The New Jersey Truth-in-Consumer Contract, Warranty and Notice Act, N.J.S.A 56:12-14, et seq. (“TCCWNA”) is a unique consumer protection statute that prohibits sellers and other commercial entities from providing consumer contracts or notices containing unenforceable terms. As stated by the sponsor of the Act, the inclusion of unenforceable provisions “deceives a consumer into thinking that they are enforceable and for this reason the consumer often fails to enforce his rights.” Sponsor Statement to Assembly Bill cited in Shelton v., Inc.,70 A.3d 544, 551 (N.J. 2013).The statute raises the stakes in drafting consumer contracts because sellers not only have to consider the enforceability of every provision of their contracts under traditional criteria such as contract formation and unconscionability; they must also consider that the very inclusion of an unenforceable term in a contract may violate the Act.

The Act has spawned increasing numbers of class actions and threatened class actions against retailers whose websites contain allegedly unenforceable provisions in their Terms of Use (TOU) and Terms of Sale (TOS). Those complaints center primarily on exculpatory and indemnity provisions in the TOU and TOS. This paper reviews the most recent developments that may affect such claims and considers pending legislation to revise the Act.

Section 15 of the TCCWNA

Section 15 of the Act provides that no seller or other commercial entity shall offer a consumer a contract or notice “which includes a provision that violates any clearly established legal right of a consumer or responsibility of a seller … as established by State or Federal Law.” So, for example, exculpatory and indemnification clauses in consumer contracts may violate the statute if they impose on consumers all risks of using the site or purchasing products from the site and fail to specify that the defendant could still be held liable for its own conduct under certain circumstances. See e.g., Walters v. YMCA, 437 N.J.Super. 111, 118-119 (2014) (premises liability cannot be disclaimed) and Castro v. Sovran Self Storage, 2015 WL 4380775 (D.N.J 2015) (self-storage operator cannot sell contents at private sale without notice).

The statute was enacted in 1981, long before the rise of e-commerce, which helps explain why we found only two documented opinions referencing the Act before 2005, but well over a hundred opinions since then. The pace of recent opinions is accelerating as plaintiffs push for broader interpretations of the Act against online retailers. In many such cases, retailers’ website TOU or TOS were drafted based on the law of the jurisdiction specified in their standard terms and conditions, without scrutinizing the enforceability of each provision under New Jersey law. Nevertheless, such online retailers could find themselves in violation of the TCCWNA if any of those terms are deemed contrary to any New Jersey or federal law.

Even in cases where potentially unenforceable provisions have not been enforced against or directly harmed the consumer-plaintiffs, courts have found potential violations of the TCCWNA if overbroad terms “discourage suits, whether or not the provisions are enforceable, and therefore fall directly within the TCCWNA’s ambit.” Castro, Id. at 9. However, in Sauro v. L.A. Fitness International, 2013 WL 978807, *9 (D. N.J. 2013), the District Court found that an allegedly overbroad exculpatory and indemnification provision did not violate the TCCWNA because the agreement included a savings clause specifying that the limitations were only applicable “to the fullest extent permitted by law” and “as broad and inclusive as is permitted by law in the State of New Jersey.” Accordingly, the District Court interpreted the provision as making the consumer contract co-extensive with New Jersey law, providing the seller with the maximum legal protection offered by New Jersey law without explicitly stating what limitations applied for the consumer.

A more recent case, Kendall v. Cubesmart L.P., 2016 WL 1597245 (D.N.J., Apr. 21, 2016), cast doubt on the effectiveness of a savings clause to prevent violations of the Act. In that case, a leak in plaintiff’s rented storage unit caused water damage to his stored goods. The defendant storage company refused to pay for the lost goods, citing various contract provisions limiting its liability, then it sold the unit contents. Plaintiff sued, alleging that his storage facility agreement violated the TCCWNA and the New Jersey Self Service Storage Facility Act (“SSFA”) because a provision stated that in the event of a default by the renter, the owner may sell personal property at a public or private sale without notice to the renter “in the manner permitted by applicable law.”

