Illusory Discount Claim Denied By NJ Supreme Court

May 21, 2024

Illusory Discount Claim Denied By NJ Supreme Court

The New Jersey Supreme Court has ruled that an illusory discount claim alleged by a proposed class of shoppers at a retail clothing store did not violate state consumer law or common law contract rights. The 4-3 opinion reverses an appellate court decision.

The plaintiffs in Robey v. SPARC Group LLC, as summarized in an article by law firm Gibbons, maintained that retailer Aéropostale “advertised clothing as being discounted when, in fact, the items had never been offered or sold at the higher prices off of which the ‘discount’ was taken.” The plaintiffs alleged this practice violated both the New Jersey Consumer Fraud Act and the state’s Truth in Consumer-Contract, Warranty and Notice Act.

The claim failed, according to the Court, because plaintiffs had not been able to demonstrate they had suffered an “ascertainable loss.” The Court noted that, among other deficiencies, the illusory discount claim did not allege the items at issue were “unsuited for their intended use,” and plaintiffs had not attempted to return them. Essentially, they “objectively received what they paid for.”

In a dissenting opinion, one of the justices maintained that there was an ascertainable loss because the plaintiffs bought items with the expectation they were getting promised bargains, “but those expectations were never realized.”

This case, according to the Gibbons article, had the potential to greatly expand the range of consumer fraud cases that could be brought under the NJCFA, in particular. “Fortunately for companies doing business in New Jersey, the Supreme Court made clear that consumers have no NJCFA claim for buying the non-defective product they thought they were buying, even if advertised as discounted when it was not.”

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