ASSEMBLY CONSUMER AFFAIRS COMMITTEE

STATEMENT TO

ASSEMBLY, No. 5395

with committee amendments

STATE OF NEW JERSEY

DATED:  MAY 15, 2025

      The Assembly Consumer Affairs Committee reports favorably and with committee amendments Assembly Bill No. 5395.

      As amended, the bill requires a cancellation option for any subscription service and establishes certain standards pertaining to the use of negative option features.

      Under current law, subscription service providers of health club services are required to provide consumers with an online cancellation option.  This bill repeals and replaces current law and expands the term “subscription service” to apply to any subscription service provider. 

      In addition, the bill requires subscription service providers to make available to consumers the option to cancel or terminate a subscription service using the same medium through which the subscription service was activated or the same medium in which the consumer is accustomed to interacting with the subscription service provider, including, but not limited to, in person, by telephone, by mail, by email, or online, in accordance with the established billing terms and conditions of the subscription service.

      Under the provisions of the bill, a subscription service provider that makes available the option to cancel or terminate a subscription service online is to provide to any consumer, in an easily accessible location, a direct link or button on the subscription service provider’s Internet website through which a consumer can initiate termination of the automatic renewal of the subscription service. 

      The committee amended the bill to require subscription service providers utilizing a negative option feature as part of the offer or agreement of a subscription service to provide a simple mechanism to cancel the negative option feature.

      Under the bill, a “negative option feature” is defined as a provision within a subscription service offer or agreement in which a consumer’s silence or failure to take an affirmative action to reject goods or services or to cancel the agreement is interpreted by the subscription service provider as acceptance of the subscription service.  A subscription service provider that utilizes a negative option feature as part of the offer or agreement of a subscription service is not to: misrepresent any material fact made while marketing; fail to clearly and conspicuously disclose material terms prior to obtaining a consumer’s billing information; fail to obtain a consumer’s express informed consent before charging the consumer; and fail to provide a simple mechanism to cancel charges.

      The committee amended the bill to provide that its provisions do not apply to any service provided by a business or its affiliate where either the business or its affiliate is licensed or regulated pursuant to State or federal law including, but not limited to, by the Board of Public Utilities, Federal Communications Commission, Federal Energy Regulatory Commission, Department of Banking and Insurance, or Division of Consumer Affairs in the Department of Law and Public Safety.

      The committee amended the bill to allow the Attorney General or the Director of the Division of Consumer Affairs to seek a temporary or permanent injunction to stop any practices that violate the provisions of this bill, and to secure restitution for New Jersey residents who have suffered financial losses due to such violations. Additionally, the bill prohibits individuals from pursuing a private right of action for violations under this bill, and prohibits these violations from serving as the basis for a private right of action under any other law.

      It is an unlawful practice for a subscription service provider to violate the provisions of this bill.  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.  In addition, 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.

      As amended and reported by the committee, Assembly Bill No. 5395 is identical to Senate Bill No. 3877 (2R), as amended by the Senate on February 25, 2025.

COMMITTEE AMENDMENTS:

      The committee amended the bill to:

      (1)  clarify that a subscription service provider utilizing a negative option feature as part of the offer or agreement of a subscription service is required to provide a simple mechanism to cancel the negative option feature, and the amendments remove the requirement to “immediately halt charges”;

      (2) allow the Attorney General or the Director of the Division of Consumer Affairs to seek a temporary or permanent injunction to stop any practices that violate the provisions of this bill, and to secure restitution for New Jersey residents who have suffered financial losses due to such violations;

      (3)  clarify that individuals cannot pursue a private right of action for violations under this bill, and that these violations cannot serve as the basis for a private right of action under any other law;

      (4)  stipulate that its provisions do not apply to any service provided by a business or its affiliate where either the business or its affiliate is licensed or regulated pursuant to State or federal law including, but not limited to, by the Board of Public Utilities, Federal Communications Commission, Federal Energy Regulatory Commission, Department of Banking and Insurance, or Division of Consumer Affairs in the Department of Law and Public Safety; and

      (5)  make other clarifying and technical changes.