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  • NJ A2450
  • Establishes notification standards for certain service contracts with automatic renewal.*
In Committee
Crossed Over
2016-2017 Regular Session
The bill establishes notification standards regarding service contracts which contain automatic renewal provisions. A service contract is defined to mean a written contract for the performance of service, maintenance, or repair over a fixed period of time in connection with real property. A service contract does not include a warranty offered by a manufacturer, importer, or seller of property or services that is incidental to the sale of the property or service. Excluded from the bill's provisions are service contracts on tangible property valued under $250 and service contracts offered by certain financial institutions, certain entities regulated by the Board of Public Utilities, and persons providing central heating and air conditioning services. Specifically, the bill provides that if a service contract has an automatic renewal provision for a specified period of more than one month, the seller is required to disclose the automatic renewal provision clearly and conspicuously in the contract or contract offer. Additionally, if the service contract is for 12 months or longer, and the renewal is for a period of one month or longer, the seller is required to provide either written or electronic notification to the consumer between the 30th and 60th day prior to the cancellation deadline provided in the contract. This notification would indicate methods by which the consumer may obtain details of the automatic renewal provision and cancellation procedure and also disclose that a contract will automatically renew unless the consumer cancels it. The bill also requires the seller to notify the consumer of any change in the procedures required to cancel the automatic renewal. If an error has caused the seller to fail to comply with the provisions of the bill, the unearned portion of the contract subject to the automatic renewal provision would be refunded as of the date on which the seller is notified of the error. Automatic renewal provisions would be void and unenforceable if the notification requirements stipulated in the bill are not met. Furthermore, a violation of the bill's provisions constitutes an unlawful practice under the consumer fraud act. An unlawful practice is punishable by a monetary penalty of not more than $10,000 for a first offense and not more than $20,000 for any subsequent offense. Additionally, a violation can result in cease and desist orders issued by the Attorney General, the assessment of punitive damages, and the awarding of treble damages and costs to the injured.
2nd Reading in the Assembly, 2nd Reading in the Senate, Passed Assembly
Received in the Senate without Reference, 2nd Reading  (on 6/30/2016)
Date Chamber Action Description
6/30/2016 S Received in the Senate without Reference, 2nd Reading
6/27/2016 A Passed by the Assembly (73-4-0)
6/16/2016 A Assembly Floor Amendment Passed (Johnson)
5/12/2016 A Reported out of Assembly Comm. with Amendments, 2nd Reading
5/12/2016 Assembly Consumer Affairs Hearing (11:00 5/12/2016 Committee Room 13, 4th Floor)
2/4/2016 A Introduced, Referred to Assembly Consumer Affairs Committee
Date Motion Yea Nay Other
Detail 6/27/2016 Assembly Floor: Third Reading - Final Passage 73 4 3
Detail 5/12/2016 Assembly Consumer Affairs Committee: Reported with Amendments 3 1 0