ASSEMBLY CONSUMER AFFAIRS COMMITTEE

STATEMENT TO

[First Reprint]

SENATE, No. 902

with committee amendments

STATE OF NEW JERSEY

DATED:  MAY 9, 2022

      The Assembly Consumer Affairs Committee reports favorably and with committee amendments Senate Bill No. 902 (1R).

As amended by the committee, this bill establishes certain consumer protection requirements upon service contract providers and administrators, or companies that offer contracts purporting to cover repairs to a consumer’s home, car, or other goods.

     In particular, the bill clarifies that legal requirements pertaining to service contracts apply to administrators, as well as persons contractually obligated to provide services under a contract, as provided under current law.  The bill requires providers to meet certain bond requirements and provides that service contract providers are to clearly and conspicuously disclose automatic renewal provisions, provide notice prior to the cancellation deadline, and provide certain minimum methods for a consumer to cancel a contract.

     In addition, the bill requires disclosure of the identities of all company principals, information regarding any litigation or enforcement matters concerning service contracts filed or prosecuted during the prior five years in which a principal was named or involved, and information about the provider’s business operations, including the total amounts collected in provider fees and the total amounts paid out in claims or charges for services provided under the contract.

     The bill requires providers and, if applicable, administrators who use a public utility’s trade name or identifying information to clearly and prominently disclose:

     (1)   that the service contract is not being offered by the public utility but by a third party entity that is not part of the public utility, and that an entity other than the public utility will be responsible for performing the services advertised;

     (2)   the name of the provider that offers the service contract and, if applicable, the name of the administrator;

     (3)   the provider’s contact information and, if applicable, the administrator’s contact information;

     (4)   that the communication is an advertisement; and

     (5)   if applicable, that the billing for the services to be provided will be conducted through a public utility and that the public utility is an entity other than the provider.

     Lastly, the bill requires providers and administrators to register with the Division of Consumer Affairs and allows the division to post non-confidential information about a provider or administrator publicly on its website.

      As reported by the committee, this bill is identical to Assembly Bill No. 1559 (ACS), which was reported by the committee on this same date.

COMMITTEE AMENDMENTS

     The committee amended the bill to:

     (1)   change the definition of “provider” under the bill;

     (2)   allow a provider of service contracts issued, offered for sale, or sold in New Jersey to use in its name, products, descriptions of products, advertisements or any other materials the words “guaranty” and “warranty” under certain circumstances;

     (3)   exempt certain providers and insurers from bond maintenance requirements under the bill;

     (4)   update the information providers are required to disclose;

     (5)   remove a requirement that the provider registration application be accompanied by an audited financial statement;

     (6)   stipulate that the division may publish on a publicly accessible webpage only non-confidential information concerning registered providers;

     (7)   provide that cancellation requests made to certain providers are to be acknowledged within five business days of receipt and honored within 10 business days of receipt, and applied as of the date of receipt or, if permitted by the service contract, applied at the end of the holder’s monthly billing cycle;

     (8)   require certain disclosures by a regulated entity when using the words “guarantee” or “warranty” in an advertisement or in any other material;

     (9) stipulate that if a provider fails to comply with certain provisions of this bill, the contract holder may cancel the contract and receive the unearned portion of the contract subject to the automatic renewal provision less the amount of claims paid during that automatic renewal period;

     (10) make various clarifying and technical changes; and

     (11) make the bill effective on the first day of the twelfth month following enactment.