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December 17, 2015 by Bruce D. GreenbergDownload PDF

Perpetrators of Consumer Fraud Can No Longer Blame Their VictimsBruce D. Greenberg

We often hear the phrase “caveat emptor,” which means “let the buyer beware.” But New Jersey courts at all levels, including the Supreme Court, have said that caveat emptor “no longer prevails in New Jersey.” As far back as the 1960’s, beginning with cases involving the sale of automobiles and real property, our Supreme Court began to repudiate caveat emptor. That trend continued in succeeding decades. Thus, the time is long past when a seller who commits a consumer fraud can hide behind caveat emptor.

Related to the notion of caveat emptor is the idea that consumers need to be completely knowledgeable about products or services that they buy, and that consumers who are so knowledgeable deserve what they get. But our courts have taken away that argument too from perpetrators of consumer fraud. Numerous cases, again including from our Supreme Court, have said that a party may not defend a fraud claim by asserting that the victim “should have been more astute.”

That is a sound result. The idea that consumers are responsible for knowing enough about purchases so as not to be defrauded originated at a time when commercial transactions were far simpler and took place on a smaller scale.

In days gone by, buyers and sellers knew each other, and buyers could perhaps more reasonably be expected to ask questions about what they were buying and get answers from sellers. Nowadays, most consumer transactions involve products marketed nationwide by large corporations who have no direct relationship with consumers. Often, those products are sold in “big box” stores, where the salespeople are far from the historical ideal of the neighborhood merchant whom customers all knew.

Additionally, in the past, products themselves were less complex and far easier to inspect and to understand. If one bought a wagon or a cart for transportation, one could more readily examine the quality of its construction and understand how it worked. Today, in contrast, no reasonable person today can be fully knowledgeable about automobiles and other products that incorporate computers and other complex moving parts. Even the idea of “looking under the hood” or “kicking the tires,” whether in the context of automobiles or other products, is looked upon with derision.

Consumers are essentially dependent on sellers to make full disclosure about products being sold. Realistically, no level of “astuteness” can protect a consumer in most sales transactions today, and the courts have rightly taken away that defense from sellers.

These judicial policies have been validated by the Legislature, which adopted the New Jersey Consumer Fraud Act in 1960 and has periodically strengthened that statute ever since. And it is not only consumers who benefit from what we call “consumer protection.” As our Supreme Court recognized as far back as 1972, “the reputable vendor, too, has a stake in the suppression of dishonest competition.” Sellers who successfully cheat take business away from merchants who play by the rules.

Buyers, sellers, and society at large all have an interest in encouraging honest sales practices so that the “free market” is a level playing field. That interest is at least as old as the Bible, which (even in those simpler times) repeatedly called for the use of honest weights and measures in commercial transactions. Our courts’ refusal to blame victims of consumer fraud, but instead to place that blame where it belongs— on dishonest sellers— is one that everyone should endorse.