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Consumer Protection - Advertisements Must Be Clear and Complete As to Any Refund Policy

July 30, 2015

Michael J. Rankin reports a recent case finding a violation of the Consumer Fraud Act (“CFA”) where a retirement community’s advertisement brochures and sales presentations of a “90% refund” for entrance fees into the facility were materially misleading because the refund (based on a future resale to a subsequent resident to occupy the unit) could be significantly lower if a discounted entrance fee was given. 

Specifically, the sales presentations omitted reference to language included in the actual residence and care agreements which expressed that refunds would be based on the lesser of the resident’s entrance fee or the fee paid by the subsequent resident who took the initial resident’s unit.  

While the decision might also reflect the Court’s extra concern for older citizens, it makes clear that to avoid CFA claims both advertising and operative contracts addressing refund policy should not only be clear, but complete and consistent.  Please contact Michael J. Rankin if you have any questions or need any assistance in connection with your contracts.