The court held that the provision violated Section 15 of the Act because a private sale without notice violates the SSFA. The court distinguished Sauro, which relied on the savings clause to dismiss the complaint, because the provision in Kendall’s agreement “does not merely state that a sale may occur [without notice], as permitted by law, leaving it to the consumer to discover that only public sales are permitted under New Jersey law. Instead, [it] unequivocally states that a private sale may occur,” which is impermissible under New Jersey law in those circumstances. Id. at *7 (emphasis by the court). The court added:

TCCWNA permits sellers to expand valid terms of a consumer contract so that they extend to the fullest degree allowed by law. But sellers cannot include invalid terms, discouraging consumers from exercising their clearly established rights and, at the same time, avoid liability under TCCWNA by including general assurances that those terms of the consumer contract would only be exercised in compliance with applicable law.

Id. at *7 (emphasis by the court). Accordingly, even savings clauses may not prevent liability under the Act if a provision in the agreement is clearly unenforceable as a matter of law.

Recent case law based on the Supreme Court’s ruling in Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1548 (2016) suggests a new line of defense against TCCWNA claims. In Spokeo, plaintiff filed a class action alleging violations of the Fair Credit Reporting Act because Spokeo created an inaccurate personal profile of him. The Supreme Court held that Article III standing requires an injury to be both concrete i.e., one that actually exists, and particularized to plaintiff. It found that plaintiff failed to allege any injury caused by the inaccurate information, and held that a bare procedural violation of a statute without concrete harm does not satisfy the injury-in-fact requirement of Article III. The court added, a plaintiff does not automatically satisfy the injury-in-fact requirement “whenever a statute grants a person a statutory right and purports to authorize that person to sue to vindicate that right.” Id. at 1549. The case was remanded to the Ninth Circuit, which had found that plaintiff had standing.

In Candelario v. Rip Curl, Case No. 16-00963 (C.D. Cal., September 7, 2016) the court applied Spokeo to a Section 15 TCCWNA claim alleging unenforceable terms in defendant’s website. Plaintiff alleged that she purchased a tank top through the Rip Curl website that “was not the cut or quality depicted on Defendant’s website.” She then reviewed defendant’s website and found provisions that purportedly barred her from seeking remedies to which she was legally entitled and shielded defendant from liabilities for which it was legally responsible. Citing Spokeo, the court held that plaintiff ‘s mere allegation that the product she ordered was different from the one depicted on the website did not allege a concrete injury-in-fact. The case is on appeal in the Ninth Circuit.

It should be noted that Article III standing would not bar a claim brought in state court. In New Jersey, “standing … is an element of justiciability rather than an element of jurisdiction.” N.J. Citizen Action v. Riviera Motel Corp., 296 N.J.Super. 402, 411, (App.Div.1997), appeal dismissed, 152 N.J. 361, 704 A.2d 1297 (1998). However, the statutory penalties under Section 17 of the Act, discussed below, are payable to the “aggrieved consumer,” an undefined term in the statute. The courts have not yet ruled on whether an “aggrieved consumer” means a person who has sustained an actual injury. If the terms are synonymous, non-injured plaintiffs would lack standing for failure to assert a justiciable claim.

Section 16 of the TCCWNA

Section 16 of the Act prohibits consumer contracts, notices, or signs from stating that “any of its provisions is or may be void, unenforceable or inapplicable in some jurisdictions without specifying which provisions are or are not void, unenforceable or inapplicable within the State of New Jersey…” In essence, this section requires retailers to note—in any provision stating that enforceability may vary based on state law—the precise extent to which the given section would be enforceable in the State of New Jersey.

This is even more complicated than it sounds, because New Jersey courts have found liability waivers to be unenforceable to the extent they violate public policy. See, e.g., Marcinczyk v. State of N.J. Police Training Commission, 203 N.J. 586 (2010). Accordingly, could a consumer contract provision that is unenforceable as against public policy constitute a violation of the TCCWNA? The answer would depend upon whether the provision is found to violate a “clearly established right,” which would be fact specific. These uncertainties make it difficult for a retailer to know whether and how enforceable a given term may be. If the retailer over-estimates the enforceability of a given provision, it may run afoul of the TCCWNA, but if it under-estimates the enforceability of a provision, it may risk subjecting itself to claims that the customer otherwise could have waived.

