Senate Commerce Committee Statement to Senate, No. 4239 — State of New Jersey (December 16, 2021)

Summary

The Senate Commerce Committee of the State of New Jersey, in a statement dated December 16, 2021, reports favorably Senate Bill No. 4239 with committee amendments. As amended, the bill sets consumer protection requirements for service contract providers that offer contracts purporting to cover repairs to a consumer's home, car or other goods. Providers may use the terms "guaranty" or "warranty" only with a clear disclosure that the contract is not a guaranty or warranty as legally defined. Providers using a public utility's trade name must disclose that the utility is not offering the contract. Providers must register with the Division of Consumer Affairs, and cancellation requests must be acknowledged within 5 business days of receipt.

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SENATE COMMERCE COMMITTEE

STATEMENT TO

SENATE, No.
4239

STATE
OF NEW JERSEY

DATED: DECEMBER
16, 2021

The
Senate Commerce Committee reports favorably Senate Bill No. 4239, with committee
amendments.

As
amended, this bill establishes certain consumer protection requirements upon
service contract providers, 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 persons who are contractually obligated to the service
contract holder under the terms of the service contract and an administrator. The
bill allows service contract providers to use the terms “guaranty” or
“warranty” in its name, products, descriptions of products, advertisements or
other materials only if when using that term the provider clearly and
conspicuously discloses that the service contract issued, offered for sale, or
sold is not in the nature of a guaranty or warranty as that term is legally
defined and commonly understood. Additionally, the bill does not prohibit the
use of the term “extended warranty” to describe a product issued, offered for
sale or sold in the State if the product accurately sets forth the terms and
source of the original equipment manufacturer warranty upon which the product
is based and clearly and conspicuously discloses that the product is a service
contract offered under P.L.2013, c.197 (C.56:12-87 et seq.).

Moreover,
the bill does not requires a provider that complies with certain other
provisions of the bill or an insurer that the Commissioner of Banking and
Insurance has determined meets financial solvency standards established under
Title 17 of the New Jersey Statutes to comply with provisions in the bill
regarding faithful performance. Persons who administer, issue, make, provide or offer to sell service
contracts are jointly and severally liable in the bill for certain violations.

The
bill requires providers 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;

(3) the
provider’s contact information;

(4) that
the communication is an advertisement; and

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

The
bill also requires providers to register with the Division of Consumer Affairs
and allows the division to post information about a provider publicly on its
website. The information to be submitted of the registration does not include
an audited financial statement from the provider.

Lastly,
the bill requires cancellation request to be acknowledged within 5 business
days of receipt and honored within 10 days of receipt. The bill will take
effect on the first day of the ninth month after enactment.

COMMITTEE
AMENDMENTS:

The
committee amended the bill to:

(1) update
the definition of “provider;”

(2) clarify
what a provider of service contracts may use in its name, products,
descriptions of products, advertisements, or any other materials;

(3) expand
the exceptions in regards to compliance with provisions regarding the assurance
of faithful performance to contract holders;

(4) make
persons who administer issue, make, provide or offer to sell service contracts
jointly and severally liable for certain violations;

(5) modify
what information is to be disclosed by a service contract provider;

(6) alter
what registration as a service contract provider is to include in a
registration;

(7) require
cancellation requests to be acknowledged within 5 business days of receipt and
honored within 10 business days of receipt; and

(8) makes
the bill effective as of the first day of the ninth month.

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