New Jersey State Statutes
56:12-29 - 56:12-49
Unfair Trade Practices
56:12-29 Findings, intentions.
The Legislature finds that the purchase of a new motor vehicle is a major, high cost
consumer transaction and the inability to correct defects in these vehicles creates a
major hardship and an unacceptable economic burden on the consumer. It is the intent of
this act to require the manufacturer of a new motor vehicle to correct defects originally
covered under the manufacturer's warranty which are identified and reported within a
specified period. It is the further intent of this act to provide procedures to
expeditiously resolve disputes between a consumer and a manufacturer when defects in a new
motor vehicle are not corrected within a reasonable time, and to provide to award specific
remedies where the uncorrected defect substantially impairs the use, value, or safety of
the new motor vehicle.
56:12-30 Definitions.
As used in this act:
"Consumer" means a buyer or lessee, other than for purposes of resale or
sublease, of a motor vehicle; a person to whom a motor vehicle is transferred during the
duration of a warranty applicable to the motor vehicle; or any other person entitled by
the terms of the warranty to enforce the obligations of the warranty.
"Dealer" means a person who is actively engaged in the business of buying,
selling or exchanging motor vehicles at retail and who has an established place of
business.
"Director" means the Director of the Division of Consumer Affairs in the
Department of Law and Public Safety, or his designee.
"Division" means the Division of Consumer Affairs in the Department of Law
and Public Safety.
"Lease agreement" means a contract or other written agreement in the form
of a lease for the use of a motor vehicle by a person for a period of time exceeding 60
days, whether or not the lessee has the option to purchase or otherwise become the owner
of the motor vehicle at the expiration of the lease.
"Lessee" means a person who leases a motor vehicle pursuant to a lease
agreement.
"Lessor" means a person who holds title to a motor vehicle leased to a
lessee under a lease agreement or who holds the lessor's rights under such an agreement.
"Lien" means a security interest in a motor vehicle.
"lien holder" means a person with a security interest in a motor vehicle
pursuant to a lien.
"Manufacturer" means a person engaged in the business of manufacturing,
assembling or distributing motor vehicles, who will, under normal business conditions
during the year, manufacture, assemble or distribute to dealers at least 10 new motor
vehicles.
"Manufacturer's informal dispute settlement procedure" means an arbitration
process or procedure by which the manufacturer attempts to resolve disputes with
consumers regarding motor vehicle nonconformities and repairs that arise during the
vehicle's warranty period.
"Manufacturer's warranty" or "warranty" means any warranty,
whether express or implied of the manufacturer, of a new motor vehicle of its condition
and fitness for use, including any terms or conditions precedent to the enforcement of
obligations under the warranty.
"Motor vehicle" means a passenger automobile or motorcycle as defined in
R.S.39:1-1 which is purchased or leased in the State of New Jersey or which is
registered by the Division of Motor Vehicles in the Department of Law and Public Safety,
except the living facilities of motor homes.
"Nonconformity" means a defect or condition which substantially impairs the
use, value or safety of a motor vehicle.
"Reasonable allowance for vehicle use" means the mileage at the time the
consumer first presents the motor vehicle to the dealer or manufacturer for correction
of a nonconformity times the purchase price, or the lease price if applicable, of the
vehicle, divided by one hundred thousand miles.
56:12-31 Report of nonconformity; repairs.
If a consumer reports a nonconformity in a motor vehicle to the manufacturer or its
dealer during the first 18,000 miles of operation or during the period of two years
following the date of original delivery to a consumer, whichever is earlier, the
manufacturer shall make, or arrange with its dealer to make, within a reasonable time, all
repairs necessary to correct the nonconformity. Such repairs if made after the first
12,000 miles of operation or after the period of one year following the date of original
delivery to the consumer, whichever is earlier, shall be paid for by the consumer, unless
otherwise covered by a manufacturer's warranty, and shall be recoverable as a cost under
section 14 of this act.
