Legislation Important to Motor Vehicle Dealers: New Payment Assurance Device Law, Temporary Registration Legislation Advances and New Requirements About Lien Payoffs Introduced into the Legislature

June 15, 2017

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New Payment Assurance Device Law

Governor Christie signed into law legislation that allows for the continued Use of Payment Assurance Devices with new limitations.  Prior to enactment of the law, use of GPS technology to either track a vehicle or for starter interruption purposes was not regulated in New Jersey.  The new law is effective August 1, 2017.  The new law allows for installation of a payment assurance device in connection with auto financing only if certain conditions are met including, but not limited to:

  • written disclosure to the consumer and their written acknowledgment that the device is installed.
  • prohibition on charging the consumer for the device.
  • prohibition on disabling the vehicle while it is being operated.
  • prohibition on remotely disabling the vehicle until the vehicle is five (5) or more days in default.
  • A 72 hour warning prior to remotely disabling the vehicle.
  • Failure to comply with the law is a violation of  the Consumer Fraud Act and could result in an award of attorneys’ fees and triple damages.

If your dealership uses GPS devices, disclosure forms should be reviewed by an attorney or other qualified professional to ensure compliance with the law and employees should be properly trained and knowledgeable about the new requirements for when and how a GPS device can be utilized.

Temporary Registration Legislation Advances

Legislation to increase the number of days a temporary registration is valid from 20 to 30 days if the vehicle is sold to an out of state consumer passed the Assembly on June 8, 2017 by a vote of   76-0.   The bill, A-1918, also allows for a second 30 day temporary registration if the title is lost or if  a prior lien holder fails to turnover title.  The bill would treat all consumers the same regardless of residency.   New Jersey consumers are already allowed thirty days for their first temporary registration and a second thirty day temporary registration.   The bill was referred to the Senate  Transportation Committee, which has yet to take action on the bill.    

Bill Introduced Concerning Lien Payoffs By Dealers And Lenders

On June 12, 2017 bill A-4980 was introduced into the Assembly.  The bill would require dealers to pay the remaining loan on a customer’s trade-in within 15 days of accepting a trade-in and to provide proof of the payment to the consumer on request.  The bill would also require lenders to release titles within 15 days of receipt of payment from a dealer except if paid by non certified check then within 15 days from the date that the check is credited to their account. Dealers and  secured parties that fail to comply with these requirements would be subject to a $500.00 penalty for the first offense and a $1,000.00 for each subsequent offense.   

Anthony Bush is a Member in Eckert Seamans’ Princeton Office with over two decades of experience with automotive issues. He counsels a wide spectrum of clients including automobile dealerships, operators of wholesale motor vehicle auctions, auto parts distributors, finance companies, and auto body repair facilities. Tony and Eckert Seamans have expertise representing dealers in consumer and corporate litigation, land use matters, business counseling, employment matters, franchise disputes, before the New Jersey Motor Vehicle Commission and New Jersey Department of Law and Public Safety, Division of Consumer Affairs, and in legislative and regulatory issues affecting the automotive industry.  

For more information about the NJIADA, contact Paula Frendel at njiada.pfrendel@gmail.com. For more information about any of the issues above, or any other legal issues impacting your dealership, contact Tony Bush at (609) 9895056 or abush@eckertseamans.com.

©Eckert Seamans Cherin & Mellott, LLC, 2017, all rights reserved.

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