Source: https://www.foundersworkbench.com/founders-alert-recent-rise-in-consumer-class-actions-targeting-common-provisions-in-online-retailer-terms-and-conditions/
Timestamp: 2019-04-21 14:14:33+00:00

Document:
The New Jersey Truth-in-Consumer Contract, Warranty and Notice Act (TCCWNA) has been cited in an increasing number of claims against online retailers that have posted broadly drafted Terms and Conditions on their websites. The TCCNWA has provided a cause of action to New Jerseyans presented with contracts that violate consumer rights for some time, but the application of this law to consumer contracts in the online retail context has been relatively recent. At-risk provisions include those that limit seller liability for and appear to require consumers to indemnify sellers against claims resulting from sellers’ own acts, among others. The law doesn’t require TCCWNA violations to be tied to actual sales--sellers can run afoul of this law through the mere display of offending Terms and Conditions to potential consumers in New Jersey. Putting aside whether any such claims are likely to succeed on the merits, online retailers should be aware that consumer class action claimants have asserted damages into the millions of dollars based merely on the number of website visitors who reside in New Jersey.
Businesses that sell products or services to consumers on the Internet now have more to worry about online than comments posted by disgruntled customers. In recent months, several consumer class action complaints have pointed to language posted by such businesses themselves as violations of New Jersey consumers’ rights.
A growing number of online retailers--start-ups and public companies alike--have received demand letters or been named as defendants in lawsuits alleging that provisions in their website terms and conditions (Terms and Conditions) violate the New Jersey Truth-in-Consumer Contract, Warranty and Notice Act. Though enacted well before e-commerce transactions were contemplated, the TCCWNA is now being cited in claims against online retailers whose Terms and Conditions include common, broadly drafted provisions limiting the retailer’s liability and requiring consumers to assume responsibility for certain claims.
Although the application of the TCCWNA to agreements posted and entered into online may be relatively new, consumer class action claimants have asserted that it is consistent with the law’s purpose as a remedial statute aimed at preventing deceptive practices and prohibiting the use of illegal provisions in consumer contracts.
It is important to note that a consumer does not need to buy a product or service or suffer any actual damages to state a claim against a seller under the TCCWNA. A seller could violate the New Jersey law by merely posting a contract or notice that contains a provision that is contrary to a consumer’s established state or federal right or is prohibited by state or federal law. Considering the breadth of the statute, New Jersey’s population of nearly nine million people and the TCCWNA’s minimum civil penalty of $100.00 per violation or actual damages (or both, at the consumer’s election), plus reasonable attorneys’ fees and court costs, an online retailer that presents Terms and Conditions containing provisions alleged to violate the TCCWNA could face claims with potentially steep financial consequences.
Cases citing violations of the TCCWNA (and the related stream of recent complaints against online retailers) commonly involve (1) broadly drafted limitation of liability and indemnification provisions that limit sellers’ financial risks and shift responsibility for certain claims to consumers and (2) consumer contracts that do not specifically identify which of their provisions are or may be unenforceable under New Jersey law. In particular, provisions that limit seller liability or appear to require consumers to indemnify a seller for any damages, losses or claims resulting from the seller’s acts have been challenged under the TCCWNA, and vaguely worded provisions about invalid or prohibited provisions that may be included in the contract have been regarded as sufficient to state a claim under the TCCWNA.
Include clear and specific language in any indemnification, limitation of liability, waiver, release, disclaimers or other exculpatory provision.
Remove language from indemnification and exculpatory provisions that would shift responsibility or limit liability to consumers for sellers’ duties under applicable law.
Expressly state which provisions are or may be unenforceable under New Jersey law.
Include an arbitration agreement and class action waiver in a manner that is designed to be enforceable under applicable law.
 N.J. Stat. Ann. §§ 56:12-14 through -18.
 N.J. Stat. Ann. § 56:12-15.
 N.J. Stat. Ann. § 56:12-16.
 Martinez-Santiago v. Public Storage, 312 F.R.D. 380, 391-92 (D.N.J. 2015); Barrows v. Chase Manhattan Mortg. Corp., 465 F.Supp.2d 347, 362 (D.N.J. 2006).
 N.J. Stat. Ann. § 56:12-17.
 See, e.g., Martinez-Santiago, 312 F.R.D. at 392.
 See Martinez-Santiago v. Public Storage, 38 F.Supp.3d 500, 511 (D.N.J. 2014).

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