56:12-32 Refunds.
a. If, during the period specified in section 3 of this act, the manufacturer
or its dealer is unable to repair or correct a nonconformity within a reasonable time,
the manufacturer shall accept return of the motor vehicle from the consumer. The
manufacturer shall provide the consumer with a full refund of the purchase price of the
original motor vehicle including any stated credit or allowance for the consumer's used
motor vehicle, the cost of any options or other modifications arranged, installed, or
made by the manufacturer or its dealer within 30 days after the date of original
delivery, and any other charges or fees including, but not limited to, sales tax,
license and registration fees, finance charges, reimbursement for towing and
reimbursement for actual expenses incurred by the consumer for the rental of a motor
vehicle equivalent to the consumer's motor vehicle and limited to the period during
which the consumer's motor vehicle was out of service due to a nonconformity, less a
reasonable allowance for vehicle use. Nothing herein shall be construed to preclude a
manufacturer from making an offer to replace the vehicle in lieu of a refund; except
that the consumer may, in any case, reject a manufacturer's offer of replacement and
demand a refund. Refunds shall be made to the consumer and lien holder, if any, as their
interests appear on the records of ownership maintained by the Director of the Division
of Motor Vehicles. In the event that the consumer accepts an offer to replace the motor
vehicle in lieu of a refund, it shall be the manufacturer's responsibility to insure
that any lien on the returned motor vehicle is transferred to the replacement vehicle.
b. A consumer who leases a new motor vehicle shall have the same remedies
against a manufacturer under this section as a consumer who purchases a new motor
vehicle. If it is determined that the lessee is entitled to a refund pursuant to
subsection a. of this section, the consumer shall return the leased vehicle to the
lessor or manufacturer and the consumer's lease agreement with the motor vehicle lessor
shall be terminated and no penalty for early termination shall be assessed. The
manufacturer shall provide the consumer with a full refund of the amount actually paid
by the consumer under the lease agreement, including any additional charges as set forth
in subsection a. of this section if actually paid by the consumer, less a reasonable
allowance for vehicle use. The manufacturer shall provide the motor vehicle lessor with
a full refund of the vehicle's original purchase price plus any un-recovered interest
expense, less the amount actually paid by the consumer under the agreement. Refunds
shall be made to the lessor and lien holder, if any, as their interests appear on the
records of ownership maintained by the Director of the Division of Motor Vehicles.
56:12-33 Presumption of inability to correct nonconformity; written notification.
a. It is presumed that a manufacturer or its dealer is unable to repair or
correct a nonconformity within a reasonable time if, within the first 18,000 miles of
operation or during the period of two years following the date of original delivery of
the motor vehicle to a consumer, whichever is the earlier date:
(1) Substantially the same nonconformity has been subject to repair three or
more times by the manufacturer or its dealer and the nonconformity continues to exist;
or
(2) The motor vehicle is out of service by reason of repair for one or more
nonconformities for a cumulative total of 20 or more calendar days since the original
delivery of the motor vehicle and a nonconformity continues to exist.
b. The presumption contained in subsection a. of this section shall apply
against a manufacturer only if the manufacturer has received written notification, by or
on behalf of the consumer, by certified mail return receipt requested, of a potential
claim pursuant to the provisions of this act and has had one opportunity to repair or
correct the defect or condition within 10 calendar days following receipt of the
notification. Notification by the consumer shall take place any time after the motor
vehicle has had substantially the same nonconformity subject to repair two or more times
or has been out of service by reason of repair for a cumulative total of 20 or more
calendar days.
c. The two-year term and the 20-day period specified in this section shall be
extended by any period of time during which repair services are not available to the
consumer because of a war, invasion or strike, or a fire, flood, or other natural
disaster.
56:12-34 Statements to consumers.
a. At the time of purchase in the State of New Jersey, the manufacturer
through its dealer, or at the time of lease in the State of New Jersey, the lessor,
shall provide directly to the consumer the following written statement on a separate
piece of paper, in 10-point bold-face type:
"IMPORTANT: IF THIS VEHICLE IS DEFECTIVE, YOU MAY BE ENTITLED UNDER NEW JERSEY
LAW TO A REFUND OF THE PURCHASE PRICE OR YOUR LEASE PAYMENTS. FOR COMPLETE INFORMATION
REGARDING YOUR RIGHTS AND REMEDIES UNDER THE RELEVANT LAW, CONTACT THE NEW JERSEY
DEPARTMENT OF LAW AND PUBLIC SAFETY, DIVISION OF CONSUMER AFFAIRS."
b. Each time a consumer's motor vehicle is returned from being examined or
repaired during the period specified in section 3 of this act, the manufacturer through
its dealer shall provide to the consumer an itemized, legible statement of repair which
indicates any diagnosis made and all work performed on the vehicle and provides
information including, but not limited to, the following: a general description of the
problem reported by the consumer or an identification of the problem reported by the
consumer or an identification of the defect or condition; the amount charged for parts
and the amount charged for labor, if paid for by the consumer; the date and the odometer
reading when the vehicle was submitted for repair; and the date and odometer reading
when the vehicle was made available to the consumer.
c. Failure to comply with the provisions of this section constitutes an
unlawful practice pursuant to section 2 of P.L. 1960, c. 39 (C. 56:8-2).
