Assemblyman Moriarty Introduces Legislation to Protect Consumers from Deceptive Used Car Dealers

(TRENTON) – Prompted by a report from the State Commission of Investigation (SCI) detailing abuses in the wholesale used car industry at facilities known as multi-dealer locations, Assemblyman Paul Moriarty on Monday introduced two bills to protect used car buyers from deceitful sellers.

“New Jersey needs to do better by consumers and the used car industry,” said Moriarty (D-Camden/Gloucester). “By strengthening consumer protections and more clearly defining the industry we can create a system that works better for everyone.”

The SCI report, “Gaming the System II: Abuses in the Used Car Industry,” released earlier this month is a follow-up to a 2015 review by the agency, which examined issues plaguing New Jersey’s used car industry. Both reports found wholesale dealerships in the state continue to participate in illicit activities such as tax evasion and insurance fraud at multi-dealer locations.

Additionally, dozens of consumers spent thousands of dollars for vehicles which turned out to be of poor quality, and buyers could not receive refunds because the cars were sold “as is” and were responsible for covering repair costs under New Jersey law, according to the report.

Under current law, warranty protections only cover vehicles purchased from New Jersey-licensed dealers for a minimum of $3,000 that are less than seven years old and have fewer than 100,000 miles.

Both SCI reports recommended that the Legislature consider advancing bills to target abuses in the used car industry and strengthen the rights of consumers.

One of the bills, known as the “Used Car Buyers’ Bill of Rights,” prohibits “as is” sales of used cars, requires dealers to offer contract cancellation option agreements for certain used vehicles, and prohibits dealers from selling cars deemed “certified” or other descriptive terms which imply the vehicle meets certain standards if the dealer knows of repair issues, among other guidelines.

Similar legislation has been adopted in New York and California, which requires dealers to certify that a used vehicle meets certain requirements.

A violation would be punishable by a fine of up to $10,000 for the first offense and up to $20,000 for any subsequent offense.

Another measure, the “Used Motor Vehicle Licensing Act,” would establish an eight-member State Board of Used Motor Vehicle Dealers in the Division of Consumer Affairs in the Department of Law and Public Safety, which will be responsible for licensing used car dealers who meet eligibility requirements. Prior to licensure applicants would be required to complete a criminal background check. Licensure is currently administered by the Motor Vehicle Commission.

Both bills were originally introduced in the 2016-2017 legislative session following SCI’s initial report.