Skip to content

New Jersey Court Declines to Narrow Consumer Protection Law

While finding no liability in this specific case, a New Jersey appeals court refused the banking industry's invitation to narrow the scope of the state's consumer protection law.


Nancy Paley hired a home health aide to assist her after she lost a leg to diabetes. Three years later she discovered that the aide had stolen nearly $40,000 from her money market bank account. She sued the home health aide as well as the bank (Bank of America, or BOA) that should have safeguarded her money.

BOA admitted that Paley's original signature verification card had been lost and while bank practice calls for a customer to sign a new card when originals cannot be located, this was not done. Evidence was presented at trial that there were discrepancies in the signatures of the checks presented and the handwriting was noticeably different from Paley's. Moreover, Paley says the bank failed to notify her of possible identity theft. For several decades she said she had been writing three checks per year, but between 2002 and 2005 almost 200 checks were written. Moreover, Paley complained, she was not receiving her statements.

BOA's failure to verify signatures and follow its own written and advertised procedures, Paley argued, violated New Jersey's Consumer Fraud Act (CFA). The CFA is designed to protect against sales and advertising practices designed to induce customers to purchase goods and services.

A jury found that BOA had violated the CFA and awarded Paley $8,500 in damages, but the judge overturned the verdict on the grounds that the bank's actions did not violate the CFA in this case.

Paley appealed. In its arguments on appeal, BOA argued that the CFA did not apply to banks at all and that Paley "got what she deserved." An appeals court agreed that in this case the bank was not liable to Paley, but held the bank is required to comply with the CFA. The ruling left the door open to liability on other facts, and invited legislative action to extend the CFA to situations such as these.

AARP had filed a "friend of the court brief" (which the court cited in its opinion), emphasizing the importance of ensuring that laws such as the CFA are broadly interpreted in order to effect their goals of protecting consumers.

What's at Stake

Exempting industries from their obligations to consumers not only harms individual consumers, it also runs counter to the intent of the legislatures to provide broad-based consumer protection in the marketplace. Claiming that they are overregulated, some industries seek a back-door escape from liability for their bad acts. Consumers need protection from harm by misrepresentations, and unfair and deceptive business practices.
Case Status

Estate of Nancy Paley v. Bank of America was decided by the New Jersey Appellate Division.