56:12-35 Sale, leasing of returned motor vehicle.
a. If a motor vehicle is returned to the manufacturer under the provisions of
this act or a similar statute of another state or as the result of a legal action or an
informal dispute settlement procedure, it shall not be resold or re-leased in New Jersey
unless:
(1) The manufacturer provides to the dealer or lessor and the dealer or
lessor provides to the consumer the following written statement on a separate piece of
paper, in 10-point bold-face type:
"IMPORTANT: THIS VEHICLE WAS RETURNED TO THE MANUFACTURER BECAUSE IT DID NOT
CONFORM TO THE MANUFACTURER'S WARRANTY AND THE NONCONFORMITY WAS NOT CORRECTED
WITHIN A REASONABLE TIME AS PROVIDED BY LAW;"
(2) The dealer or lessor obtains from the consumer a signed receipt
certifying, in a conspicuous and understandable manner, that the written statement
required under this subsection has been provided. The director shall prescribe the
form of the receipt. The dealer or lessor may fulfill his obligation to obtain a
signed receipt under this paragraph by making such a notation, in a conspicuous and
understandable manner, on the vehicle buyer order form accompanying the sale or lease
of that vehicle; and
(3) The dealer or lessor, in accordance with the provisions of section 1 of
P.L.1993, c.21 (C.39:10-9.3), notifies the Director of the Division of Motor Vehicles
in the Department of Law and Public Safety of the sale or transfer of ownership of the
motor vehicle.
b. Nothing in this section shall be construed as imposing an obligation on a
dealer or lessor to determine whether a manufacturer is in compliance with the terms of
this section nor shall it be construed as imposing liability on a dealer or lessor for
the failure of a manufacturer to comply with the terms of this section.
c. Failure to comply with the provisions of this section constitutes an
unlawful practice pursuant to section 2 of P.L.1960, c.39 (C.56:8-2).
56:12-36 Informal dispute settlement procedure.
a. If a manufacturer has established, or participates in, an informal dispute
settlement procedure pursuant to section 110 of Pub. L. 93-637 (15 U.S.C. s.2310) and
the rules promulgated there under, or the requirements of this section, a consumer may
submit a dispute regarding motor vehicle nonconformities to the dispute settlement body
provided by that procedure but a consumer shall not be required to first participate in
the informal dispute settlement procedure before participating in the division's summary
hearing procedure under this act.
b. If a consumer chooses to use a manufacturer's informal dispute settlement
procedure established pursuant to this section, the findings and decisions of the
dispute settlement body shall state in writing whether the consumer is entitled to a
refund under the presumptions and criteria set out in this act and the findings and
decisions shall be admissible against the consumer and the manufacturer in any legal
action.
c. If the dispute settlement body determines that a consumer is entitled to
relief under this act, the consumer shall be entitled to a refund as authorized by
section 4 of this act.
d. In any informal dispute settlement procedure established pursuant to this
section:
(1) Participating arbitrators shall be trained in arbitration and familiar
with the provisions of this act.
(2) Documents shall not be submitted to any dispute settlement body unless
the documents have been provided to each of the parties in the dispute at least seven
days prior to commencement of the dispute settlement hearing. The parties shall be
given the opportunity to comment on the documents in writing or with oral
presentation.
(3) No party shall participate in the informal dispute settlement procedure
unless all other parties are also present and given an opportunity to be heard, or
unless the other parties consent to proceeding without their presence and
participation.
(4) A consumer shall be given an adequate opportunity to contest a
manufacturer's assertion that a nonconformity falls within intended specifications for
the vehicle by having the basis of the manufacturer's claim appraised by a technical
expert selected and paid for by the consumer prior to the manufacturer's informal
dispute settlement procedure. If the dispute settlement body rules in favor of the
consumer, his costs and reasonable attorney's fees shall also be awarded.