A recent case in New Jersey relied on Spokeo to reject a claim under Section 16 of the TCCWNA. In Hecht v. The Hertz Corporation, Case No: 2:16-cv-01485 (D.N.J., October 20, 2016), plaintiff rented a car through defendant’s website. The rental agreement provision entitled “Void Where Prohibited” recited that all services may not be available in all locations and that restrictions may apply to the use of services in some jurisdictions. Plaintiff alleged that this provision violated Section 16 of the Act because it failed to describe which restrictions applied or were void in New Jersey. The court rejected the claim because plaintiff sustained no real injury. It added that even if the statute gave plaintiff standing to bring the claim under state law, that legislation did not confer Article III standing, which is a separate requirement in federal court. Id., Slip Op. at *4.

Penalties Under the TCCWNA

Section 17 of the TCCWNA imposes substantial penalties for violations in the context of a class action. A seller who violates the TCCWNA is liable “for a civil penalty of not less than $100.00 or for actual damages, or both at the election of the consumer, together with reasonable attorney’s fees and court costs.” In the context of a class action, damages can add up dramatically because putative class action plaintiffs typically seek to represent all visitors to the site, which can number in the tens of thousands over a given period of time. Moreover, plaintiffs argue that this penalty applies for each violation in a website’s terms and conditions. One court held that plaintiff stated a claim under both Section 15 and Section 16 of the Act, Martinez-Santiago v. Public Storage, 38 F.Supp.3d 500, 511-512 (D.N.J. 2014), but no court has expressly ruled on whether a separate statutory penalty must be imposed for each provision that violates the Act. Under the argument advanced by plaintiffs, a retailer could be liable for several hundred dollars per unenforceable provision for each visitor to the website, plus attorneys’ fees.

Given this potential liability, and the broad remedial interpretations of the Act by the courts, most retailers targeted by TCCWNA claims opt to settle them quickly.

Proposed Legislation to Expand the TCCWNA

There have been several recent attempts to revise the TCCWNA on both sides of the issue. In January 2016, New Jersey Assembly Bill 759 (and its counter-part Senate Bill 755) were pre-filed for introduction in the 2016 legislative session. The proposed bills sought to prohibit any provision whereby a consumer waives or limits any rights under TCCWNA “or any other federal or State consumer protection law,” prohibits reduction of the time to bring a TCCWNA claim within the otherwise applicable statute of limitations, or renders void and unenforceable any provision which inhibits the ability to bring a class action TCCWNA claim. The bills also sought to prohibit consumer contracts from requiring consumers to consent to venue and jurisdiction outside of New Jersey or waive a right to jury trial. The sponsors of these bills had proposed the same set of amendments in the 216th legislative session in Assembly Bill 4079, which was not passed.

In September 2016, Assembly Bill 4121 was introduced which sought to prohibit class certification of TCCWNA claims “in the absence of an ascertainable economic loss resulting from the alleged violation.” The legislation would also require allegedly aggrieved consumers whose economic loss was $250 or less to first request reimbursement from the seller at least 35 days before filing a TCCWNA suit.

All of these bills are still under consideration by various New Jersey legislative committees, and depending upon what is passed, there could be significant consequences for online retailers selling to New Jersey consumers.


The case law under the TCCWNA remains in flux on several important issues besides those discussed above, and the statute may be expanded by the New Jersey legislature. Accordingly, online retailers will continue to be subject to claims under the TCCWNA. Given the increasing popularity of these suits, retailers should act quickly to make sure that their terms comply with the Act in its present form and as it may be amended. At a minimum, any terms should be revised to state how a provision would be enforced in New Jersey. As noted, the enforceability of a given provision may be difficult to ascertain. Retailers should therefore consult counsel with expertise in this area, to make sure that their terms are compliant.