New Jersey Bill Regulates Vehicle Service Contracts, Ancillary Products

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Last month, New Jersey Governor Chris Christie signed SB 854, which will regulate, among other things, motor vehicle service contracts and motor vehicle ancillary protection products. For example, the new law (i) requires service contract providers or sellers to provide to the purchaser receipts or other written evidence of a contract, and copies of such contracts “within a reasonable period of time following the date of purchase”; (ii) specifies the form and contents of service contracts, including “plain language” requirements and certain disclosures; and (iii) grants purchasers the right to return a contract and obtain a full refund of the contract’s purchase price. In addition, providers must meet certain financial security requirements. A violation of the new provisions constitutes an unlawful practice under to the state’s consumer fraud act, which provides for fines of up to $10,000 for the first offense and up to $20,000 for any subsequent offense. The bill exempts, among other things, warranties and mechanical breakdown insurance policies offered by licensed insurers. The bill takes effect on 180 days following enactment, i.e. July 16, 2014.

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