true in some instances, but plaintiff must still demonstrate an ascertainable loss. Plaintiff has conceded that he is relying on the purchase price as his ascertainable loss. Plaintiff needs to prove more; he had to demonstrate that the Product did not perform as advertised. That proof must come from either plaintiff’s use of the Product or from other evidence demonstrating that the Product does not perform as advertised (i.e. an expert in hair loss products opinion that the product is worthless). Because the plaintiff did not produce evidence that the Product failed to perform as advertised or state that he intended to produce such evidence during discovery, his case was dismissed.
To discuss your NJ consumer fraud case, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at fniemann@hnlawfirm.com. Please ask us about our video conferencing or telephone consultations if you are unable to come to our office.
By Fredrick P. Niemann, Esq. of Hanlon Niemann & Wright, a Freehold Township, Monmouth County, NJ Consumer Fraud Attorney