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The Truth-in-Consumer Contract, Warranty and Notice Act, N.J.S.A. 56:12-14 to -18 (TCCWNA) was enacted in 1982 but has historically been under-utilized by plaintiffs until recently. In the past year alone, approximately 40 class actions have been filed alleging violations of TCCWNA against businesses such as Wal-Mart, Target, J. Crew, Burlington Coat Factory, TOYS ‘R’ US, Bed Bath & Beyond, Johnston & Murphy, Whirlpool and the New Jersey Devils. TCCWNA’s all-encompassing scope covers almost every form of written consumer contract, warranty, notice, advertisement or sign – from restaurant menus to in-store displays to website terms and conditions of use – that is displayed, offered or entered into with a consumer or potential consumer. And the statute carries a mandatory, strict-liability penalty of at least $100 per violation which, for businesses with substantial customer contacts, can rapidly reach into the millions or tens of millions of dollars.

Given that most businesses nowadays have an online presence or an e-commerce platform, the expansive reach of TCCWNA could be a pricey trap for unwary enterprises. Understanding the nuances of TCCWNA is imperative for businesses that routinely utilize consumer contracts, disclaimers, notices, signs and advertisements – and particularly national businesses operating either physically or virtually in New Jersey – to avoid being the target of a costly consumer-fraud class-action lawsuit.

Conduct Prohibited by TCCWNA

TCCWNA prohibits two general categories of conduct. First, Section 15 of TCCWNA prohibits sellers from entering into a written consumer contract providing a consumer warranty or displaying a notice or sign that includes "any provision that violates any clearly established legal right of the consumer or responsibility of a seller…as established by a State or Federal law."1 When drafting or revising consumer contracts, disclaimers or notices, businesses must keep in mind that restricting or undermining any independent right available to the consumer may violate TCCWNA. There is no limit to the sources of clearly-established legal rights that a plaintiff can use to bring a TCCWNA claim. However, a plaintiff must identify which clearly-established legal right has been violated and cannot maintain a claim under Section 15 unless it is entirely certain that a clearly-established legal right has indeed been violated.2 Section 15 does not itself establish any independent rights – it is derivative, intended to bolster other existing consumer rights.3

Second, Section 16 of TCCWNA prohibits sellers from providing a contract, notice or sign stating that any of its provisions is or may be void, unenforceable or inapplicable in some jurisdictions without specifying which of those provisions are or are not void, unenforceable or inapplicable in New Jersey.4 This means that sellers must explain differences in a consumer’s rights or responsibilities that may exist among different jurisdictions, especially when a consumer contract may be used in multiple jurisdictions.5 (Significantly, Section 16 of TCCWNA does not apply to warranties).

Several aspects of TCCWNA make it more expansive than other New Jersey consumer-protection statutes and, consequently, a cause for alarm for imprudent businesses. First, TCCWNA applies to virtually any entity that is involved in the production, distribution, or sale of a consumer good.6 Second, TCCWNA defines "consumers" in a broad sense, allowing any individual who buys, leases or borrows a property or service, which is primarily for household use, to bring suit under the statute.7 Furthermore, TCCWNA applies to both consumers and prospective consumers, meaning that a plaintiff does not need to have an established contractual relationship with the seller to bring a TCCWNA claim. Third, TCCWNA applies to nearly all forms of written material – including consumer contracts, terms and conditions of use, notices, advertisements, in-store displays, signs, leases, menus, rental agreements, warranties or disclaimers – that are displayed or offered to a consumer or prospective consumer. Fourth, and most importantly, TCCWNA provides for mandatory statutory damages of not less than $100 for each separate violation, actual damages or both at the consumer’s election, in addition to reasonable attorneys' fees and court costs.8 Thus, unlike the New Jersey Consumer Fraud Act, which requires an ascertainable loss of money or property to maintain a claim, TCCWNA provides statutory damages, even in the absence of actual damages; it is essentially strict liability.9

Recent Developments

New Jersey courts seem to apply TCCWNA to its fullest extent, often relying on its broad legislative purpose. Courts continue to emphasize that TCCWNA was enacted with the primary goal of preventing confusion among consumers as to their legal rights and to remedy the inclusion or omission of confusing or illegal provisions that deny or obscure a consumer’s legal rights.1

While some aspects of TCCWNA may appear difficult to comply with, New Jersey courts have started building a legal analytical framework as to what sort of written language is permissible and what language may violate TCCWNA. These decisions are relevant to standard terms and conditions contained in many consumer contracts. Businesses need to be aware of these developments when drafting or revising their consumer contracts, notices, warranties and the like applicable to New Jersey consumers.

