May 20

If You Conduct Business in New Jersey You Need to Review Your Online Terms and Conditions

Companies that do business in New Jersey have seen a sharp spike in class actions alleging their Web sites violate the New Jersey Truth-in-Consumer Contract, Warranty, and Notice Act, 56 N.J.S.A. § 56:12-14, et seq. (“TCCWNA”).  The statute has caused headaches for companies for a number of years, but a group of entrepreneurial plaintiffs’ lawyers are looking to test the statute’s outer bounds.

What is the TCCWNA?

TCCWNA (pronounced tick-wuh-nuh) provides that “No seller … shall in the course of his business offer to any consumer or prospective consumer or enter into any written consumer contract or give or display any written consumer warranty, notice or sign … which includes any provision that violates any clearly established legal right of a consumer.”  N.J.S.S. § 56:12-15.

In plain language, this means a company may be held liable for including an unlawful provision in a contract (or notice or sign).  A violation of the statute carries a $100 penalty – regardless of whether the consumer suffered actual damages (the consumer is entitled to those, too, if they can prove them) – and reasonable attorneys’ fees.

The current wave of class actions  

The current wave of class actions allege various corporate Web sites include provisions that violate “clearly established legal rights.”

In one lawsuit, for example, plaintiff alleges a company’s Web site violates the statute by purporting to disclaim liability for damages arising out of one’s use of the site.  Although the plaintiff suffered no harm as a result of using the Web site, she alleges the disclaimer is unlawful and seeks to recover $100 on behalf of every New Jersey consumer who was “offered, given, displayed or entered into the Terms and Conditions.”

In another lawsuit, plaintiff alleges a sporting arena’s Web site violated the statute by purporting to absolve itself from any liability for providing a dangerous or substandard arena in which to attend a performance. Once again, plaintiff seeks to recover $100 on behalf of every New Jersey consumer who was “offered, given, displayed or entered into the Terms of Use” on the defendant’s Web site.

How do I avoid getting sued?

To help avoid being sued, companies doing business in New Jersey should carefully review their Web sites and, in particular, their terms and conditions.  If the Web site includes a provision that may be unlawful, the company should consider modifying it so that it comports with federal and state law.

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