TRENTON, NJ – A bill backed by Assemblyman Dan Benson (D-Hamilton) that would require notification to customers when a contract is to be automatically renewed was passed by the Assembly Consumer Affairs Committee Thursday.
“So many highly-used services include automatic renewal provisions in their contracts,” said Benson. “In an era of paperless billing and automatic charges to credit cards or bank accounts, consumers often get perpetually roped into extended and costly contracts. By requiring a clear display of the terms and advance notice prior to renewal, this bill will give consumers the opportunity to make more informed choices.”
The bill would require the seller of a service to disclose an automatic renewal provision clearly and conspicuously in the contract or contract offer. The measure also would require the seller to notify a consumer at least 30 days, but no more than 60 days, before a renewal cancellation deadline.
A violation of the bill’s provisions would be an unlawful practice under the Consumer Fraud Act, punishable by a fine of up to $10,000 for a first offense and up to $20,000 for any subsequent offense. However, the bill also provides that penalties would not be imposed if a seller allows a consumer to cancel the service contract at any time; provides proper notification to the consumer; and refunds the unearned portion of the contract subject to the automatic renewal provision.
The bill now goes to the Speaker of the Assembly for further review.
Know a story we should share with readers? Email editor Elizabeth Meyers and tell her about it.