Legislation Would Prohibit Misleading Advertising of Free Products in New Jersey
(TRENTON) – Assembly Democrats Charles Mainor, Paul Moriarty and Patrick Diegnan recently introduced legislation that would curb misleading advertising practices of contracted service providers and retailers, by prohibiting the advertising of any product as free, or offering for sale or selling any product at no cost, if it is not ultimately free.
“Drawing in consumers with false promises of free products is a lot like the once popular bait-and-switch scams,” said Mainor (D-Hudson). “Adding on charges or making ‘free’ conditional to purchase without clearly noting their intent is a waste of a consumer’s time. Advertisers must be clear when making free offers to consumers.”
Specifically, the bill, (A-3892) also referred to the “Free Means Free Act,” prohibits advertising, offering, or selling free products if the person: (1) assesses a return or restocking fee for the return of the product or another product sold in conjunction with the free product; (2) assesses a cancellation fee for early termination for a contracted service and the cancellation fee incorporates any actual value or cost of the product; (3) includes any amount to cover the cost of the product within a bill regularly assessed to a person for the contracted service.
“Advertisements that claim a product will be given away free take advantage of consumers in need,” said Moriarty (D-Camden, Gloucester). “Many families are still struggling to make ends meet in this economy. It’s deceptive and unfair to consumers who work hard for every dollar earned to be misinformed and then nickel and dimed with extra costs.”
“I am sure that the reputable businesses of New Jersey will welcome this common sense legislation,” said Diegnan (D-Middlesex). “Free should mean exactly that….FREE. Any added costs or required purchases should be clearly stated in the advertisement.”
The bill also requires a person to clearly and conspicuously disclose the ultimate cost after any fees are assessed. It directs the “clear and conspicuous” disclosure to include (1) whether the cost of the product was offered by the seller or provider as free or at a reduced rate, as part of a sale or contract; (2) the retail value of the product and any associated subsidy offered by the seller or provider; (3) any cancellation fee to be assessed by the provider is the person cancels or terminates the contract, including, if applicable, any formula used to determine the total cancellation fee; and (4) any return or restocking fee to be assessed by the seller or provider if the person returns the product.
This type of unlawful practice falls under the consumer fraud act and is punishable by a monetary penalty of not more that $10,000 for a first offense and not more than $20,000 for any subsequent offense. Violations can also result in a cease and desist order issued by the Attorney General, the assessment of punitive damages, and the awarding of treble damages and costs to the injured party.
The bill was introduced on Thursday, November 13th.