A consumer protection measure passed by the Assembly Consumer Affairs Committee Thursday moves New Jersey closer to requiring notification to customers when a contract is to be automatically renewed.
Assembly Democrats Daniel R. Benson, Paul Moriarty, Raj Mukherji and Angela McKnight sponsor the legislation.
“So many highly-used services include automatic renewal provisions in their contracts,” said Benson (D-Mercer, Middlesex). “In an era of paperless billing and automatic charges to credit cards or bank accounts, consumers often get perpetually roped into extended and costly contracts. By requiring a clear display of the terms and advance notice prior to renewal, this bill will give consumers the opportunity to make more informed choices.”
The bill (A-1460) would require the seller of a service to disclose an automatic renewal provision clearly and conspicuously in the contract or contract offer. The measure also would require the seller to notify a consumer at least 30 days, but no more than 60 days, before a renewal cancellation deadline.
“Sometimes contracts are entered into a year, or even two years, before the automatic renewal clause kicks in,” said Moriarty (D-Gloucester, Camden). “This bill will protect consumers by ensuring that they have the opportunity to cancel any unwanted service prior to renewal of an additional term.”
“For some consumers, automatic renewal may provide convenience, but it’s important that anyone who enters this kind of agreement is aware and does so willingly,” said Mukherji (D-Hudson). “By requiring greater transparency in business, our state can ensure that consumers can make more informed decisions about how to spend their hard-earned money.”
“This legislation is about promoting good business practices on behalf of New Jersey consumers,” said McKnight (D-Hudson). “Automatic renewals can present a real financial burden for individuals who are struggling to make ends meet.”
A violation of the bill’s provisions would be an unlawful practice under the Consumer Fraud Act, punishable by a fine of up to $10,000 for a first offense and up to $20,000 for any subsequent offense. However, the bill also provides that penalties would not be imposed if a seller allows a consumer to cancel the service contract at any time; provides proper notification to the consumer; and refunds the unearned portion of the contract subject to the automatic renewal provision.
The bill now goes to the Speaker for further review.