Section 15

The Third Circuit Court of Appeals recently found that a plaintiff's complaint alleging that a service contract containing a provision waiving attorneys’ fees was sufficient to survive a motion to dismiss because clauses preventing the recovery of attorneys’ fees and costs, when mandated by statute – such as under TCCWNA – are unconscionable.11 Additionally, some courts have concluded that contractual provisions reducing a limitations period to assert a counterclaim or raise an affirmative defense restrict a consumer’s right under the Federal Rules of Civil Procedure and the New Jersey Court Rules, and thus violate TCCWNA.12

Section 16

At least one court has concluded that standard provisions containing language such as "unless prohibited by law" do not offend Section 16 of TCCWNA because they do not suggest that some of the provisions may be invalid in a specific jurisdiction. The New Jersey Superior Court found that language in a vehicle lease agreement which provided that the lessee agreed “to pay, unless prohibited by law, any such sales, use or occupational taxes imposed” did not violate TCCWNA, reasoning that TCCWNA only applies "where an agreement states that [the] provision is void in 'some jurisdictions' without specifying its enforceability or lack thereof in New Jersey."13

Additionally, a federal court in New Jersey held that a severability clause – stating "[i]f one or more of the provisions of this Rental Agreement are deemed to be illegal or unenforceable" – did not offend TCCWNA because the rental agreement was specific to New Jersey, and there was no indication that the provision at issue contemplated the contract's application to multiple jurisdictions such that enforceability in New Jersey had to be clarified.14 Generally, New Jersey courts seem to agree that a provision containing a declarative statement, as opposed to a conditional one, indicating which provisions are invalid in New Jersey, complies with Section 16.15

Review and Revise Your Contracts, Warranties and Notices

Given the rise in TCCWNA lawsuits, consumer contracts, warranties and notices that contain provisions purporting to waive damages resulting from a seller's liability, unduly restrict limitations periods, or fail to indicate which provisions are applicable (or not) in New Jersey will now be subject to greater scrutiny – and attack – by the plaintiff’s class-action bar. Businesses should carefully evaluate the terms and conditions of any written documents displayed, offered or given to consumers, such as contracts, website terms of use, warranties, notices, in-store displays, menus, gift certificates or advertisements to ensure that they do not run afoul of TCCWNA in order to avoid the potential of paying the steep $100 per violation of statutory damages to a class of thousands of plaintiffs. Businesses should also regularly update their contracts, warranties, notices, advertisements or terms and conditions applicable to New Jersey consumers as new case law concerning "clearly-established legal rights" protected by TCCWNA develops.


1See N.J.S.A. 56:12-15.
2Walters v. Dream Cars Nat'l, LLC, 2016 WL 890783, *5 (N.J. Superior Ct. Law Div. Mar. 07, 2016); McGarvey v. Penske Auto Group, Inc., 486 Fed. Appx. 276, 282 (3d Cir. 2012); Perrotta v. LG Elecs. USA, Inc., 2013 WL 4446975, *7 (D.N.J. Aug. 15, 2013).
3See, e.g., Watkins v. DineEquity, Inc., 591 F. App'x 132, 134 (3d Cir. 2014).
4See N.J.S.A. 56:12-16 (significantly, Section 16 of TCCWNA does not apply to warranties).
5Walters, 2016 WL 890783 at *6.
6See, Smith v. Vanguard Dealer Servs., L.L.C., No. A-3875-09T2, 2010 WL 5376316, at *3 (N.J. Super. Ct. App. Div. Dec. 21, 2010).
7See N.J.S.A. 56:12-15.
8See N.J.S.A. 56:12-17.
9See, Weinberg v. Sprint Corp., 173 N.J. 233, 250 (2001); Barrows v. Chase Manhattan Mortgage Corp., 465 F. Supp. 2d 347, 362 (D.N.J. 2006); N.J.S.A. 56:12-17.
10Walters, 2016 WL 5890783 at *5; Barbarino v. Paramus Ford, Inc., 2015 WL 5475928, *2 (N.J. Super. Ct. Law Div. Sept. 11, 2015).
11Johnson v. Wynn's Extended Care, Inc., 2015 WL 8781374, *1-2 (3d Cir. Dec. 15, 2015).
12Gomes v. Extra Space Storage, Inc., 2015 WL 1472263, *9 (D.N.J. Mar. 31, 2015) (citing Martinez-Santiago v. Public Storage, 38 F. Supp. 3d 500, 510-511 (D.N.J. 2014)).
13Barbarino, 2015 WL 5475928 at *4. However, the plaintiffs in Barbarino have appealed, and the Appellate Division has yet to issue its decision.
14Castro v. Sovran Self Storage, Inc., 114 F. Supp. 3d 204, 213 (D.N.J. 2015).
15Gomes, 2015 WL 1472263 at *8; see also Martinez-Santiago, 38 F. Supp. 3d at 511 (holding that provision stating that terms of storage unit rental agreement "may be invalid or prohibited in the state in which the premises were located" violated Section 16 of TCCWNA because, while it did not "expressly state, in a simple, declarative sentence, that some provisions may be invalid under state law", it implied such consequence with references to the location of the premises); Greenberg v. Mahwah Sales & Serv., Inc., 2016 WL 193485, *4 (N.J. Super. Ct. Law Div. Jan. 08, 2016) (holding that phrase "unless prohibited by law" following a provision did not violate Section 16 of TCCWNA because it did not "declaratively or impliedly state that the sales tax provisions are or may be void, enforceable or inapplicable in a particular jurisdiction, without specifying enforceability in New Jersey").