In Miller v. American Family Publishing, 284 N.J. Super 67, 76 (App. Div. 1995), the Court held that the plaintiffs establish a prima facie case and the defendant’s Motion for Summary Judgment should be denied. In Miller, the plaintiffs contended that the defendant’s advertising materials were deceptive and violated the New Jersey Consumer Fraud Act in three respects.
First, plaintiff said that the defendants deliberately planted the impression that the chances of winning in its sweepstakes were enhanced by ordering a magazine subscription. Second, plaintiffs claimed that those who responded to defendant's earlier mailings were, thereafter, urged to submit further responses from misrepresentations that they had survived a “winnowing down” process which had placed them in a select group of finalists and had increased their chances of winning. Thirdly, plaintiffs pointed to defendant’s “alert” to sweepstakes participants who had not ordered the magazines, implying that a continued failure to subscribe would lead to their being dropped from the contest. The Court held as follows:
The Court held specifically that the defendant’s disclaimers, nor the literal truth of the solicitations, constituted a defense to any of the plaintiffs’ claims.
Consumer fraud act cases involving contests have similar rules. The publisher's clearinghouse case was a groundbreaking case. It addressed potentially misleading communications there were “really” true. The court recognized that there was the potential to deceive people even if the affirmative representations were truthful. This is the very important take away from this case
The general theory that was asserted by the defendants was that the actual wording of the contest disclaimers was truthful. However, the court realized that they were potentially misleading because of how they were said the context where it was said in the actual wording. The key factor/holding in this case is that the court recognizes that the prime ingredient for consumer fraud is the capacity to mislead.
There are some separate rules that apply specifically to contests. This does not mean that the Consumer Fraud Act does not apply to contests generally. There would be some simple examples. You cannot promise to give away certain product and then not give away the product. You cannot charge to enter a free contest. You cannot require the doing of a specific act to qualify for a gift as part of the contest or give away.
The contest cannot be misleading or cannot be viewed in a misleading way. The purpose of the contest in this case was to get people to subscribe to magazines. The company was attempting to lure people to think that if they applied for magazines as part of the contest, they would have a greater chance to win the contest. And this is not true. In the words were literally true. However, there was no connection between the number of subscriptions and the chance of winning the contest. However, this is not how the contest appeared to the average person. The court recognized the sophisticated nature of this contest and determined that it was unfair and misleading.
I would assert that these types of subscription type schemes are no longer active due to the Internet. However, if you check your email, junk email, texts, or other communications I think you would see various communications which would be potentially misleading and be a violation of the consumer fraud act. However, you would still be required to establish an ascertainable loss or damages. This could be the cost of the text message. This can be the cost of a stamp. This can be an amount of money that you paid for data that was used on your plan when you received a text, email, or phone call.
The problem, these days, post American Clearinghouse is the identifying of the defendants and quantifying the damages. In the American Clearinghouse case one can easily delineate the cost of the stamp, an envelope or paper. These days when everything is digital it is more difficult to quantify, measure or assert an ascertainable loss based on the communications. And as a plaintiff in a Consumer Fraud claim required to assert and maintain a measurable or ascertainable loss. The law requires this measurable or ascertainable loss. However, the State is free to shutdown contest or intervene filed suit against the business without the requirement for an ascertainable loss. The state operator has different rights, obligations and duties as opposed to a private plaintiff and a private plaintiff’s attorney. The Atty. Gen. has a significant injunctive relief.
The Atty. Gen. has significant investigatory powers. The Atty. Gen. has significant more resources than the average attorney and the average plaintiff. These types of resources and public policy considerations are not identical to an attorney with the client was acting as a private attorney general.
Technically speaking, a plaintiff who files a lawsuit, represented by a licensed attorney is acting as a designated private attorney general.
The tips for pursuing the Consumer Fraud Act claim as part of the contest would be to take good notes, capture screenshots of all relevant Internet pages, make copies of emails and texts to the individuals with whom you have contact. This is especially true when dealing with text messages and contests. Once they gone they are gone and it is an issue. The evidence must be preserved. There are some cases which assert that if you destroy relevant evidence. You have an obligation to protect relevant evidence.
There are claims for consumer fraud when there is a contest. I like to assert that when the price is not provided the price is the ascertainable loss. The value of the prizes the ascertainable or measurable loss. They had a contest the deceived you to get your information you want the price. This is a very good argument but, it again, depends upon the wording of the contest the placement of the words the graphics and other relevant information including communications with the company that is giving away the prize. Many times, the company which is providing the prize is not been handling the dissemination of the price materials, communications or other rules and procedures.
Jonathan Rudnick Tinton Falls Consumer Lawyer in New Jersey
Updated 1/1/2021