Senate Commerce Committee Statement to Senate, No. 902 — State of New Jersey (February 10, 2022)

Summary

The Senate Commerce Committee of the State of New Jersey, in a statement dated February 10, 2022, reports favorably and with committee amendments Senate Bill No. 902 on service contract providers, companies offering contracts purporting to cover repairs to a consumer's home, car or other goods. Providers must meet bond requirements, disclose automatic renewal provisions, give notice before the cancellation deadline and offer minimum methods to cancel. Providers must disclose company principals and litigation or enforcement matters from the prior five years. Providers using a public utility's trade name must disclose that the utility is not offering the contract. Providers and administrators must register with the Division of Consumer Affairs.

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SENATE COMMERCE COMMITTEE

STATEMENT TO

SENATE, No.
902

with
committee amendments

STATE
OF NEW JERSEY

DATED: FEBRUARY
10, 2022

The Senate Commerce Committee reports favorably and
with committee amendments Senate Bill No. 902.

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 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 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 name of 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.

COMMITTEE AMENDMENTS

The committee amended the bill to

(1) remove administrators of service contracts from
the definition of “provider” and add a definition of “regulated entity” that
means a provider or an administrator;

(2) stipulate that certain provisions of the bill
apply to administrators in addition to providers;

(3) change the conditions under which the use of the
term “extended warranty” may be used;

(4) require an advertisement for a service contract
offered by an entity other than a public utility in a manner that uses a public
utility’s trade name or other identifying information to clearly and
prominently disclose certain information relative to the administrator of the
service contract in addition to the provide that offers the service contract;

(5) stipulate that nothing in the bill is to be
construed to impose liability on news media for accepting or publishing
advertising that may fall within the scope of the bill; and

(6) make certain technical corrections.

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