(5) A dispute shall not be heard if there has been a recent attempt by the
manufacturer to repair a consumer's vehicle, but no response has yet been received by
the dispute settlement body from the consumer as to whether the repairs were
successfully completed. This provision shall not prejudice a consumer's right under
this section.
The manufacturer shall provide, and the dispute settlement body shall consider, any
relevant technical service bulletins which have been issued by the manufacturer
regarding motor vehicles of the same make and model as the vehicle that is the subject
of the dispute.
e. Any manufacturer who establishes, or participates in, an informal dispute
settlement procedure, whether it meets the requirements of this section or not, shall
maintain, and forward to the director at six month intervals, the following records:
(1) The number of purchase price and lease price refunds requested, the
number awarded by the dispute settlement body, the amount of each award and the number
of awards satisfied in a timely manner;
(2) The number of awards in which additional repairs or a warranty extension
was the most prominent remedy, the amount or value of each award, and the number of
awards satisfied in a timely manner;
(3) The number and total dollar amount of awards in which some form of
reimbursement for expenses or compensation for losses was the most prominent remedy,
the amount or value of each award and the number of awards satisfied in a timely
manner; and
(4) The average number of days from the date of a consumer's initial request
to use the manufacturer's informal dispute settlement procedure until the date of the
decision and the average number of days from the date of the decision to the date on
which performance of the award was satisfied.
56:12-37 Dispute resolution.
a. A consumer shall have the option of submitting any dispute arising under
section 4 of this act to the division for resolution. The director may establish a
filing fee, to be paid by the consumer, fixed at a level not to exceed the cost for the
proper administration and enforcement of this act. This fee shall be recoverable as a
cost under section 14 of this act. Upon application by the consumer and payment of any
filing fee, the manufacturer shall submit to the State hearing procedure. The filing of
the notice in subsection b. of section 5 of P.L.1988, c.123 (C.56:12-33) shall be a
prerequisite to the filing of an application under this section.
b. The director shall review a consumer's application for dispute resolution
and accept eligible disputes for referral to the Office of Administrative Law for a
summary hearing to be conducted in accordance with special rules adopted pursuant to the
"Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), by the
Office of Administrative Law in consultation with the director. Immediately upon
acceptance of a consumer's application for dispute resolution, the director shall
contact the parties and arrange for a hearing date with the Clerk of the Office of
Administrative Law. The hearing date shall, to the greatest extent possible, be
convenient to all parties, but shall be no later than 20 days from the date the
consumer's application is accepted, unless a later date is agreed upon by the consumer.
The Office of Administrative Law shall render a decision, in writing, to the director
within 20 days of the conclusion of the summary hearing. The decision shall provide a
brief summary of the findings of fact, appropriate remedies pursuant to this act, and a
specific date for completion of all awarded remedies. The director, upon a review of the
proposed decision submitted by the administrative law judge, shall adopt, reject, or
modify the decision no later than 15 days after receipt of the decision. Unless the
director modifies or rejects the decision within the 15-day period, the decision of the
administrative law judge shall be deemed adopted as the final decision of the director.
If the manufacturer unreasonably fails to comply with the decision within the specified
time period, the manufacturer shall be liable for penalties in the amount of $5,000.00
for each day the manufacturer unreasonably fails to comply, commencing on the day after
the specified date for completion of all awarded remedies.
c. The Office of Administrative Law is authorized to issue subpoenas to compel
the attendance of witnesses and the production of documents, papers and records relevant
to the dispute.
d. A manufacturer or consumer may appeal a final decision to the Appellate
Division of the Superior Court. An appeal by a manufacturer shall not be heard unless
the petition for the appeal is accompanied by a bond in a principal sum equal to the
money award made by the administrative law judge plus $2,500.00 for anticipated
attorney's fees and other costs, secured by cash or its equivalent, payable to the
consumer. The liability of the surety of any bond filed pursuant to this section shall
be limited to the indemnification of the consumer in the action. The bond shall not
limit or impair any right of recovery otherwise available pursuant to law, nor shall the
amount of the bond be relevant in determining the amount of recovery to which the
consumer shall be entitled. If a final decision resulting in a refund to the consumer is
upheld by the court, recovery by the consumer shall include reimbursement for actual
expenses incurred by the consumer for the rental of a motor vehicle equivalent to the
consumer's motor vehicle and limited to the period of time after which the consumer's
motor vehicle was offered to the manufacturer for return under this act, except in those
cases in which the manufacturer made a comparable vehicle available to the consumer free
of charge during that period. If the court finds that the manufacturer had no reasonable
basis for its appeal or that the appeal was frivolous, the court shall award treble
damages to the consumer. Failure of the Office of Administrative Law to render a written
decision within 20 days of the conclusion of the summary hearing as required by
subsection b. of this section shall not be a basis for appeal.
