New Jersey Assembly Democrats:Moriarty, Coughlin & Mukherji Bill Requiring Advance Notice Prior to Remote Disabling of Automobiles Heads Back to Governorís Desk

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Moriarty, Coughlin & Mukherji Bill Requiring Advance Notice Prior to Remote Disabling of Automobiles Heads Back to Governorís Desk

Legislation sponsored by Assembly Democrats Paul Moriarty, Craig Coughlin and Raj Mukherji that would require sufficient warning before a consumer's vehicle is disabled remotely for failure to make a payment is headed back to the Governor's desk after receiving approval 34-2 by the full Senate on Monday.

The bill (A-756), which was originally sent to the Governor in December, was sent back to the legislature as a conditional veto with several recommendations altering various provisions, but maintaining the key priorities that consumers receive ample warning and vehicles may not be turned off while in use. The Assembly signed off on the changes in February.

"These devices are akin to having a predatory debt collector riding in the car with the borrower, ready to strike at the slightest mistake," said Moriarty (D-Gloucester/Camden). "It's incredibly unsafe. We need this bill to protect consumers. While I would have liked it to be slightly more consumer-friendly, these recommendations are reasonable enough that they still preserve our ultimate goal, which is protecting the driver's safety."

The amended bill will still require automobile dealers and lenders to provide a consumer with at least 72 hours-notice before remotely disabling a motor vehicle via a payment assurance device. The bill defines a "payment assurance device" as a device, installed pursuant to a consumer's financing agreement or lease agreement on a motor vehicle with GPS capability or starter interrupt capability, that allows for the remote enabling or disabling of the vehicle.

A recent uptick in auto loans to borrowers with subprime credit scores has led some creditors to use payment assurance devices to ensure that high-risk borrowers lose access to their vehicles should they fail to make a payment on time. An estimated two million vehicles are equipped with the devices, but, as detailed in a New York Times article, safety concerns have arisen as borrowers have reportedly had their vehicles disabled during emergencies, while idling or even while driving on the highway.

Presently, New York, Pennsylvania, Rhode Island and Virginia are all considering similar legislation.

"While it's reasonable for a lender to expect a loan to be repaid in a timely fashion, having a vehicle shut off while the driver is on the road is a safety issue both for that particular driver and for other motorists," said Coughlin (D-Middlesex). "This bill will protect consumers who purchase cars that come installed with payment assurance devices by preventing dealers from shutting cars off while they are being operated."

Under the bill, only a creditor may install a payment assurance device if the following criteria are met:
- The installation of a device is accompanied by an enhanced written disclosure acknowledged in writing by the consumer;
- The consumer is not charged a fee for installation of the device;
- The consumer receives a warning at least 48 hours before the vehicle is disabled;
- The device cannot shut down the vehicle while in use; and
- The consumer has the ability to start a vehicle for a period of 48 hours after it has been disabled.

"A disabled vehicle is more than a simple inconvenience. When a car stops in the middle of a busy road or if there's no way to get help during an emergency situation, it becomes a serious public safety concern," said Mukherji (D-Hudson). "Implementing this legislation will ensure that creditors use this technology responsibly."

Under the bill, a violation of the aforementioned provisions would constitute an unlawful practice under the Consumer Fraud Act, 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.

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