On July 8, the Supreme Court of New Jersey unanimously held that the New Jersey Consumer Finance Licensing Act does not contain an implied private right of action for a borrower to void a loan contract, affirming a lower appellate court’s dismissal of a putative class action brought by a borrower against a group of debt-buyer defendants. According to the opinion, the borrower had defaulted on a credit card debt, which was assigned through a series of transactions to several institutional debt buyers unlicensed in New Jersey as consumer lenders or sales finance companies. After one of the debt buyers obtained a default judgment against him, the borrower brought a putative class action alleging that the defendants’ lack of licensing voided their purchase of the debt, seeking a declaratory judgment voiding the loan contract and an injunction against further collection. A trial court dismissed the suit with prejudice, reasoning that only the commissioner of banking and insurance may pursue licensing violations, and an intermediate appellate court affirmed on the same ground.

In determining whether a statute confers an implied private right of action, the court found the borrower met the requirement that he belonged to the class the statute was meant to benefit, but failed to show that the legislature intended to create a private right of action or that inferring one would be consistent with the statute’s purpose. The court explained that predecessor statutes had expressly authorized borrowers to recover payments from lenders who violated licensing requirements, while the current voiding provision, which voids an unlicensed lender’s loan contract and subjects the lender to a fourth-degree crime, contains no comparable express private recovery right.

The court also rejected the borrower’s argument that a separate forfeiture provision, described in a prior case as allowing treble damages, showed legislative intent to permit private enforcement of the voiding provision, noting that the borrower had not alleged excess charges or sought treble damages and that the prior case’s statement was non-binding dictum from a case concerning a different statute. Because the voiding provision is part of a broader criminal penal scheme that courts generally do not allow private plaintiffs to enforce absent a clarifying statement from the legislature, and none exists here, the court affirmed the dismissal without reaching whether other provisions of the act permit private enforcement.