e. The Attorney General shall monitor the implementation and effectiveness of
this act and report to the Legislature after three years of operation, at which time a
recommendation shall be made either to continue under the procedures set forth in this
act or to make such modifications as may be necessary to effectuate the purposes of this
act.
56:12-38 Statistics.
a. The Division of Consumer Affairs shall maintain an index of all motor
vehicle disputes by make and model. The division shall, at six-month intervals, compile
and maintain statistics indicating the record of manufacturer compliance with any
settlement procedure decisions. The statistics shall be public record.
b. A manufacturer shall provide to the division all information on private
arbitration or private buy-back programs maintained or instituted by the manufacturer.
The information shall include the type and number of vehicles to which these programs
apply and the reasons for establishing and maintaining the programs. The manufacturer
shall provide the division with updated information at six month intervals.
56:12-39 Decision binding.
A consumer shall not be required to participate in a manufacturer's informal dispute
settlement procedure or the division's summary hearing procedure before filing an action
in the Superior Court. However, a decision rendered in a proceeding brought pursuant to
the division's summary hearing procedure shall be binding on the consumer and the
manufacturer, subject to the right of appeal as set forth in subsection d. of section 9 of
this act, and shall preclude the institution of any other action in the Superior Court
under this act.
56:12-40 Affirmative defense.
It shall be an affirmative defense to a claim under this act that the alleged
nonconformity does not substantially impair the use, value, or safety of the new motor
vehicle or that the nonconformity is the result of abuse, neglect, or unauthorized
modifications or alterations of the motor vehicle by anyone other than the manufacturer or
its dealer.
56:12-41 Pleading.
Any party to an action in the Superior Court of this State asserting a claim,
counterclaim or defense based upon violations of this act shall mail a copy of the initial
or responsive pleading containing the claim, counterclaim or defense to the Attorney
General within 10 days after filing the pleading with the court. Upon application to the
court in which the matter is pending, the Attorney General may intervene or appear in any
status appropriate to this matter.
56:12-42 Attorney, expert fees; costs.
In any action by a consumer against a manufacturer brought in Superior Court or in the
division pursuant to the provisions of this act, a prevailing consumer shall be awarded
reasonable attorney's fees, fees for expert witnesses and costs.
56:12-43 Use of funds.
All fees, penalties and costs collected by the division pursuant to this act shall be
appropriated for purposes of offsetting costs associated with the handling and resolution
of consumer automotive complaints.
56:12-44 Inherent design defect.
A manufacturer shall certify to the division, within one year of discovery, the
existence of any inherent design defect common to all motor vehicles of a particular model
or make. Failure to comply with this constitutes an unlawful practice pursuant to section
2 of P.L. 1960, c. 39 (C. 56:8-2).
56:12-45 Proceedings.
The director may institute proceedings against any manufacturer who fails to comply
with any of the provisions of this act.
56:12-46 No liability, cause of action.
Nothing in this act shall be construed as imposing any liability on a dealer, or
creating a cause of action by a manufacturer against a dealer, and nothing shall be
construed as imposing any liability on a dealer, or creating a cause of action by a
consumer against a dealer under section 4 of this act.
56:12-47 No limitation on rights.
Nothing in this act shall in any way limit the rights or remedies which are otherwise
available to a consumer under any other law.
56:12-48 Agreements void.
Any agreement entered into by a consumer for the purchase or lease of a new motor
vehicle which waives, limits or disclaims the rights set forth in this act shall be void
as contrary to public policy.
56:12-49 Rules, regulations.
Within 120 days following enactment, the director shall, subject to approval by the
Attorney General and pursuant to the provisions of the "Administrative Procedure
Act," P.L. 1968, c. 410 (C. 52:14B-1 et seq.), adopt rules and regulations necessary
to effectuate the purposes of this act.
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