Assemblyman Moriarty Bill to Protect Consumers from Deceptive Used Car Dealers Clears Assembly Panel

(TRENTON) – Prompted by a report from the State Commission of Investigation (SCI) detailing abuses in the wholesale used car industry, legislation sponsored by Assemblyman Paul Moriarty to strengthen protection for used car buyers was approved in committee on January 17th. New Jersey needs to do better by consumers and the used car industry. 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.
The bill (A-4770), 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 (A-4771), the “Used Motor Vehicle Licensing Act,” -sponsored by Assemblyman Moriarty 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.

The act is a consumer protection measure which aims to address longtime concerns of used car buyers. No buyer should walk away from a purchase feeling as if they were taken advantage of and they should have some recourse if the car dealer misrepresented the quality of the vehicle.

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