Bill > A4771

Introduced Session

This bill, designated the "Used Car Buyers' Bill of Rights," prohibits "as is" sales of used motor vehicles to consumers, requires dealers to offer contract cancellation option agreements for certain used vehicles, and establishes additional requirements for dealers selling used vehicles. The bill does not apply to transactions between private parties or the sale of used motorcycles, motor homes, or off-road vehicles. This bill makes it an unlawful practice under the consumer fraud act for a dealer to sell a consumer a used vehicle deemed to be "certified" or any other similar descriptive term that implies the vehicle complies with the terms of a used motor vehicle certification program if: the dealer knows or should know that the odometer is inaccurate; the dealer knows or should know that the vehicle was reacquired by a manufacturer or dealer pursuant to state or federal warranty laws; the title to the vehicle is inscribed with the notation "flood," "junk," "Lemon Law Buyback," "manufacturer repurchase," "nonrepairable," "salvage," or another similar title designation; the vehicle sustained damage in an impact, fire, or flood, which substantially impairs its use or safety; the dealer knows or should know that the vehicle sustained frame damage; prior to sale, the dealer fails to provide a consumer with a completed inspection report indicating all the components inspected; the dealer disclaims any warranties of merchantability on the vehicle; the vehicle is sold "as is"; or the term "certified," or any other similar descriptive term, is used in a manner that is untrue or misleading. The bill requires that a dealer offer a consumer a contract cancellation option agreement that allows the consumer to return the used motor vehicle without cause, if the used motor vehicle has a purchase price of less than $40,000. The contract cancellation option agreement gives the consumer the right to cancel the contract and obtain a refund. The bill sets forth the information to be contained in any contract cancellation option agreement, including the deadline for exercising the cancellation option and returning the vehicle to the dealer, the maximum mileage the vehicle may be driven, which could not be less than 250, and any restocking fee. A dealer would be required to apply toward the restocking fee the price paid by the consumer for the contract cancellation option agreement. A dealer is also required to give notice at its business location and in the contract for the used motor vehicle that there is no cancellation period, sometimes referred to as a "cooling-off" period, unless a consumer obtains a contract cancellation option. The bill provides that the fee for the contract cancellation option agreement is not to exceed the following: (1) $75 for a used motor vehicle with a cash price of $5,000 or less; (2) $150 for a used motor vehicle with a cash price of between $5,000.01 and $10,000; (3) $250 for a used motor vehicle with a cash price of between $10,000.01 and $30,000; or (4) one percent of the purchase price for a used motor vehicle with a cash price of $30,000.01 to $40,000. No later than 48 hours after a consumer exercises the right to cancel a contract under the agreement, the dealer is required to cancel the contract and provide the consumer with a refund, including the appropriate portion of the sales tax or other fees paid. Within this same timeframe, the dealer would be required to return to the consumer any used vehicle the consumer conveyed to the dealer as a down payment or trade-in. If the dealer sold or otherwise transferred title to that used vehicle, the refund would include the fair market value of that used vehicle or its value as stated in the contract, whichever is greater. Currently, P.L.1995, c.373 (C.56:8-67 et seq.) sets forth minimum warranty requirements when a dealer sells a consumer a used vehicle. It is an unlawful practice under this law for a dealer to fail to provide a clear written explanation, prior to sale, of what is meant by the term "as is," if the used motor vehicle is sold "as is." Current law also requires a dealer to provide a consumer purchasing certain used vehicles with a written warranty for a minimum number of days or miles, depending on the mileage of the used vehicle at the time of purchase, and to repair defects. This bill amends current law to make it an unlawful practice under the consumer fraud act for a dealer to sell a consumer a used vehicle "as is," i.e., without any warranty, express or implied, and placing responsibility on the consumer for the cost of any vehicle repairs. The bill eliminates the existing ability of a dealer to sell a consumer a used vehicle "as is" as a result of negotiating a lower price in exchange for waiving the dealer's obligation to provide a warranty. This bill revises the mileage requirements under the dealer's required written warranty. If the motor vehicle has less than 40,000 miles, the warranty would be 90 days or 3,750 miles, whichever comes first. If the motor vehicle has 40,000 miles or more, but less than 80,000 miles, the warranty would be 60 days or 2,500 miles, whichever comes first. If the used motor vehicle has 80,000 miles or more, but less than 125,000 miles, the warranty would be 30 days or 1,250 miles, whichever comes first. If the used motor vehicle has 125,000 miles or more, a consumer would be entitled to any implied warranties created by law. An unlawful practice under the consumer fraud act 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, violations may 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 party. In December 2015, the State Commission of Investigation (SCI), an independent investigative government agency, published "Gaming the System: Abuse and Influence Peddling in New Jersey's Used‐Car Industry." This report examined used car dealers in New Jersey and found that regulations, licensing, and enforcement of these dealers was selectively applied and further manipulated and weakened to benefit private interests, including multiple-dealer locations (MDLs) and commercial businesses engaged in unscrupulous and possibly illegal activities. The SCI specifically recommended that the Legislature consider adopting a "Used Car Buyers' Bill of Rights," similar to those now in effect in other states such as California and New York, which require dealers to certify a used vehicle meets certain requirements. The SCI report states that a "Used Car Buyers' Bill of Rights" would put all parties to a vehicle sale on notice that certain rules must be followed before any transaction may be completed.

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Gordon Johnson (D)*,  Paul Moriarty (D)*, 

Reported as an Assembly Committee Substitute and Referred to Assembly Appropriations Committee (on 01/17/2019)