A couple of weeks ago the Appellate Division confirmed that employees and principals of a company can be held liable for violations of the consumer fraud act. In Allen v. V and A Brothers, Inc the Plaintiffs alleged that the company, its principals and its employees violated the consumer fraud act by failing to comply with certain regulatory sections. These violations included not having a written contract; failure to obtain final approval before accepting payment and failure to obtain Plaintiffs’ approval on changes.
The Court reasoned that the Consumer Fraud Act required liberal application to protect consumers. The CFA defines person as “any natural person or his legal representative, partnership, corporation, company, trust, business entity or association, and any agent, employee, salesman, partner, officer, director, member, stockholder, associate, ….” NJSA 56:8-1d.
Prior case law has found, based upon the definition of Person under the Act, a principle of a company liable for the affirmative actions the principle took to violate the act. The Court in Allen reasoned that there was no reason to treat affirmative acts and regulatory violations different under the CFA. An owner of a company can be liable for their violations of the CFA’s regulatory requirements.
Other posts on the Consumer Fraud Act: