The March 24, 2008, edition of the New Jersey Lawyer reported that the New Jersey Attorney General is investigating whether or not it’s Division of Consumer Affairs should assert fraud or Consumer Fraud claims against JuicyCampus.com, a free website which allows individuals to post anonymous opinions to "often nonsensical and sometimes vicious discussions" about who’s the most overweight student on campus, or who on campus has the most morally casual attitude? This invites the following question: can the New Jersey Attorney General successfully assert claims against this website? Probably not.

The New Jersey Consumer Fraud Act.

New Jersey enjoys one of the strongest consumer protection statutes in the United States.  New Jersey Courts have consistently emphasized that like most remedial legislation, the New Jersey Consumer Fraud Act ("CFA") is to be construed liberally in favor of consumers. Although initially designed to combat "sharp practices and dealings" that victimized consumers by luring them into purchases through fraudulent or deceptive means, the Act is no longer aimed solely at "shifty, fast-talking and deceptive merchants" but reaches "non-soliciting artisans" as well. Thus, the Act is designed to protect the public even when a merchant acts in good faith. Despite the same, it appears that the CFA will not be a viable claim against the Juicy Campus website because it did not engage in activities which violate the CFA.

The CFA only recognizes three forms of violations.  They are: (1) misrepresentations of fact; (2) knowing omission of fact; and (3) per se violations of administrative code.  Cox v. Sears Roebuck & Co., 138 N.J. 2 (1994)The first apparently problem with the State’s possible case against the website is that most of the statements posted on the website appear to be "opinions" rather than "facts."  Opinions are generally not actionable under the CFA.  Moreover, in order for there to be a violation of the CFA, the State would need to prove that a consumer suffered an ascertainable loss which is has a casual connection to the misrepresentation, omission or per se violation of the act. In other words, the State would have to prove that the recipient of the false information suffered a loss as a result of reading those false statements.

FRAUD

In order to prove fraud, the State of New Jersey would have to prove by "clear and convincing evidence" that the defendant made a material misrepresentation of a presently existing material fact, with knowledge of its falsity and with the intention that the other party rely thereon, resulting in reliance in that party to its detriment. The first procedural hurdle the State would face if it were to assert a fraud claim is that it may not have standing to assert that claim because it did not suffer and damages.  Unlike the CFA which gives the Office of the New Jersey Attorney General powers to assert claims under that Act, N.J.S.A. 56:8-3, in order to have standing to assert a common law fraud claim the State would need to demonstrate that it was somehow damaged. Perhaps, if the website in question has false statements about State colleges or universities, the State would have standing to assert a fraud claim. Since it appears not to be the case, I believe that any common law fraud claim asserted by the State would be subject to dismissal for lack of standing.

Like a CFA claim, the State would have trouble asserting a fraud claim because it appears that the statements made on the website were opinions rather than knowingly false presently existing material facts. Again, under the CFA and fraud opinions are not actionable.  Thus, unless the website posted a knowingly false presently existing material fact such as "X State University admitted 25 students who’s grade point averages and SAT scores were 90% below the mean SAT and GPA requirements because those students had ties to Governor X," the State could not assert common law fraud claims.

Moreover, in prove fraud, the State would need to prove that the website posted those presently existing false statements with knowledge that they were false at the time they were placed. The first issue is that the website simply hosts the statements of others. The website is really not making any statements. It also appears that as a result of the same, it would be extremely difficult for the State to prove that the website knew that the factual statements were false at the time they were made.

Finally, as discussed above, it appears that the State would not be able to prove by clear and convincing evidence that it detrimentally relied on those false statements and suffered damages as a result of the same. In order to successfully prosecute a fraud claim, the Plaintiff must prove amongst other things that it detrimentally relied upon the false statements and suffered damages as a result. A classic example of a party detrimentally relying and suffering damages is "Seller provides knowingly false income statements to a potential buyer, the buyer in doing its due diligence relies on the knowingly false income statements and purchases the company. After the purchase, the buyer learns that the pro-offered income statements were inflated and the company was not worth anywhere near what it paid for the company." In the aforementioned example, the buyer detrimentally relied on the false income statements and suffered damages as a result. It seems unlikely that the State of New Jersey detrimentally relied upon what was posted on the website in question and suffered damages as a result.

For the reasons stated above, the New Jersey Attorney General may want to consider not asserting charges against JuicyCampus.com.