New Jersey-2014-A4065-Introduced

An Act concerning unsolicited checks and amending P.L.2014, c. (C. ) (pending before the Legislature as Assembly Bill No. 625 of 2014).

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. Section 1 of P.L.2014, c. (C. ) (pending before the Legislature as Assembly Bill No. 625 of 2014) is amended to read as follows:

1. [No person shall] It shall be an unlawful practice for a person to send an unsolicited check to an individual which, upon being cashed or redeemed, automatically obligates the recipient to pay any fee or enrolls that individual in any club, service, plan, or continuing agreement.

For the purposes of this act, an "unsolicited check" means any check mailed or otherwise delivered to a person, other than:

a. In response to a request or application for a check or account by the person;

b. As a substitute for a check or account previously issued to the person to whom the check is mailed or otherwise delivered; or

c. A check related to a consumer credit transaction or consumer loan business issued or provided by an insured depository institution as defined in 12 U.S.C. s.1813, a licensee under the New Jersey Consumer Finance Licensing Act, sections 1 through 49 of P.L.1996, c.157 (C.17:11C-1 et seq.), or other financial institution authorized to do business by the New Jersey Department of Banking and Insurance.

(cf: P.L.2014, c. , s.1, pending before the Legislature as Assembly Bill No. 625 of 2014)

2. Section 2 of P.L.2014, c. (C. ) (pending before the Legislature as Assembly Bill No. 625 of 2014) is amended to read as follows:

2. [a.] A person [who violates] in violation of section 1 of P.L.2014, c. (C. ) (pending before the Legislature as Assembly Bill No. 625 of 2014) shall be subject to a civil penalty [in an amount not to exceed $500 for the first violation and $1,000 for each subsequent violation, collectible by the Attorney General in] of up to $500 for a first offense, and up to $1,000 for a second offense, to be collected in a civil action by a summary proceeding pursuant to the "Penalty Enforcement Law of 1999," P.L.1999, c.274 (C.2A:58-10 et seq.).

[b. Nothing set forth in P.L.2014, c. (C. ) (pending before the Legislature as Assembly Bill No. 625 of 2014) shall be
construed as creating, establishing or authorizing a private cause of action by an aggrieved person against a person who has violated, or is alleged to have violated, the provisions of P.L.2014, c. (C. ) (pending before the Legislature as Assembly Bill No. 625 of 2014).] The Superior Court shall have jurisdiction of proceedings for the enforcement of the penalty provided by this section.

A third violation of section 1 of P.L.2014, c. (C. ) (pending before the Legislature as Assembly Bill No. 625 of 2014) is an unlawful practice under P.L.1960, c.39 (C.56:8-1 et seq.), and for the purposes of this section shall be considered a first offense under P.L.1960, c.39 (C.56:8-1 et seq.).

A fourth or subsequent violation of section 1 of P.L.2014, c. (C. ) (pending before the Legislature as Assembly Bill No. 625 of 2014) is an unlawful practice under P.L.1960, c.39 (C.56:8-1 et seq.), and for the purposes of this section shall be considered a subsequent offense under P.L.1960, c.39 (C.56:8-1 et seq.).

(cf: P.L.2014, c. , s.2, pending before the Legislature as Assembly Bill No. 625 of 2014)

3. This act shall take effect immediately but in no event shall be effective prior to the effective date of P.L.2014, c. (C. ) (pending before the Legislature as Assembly Bill No. 625 of 2014).

STATEMENT

This bill changes the penalties for a violation of the law prohibiting certain unsolicited checks, enacted as Assembly Bill No. 625 of 2014.

Under this law, no person may send an unsolicited check to an individual which, upon being cashed or redeemed, automatically obligates the recipient to pay any fee or enrolls that individual in any club, service, plan, or continuing agreement. A person violating this provision is subject to a civil penalty in an amount not to exceed $500 for a first violation and $1,000 for each subsequent violation.

Under this bill, a first violation is subject to a civil penalty of up to $500, and up to $1,000 for a second violation. A third violation is an unlawful practice under the consumer fraud act (CFA), P.L.1960, c.39 (C.56:8-1 et seq.), and would be considered a first offense under the CFA, with a fourth or additional violation considered a subsequent offense under the CFA.

An unlawful practice under the CFA is 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. Additionally, violations may result in cease and desist orders issued by the Attorney General, the assessment of punitive damages, and the awarding of treble damages and costs to the injured party.

As introduced and passed by both chambers of the Legislature, Assembly Bill No. 625 of 2014 supplemented the CFA and a violation of the provisions of Assembly Bill No. 625 were unlawful practices under the CFA. Subsequently, Assembly Bill No. 625 was conditionally vetoed by the Governor. In the recommendations for reconsideration, the Governor proposed removing the bill's provisions from the CFA, and the penalties set forth thereunder.

This bill is a compromise, by creating a two-tiered penalty structure. This bill intends to provide balance by establishing civil penalties for first and second violations and requiring the enhanced penalties of the CFA for repeat violators thereafter.