On Wed. August 12, 2009 the Best Buy website listed a 52 inch Samsung LCD TV for a whopping $9.99. Unfortunately, this was not the price that should have been listed and, upon discovering the error, Best Buy corrected the website and rescinded all of the orders placed using the wrong price, indicating that it will not honor the orders for those who have placed them at that price level.
Now a few NJ lawyers are looking for plaintiffs to go after Best Buy for a violation of the New Jersey Consumer Fraud Act. For the purposes of this post, I am assuming that the price error was a genuine mistake, it being a typo and not the result of any intent to defraud its consumers. The question for Best Buy in NJ is whether that honest mistake will subject them to the penalties of the Consumer Fraud Act.
As I have noted in past posts, the Consumer Fraud Act provides:
the act, use or employment by any person of any unconscionable commercial practice, deception, fraud, false pretense, false promise, misrepresentation, . . .in connection with a sale or advertisement of any merchandise or real estate, or with the subsequent performance of such person as aforesaid, whether or not any person has in fact been mislead, deceived or damaged thereby, is declared to be an unlawful practice. NJSA 56:8-2.
The online price listing was clearly an advertisement of merchandise. It is also, clearly, a misrepresentation of the true sales price at the very least. News reports indicate that Best Buy does not intend to honor those orders which were made prior to Best Buy learning of the erroneous sales price; therefore, their subsequent performance (i.e., returning the money and not honoring the orders) may be an unconscionable commercial practice.
In addition to showing that Best Buy had an advertisement that was false or misleading the Plaintiffs also have to show that the price was material to the transaction and that the false price induced the Plaintiffs to buy the TV from the store.
If Best Buy is found to be in violation of the consumer fraud act, then they are subject to treble damages and attorney fees. The damages would be the difference between what the TV was listed for and what Best Buy was willing to sell the TV for or $1,690.00 which is then trebled to: $5,070. The plaintiffs’ would also be entitled to attorney fees and costs of suit.
But this leaves the question of “can a seller of merchandise make an honest mistake under the Consumer Fraud Act and not be liable?” It is important to note that for there to be a violation of the Consumer Fraud Act, the Plaintiff did not have to show that Best Buy intentionally or knowingly made the mistake in the advertisement. There must only be shown that that Best Buy placed an advertisement which was not accurate. It must be remembered that the Act was passed in order to provide broad protections to consumers against sharp practices engaged in by businesses. Given the broad scope and purpose of the Consumer Fraud Act, there does not appear to be room for honest mistakes. While everyone makes mistakes, the lesson here is to correct the mistake as soon as possible and honor the deals made prior to the fix. This will reduce the chance of a lengthy legal battle that could end of paying triple the original cost, plus the plaintiff and your legal fees.
For more posts regarding NJ’s Consumer Fraud Act you can read: