Online retailers across the United States have one more issue to consider as they prepare for the next sale: a growing number of lawsuits under the New Jersey Truth-in-Consumer Contract, Warranty and Notice Act (TCCWNA) alleging that standard online terms of service agreements on websites violate the New Jersey bar on deceptive notices.
The TCCWNA—N.J.S.A. 56:12-14 et. seq.—was enacted in 1981 to prohibit businesses from using provisions that deceived consumers about their legal rights. The statute provides a private right of action that allows both actual customers and prospective buyers to bring suit against businesses. Businesses that violate the TCCWNA are liable to aggrieved consumers for $100, actual damages, or both, as well as reasonable attorneys’ fees and court costs.
Given its broad scope and the potential damages at issue, plaintiffs’ lawyers have attempted to breathe new life into this 35-year-old law by filing class action lawsuits contending that retailers’ website terms, conditions, policies, notices and other contracts violate the TCCWNA. Plaintiffs have filed suit against several Fortune 500 retailers, including car rental companies, office supply companies, clothing retailers, toy stores, specialty retailers and social media sites. These lawsuits allege that any website language which attempts to limit liability or waive a clearly established right violates the TCCWNA. They have targeted language in indemnification provisions, catch-all invalidity provisions and disclaimers. In addition to the complaints already filed in state and federal courts, companies may receive demand letters threatening putative class actions if they do not engage in pre-suit settlement.
The recent lawsuits brought under the TCCWNA underscore the significance for businesses engaged in Internet commerce to utilize experienced legal counsel to draft their terms of service agreements, as well as to evaluate their existing agreements for potential vulnerabilities under the New Jersey law.