Articles Tagged with Fraud

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The Magnusson-Moss Warranty Act was enacted in 1975 to govern written warranties on consumer products. Oral warranties are not covered by the Act. Commercial warranties are not covered by this Act. Warranties on services are not covered by the Act. Instead, the Act was enacted to require the manufactures and sellers of consumer products to give consumers detailed information regarding warranty coverage, and to require sellers to live up to their warranties.

The Act does not require that a warranty be provided. However, if a warranty is provided it must be clearly written and easy to understand. The warranty must be designated as either “full” or “limited” and readily available for inspection.

Further, if a warranty is provided, the Act serves many useful purposes. First, it allows consumers to get complete information about warranty terms and conditions. The Act also enables consumers to compare warranty coverage before buying a consumer good. Additionally, the Act ensures warranty competition by allowing consumers to be able to pick a product, based on a combination of the price, features, and warranty. Finally, the Acts provides incentives for companies to perform on their warranty obligations in a timely and through manner and to resolve disputes without delay and expense to the consumer.

The Act protects consumers in many ways. First, the Act prohibits the disclaimer of implied warranties when a written warranty is offered. This means that consumers will always receive an implied warranty of merchantability regardless of how broad or narrow the written warranty is. An implied warranty can only be limited to the duration of the written warranty. For example, if a written warranty is limited to one year, then the implied warranty can be also limited to a year.
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New Jersey’s Consumer Fraud Act (the “CFA”) is one of the broadest, strongest, and most far-reaching consumer protection laws in the country. The CFA states that it is unlawful for any person to use any unconscionable commercial practice in the sale of any goods, services, or even real estate in some cases.

 

 

The New Jersey Legislature enacted the CFA in 1960. Amendments in 1971 expanded the Act’s reach and purpose and included provisions to allow for individuals to bring private lawsuits rather than only allowing public actions by the Attorney General. However, the State still plays a significant part in enforcing the Act, led by the New Jersey Division of Consumer Affairs, Office of Consumer Protection.

In the attempt to encourage private actions and reduce the burden to the State in enforcing the CFA, the Act included the ability for claimants to recover treble (triple) damages, reasonable attorneys fees, and litigation expenses. This was done so that even those with little means to bring an action could recover their losses no matter how small, and, in the process, the punitive nature of the damages would further discourage those who would otherwise be tempted to use deceitful or fraudulent practices against others.

Since the CFA is a remedial piece of legislation courts tend to interpret the Act’s language very broadly with the aim of providing the most consumer protection. However, the CFA does have some limits and generally will not apply to claims such as denial of benefits by insurance companies, claims regarding employee benefit plans covered by the Employee Retirement Income Act (“ERISA”), claims regarding hospital services, employment claims, or claims against the government, public utilities, or licensed professionals. “Licensed professionals” typically include accountants, insurance agents, architects, doctors or other professionals where the claimant could have alternative options for recourse such as through malpractice claims.
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Background: Due Diligence, Purchases and Sales of Business

In the sale of a New Jersey business, buyers normally perform due diligence such as inspecting profits, losses, revenue, expenses, bank accounts, tax returns and financial statements and the like. Contracts for the sale of a business often say that the buyer is not relying on a seller’s representations, but rather only on its own inspections. In many instances, conducting inspections and due diligence may bar recovery when the buyer believed going in to the closing turn out to be incorrect. The question then becomes, what if those mistaken beliefs were brought about by the seller’s own fraud?

Bridals Gowns Not What They Appear

Anwar and Donna Walid were looking to buy a business. Donna had worked at a high end retail clothing store in New York, studied textile design, and obtained a master’s degree in organization and development. Anwar, Donna’s husband, had a degree in electrical engineering and had worked in research and development for Lucent Technologies. They were highly educated people.
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257897_whistle1.JPGNew Jersey’s Conscientious Employee Protection Act (“CEPA”) is New Jersey’s whistleblower protection law. CEPA provides perhaps the broadest and strongest legal protections in the country against whistleblower retaliation. However, it does not protect against all employee complaints that an employer is doing something it shouldn’t. In the recent case of Powell v. Wachovia Corporation, the Appellate Division of New Jersey’s Superior Court once again defined the outer limits of what objections are protected.

CEPA: New Jersey’s Conscientious Employee Protection Act, the “Whistleblower Law.”

Among other things, CEPA prohibits employers from retaliating against employees who object to or refuse to participate in an employer activity, policy or practice which they reasonably believe violates a law, regulation or public policy, or which is criminal or fraudulent.

Examples of objections which New Jersey courts have found to be protected be protected under CEPA include:

  • New Jersey’s Supreme Court held that complaints about inadequate ventilation in a school shop affecting health and safety outlined in a guide incorporating regulations constituted clear mandate of public policy.
  • New Jersey’s Supreme Court found that objections that police selectively refused to enforce laws regarding sex-industry was complaint of violation of law affecting public welfare.
  • The Appellate Division held that objections to adoption of dog which had previously been violent impacted clear mandate of public policy to protect public from vicious dogs.
  • The Appellate Division found that a grammar school custodian objecting to unsanitary conditions in a student lavatory constituted objection regarding clear mandate of public policy.

What Happened Between Powell and His Employer, Wachovia

James Powell was a “benefits producer” for several insurance companies which were eventually acquired by Wachovia. As a benefits producer, Powell’s job was to market, sell and place insurance policies provided by companies as employee benefits. Powell was an “at-will” employee. However, he and his fellow benefits producers at Wachovia’s Wayne, New Jersey, were compensated under a contract from 1993 which had long ago expired. Under this scheme, they were paid fifty per cent of the revenue they generated.
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