Good news for buy-here, pay-here dealerships in New Jersey — and perhaps in other states, too. Garden State dealers can continue to utilize GPS and starter-interrupt devices.
The National Independent Automobile Dealers Association capped a prolonged lobbying effort with a last-minute charge that prevented anti-consumer provisions in a proposed bill from becoming law in New Jersey.
As originally introduced, Assembly Bill 756 would have prevented the use of GPS and starter-interrupt devices as a condition to financing.
NIADA, through its Buy Here-Pay Here Commission, worked closely with its state affiliate — the New Jersey Independent Automobile Dealers Association (NJIADA) — and the Telematics Service Providers Association (TSPA) to express the industry’s opposition to many provisions in the bill.
“Originally, the bill was an all-out ban on the device and its usage, which would have a huge detriment to the dealers and creditors in New Jersey,” said TSPA’s Corinne Kirkendall, who also is vice president of compliance and public relations at PassTime.
“In our discussions, we slowly changed the dialogue,” Kirkendall continued during a phone conversation with BHPH Report about those meetings with lawmakers that first started back in 2015.
NIADA submitted written comments opposing the bill and mobilized BHPH Commission member and New Jersey dealer Mike Brill to testify before multiple legislative committees and meet with key legislators.
Despite those discussions, the legislature passed a subsequent draft of the bill that removed the outright ban but included other provisions that would have adversely impacted dealers’ ability to use payment assurance devices, including a provision requiring dealers using the technology to reduce customers’ interest rates by 10 percent.
After a meeting between his staff and NIADA and its industry partners, Gov. Chris Christie conditionally vetoed the bill and returned it to the legislature with instructions to remove the anti-consumer provisions.
“Our relationship with the governor’s office was really the crucial point in getting the right bill put forward,” Kirkendall said. “His conditional veto changed this bill dramatically. We’re very fortunate to have him work with us and be on our side so the devices could still be used in New Jersey.”
The legislature, including the original sponsors, has approved the bill with the governor’s changes. The governor is expected to sign the bill in the near future.
“We applaud the leadership of Gov. Christie for recognizing the harm that would have come to New Jersey consumers had the over-burdensome requirements originally contained in this bill become law,” NIADA chief executive officer Steve Jordan said in a news release. “The responsible use of payment assurance technology opens opportunities for consumers to get more vehicle and better credit terms.”
Once the bill takes effect, dealers installing payment assurance devices on vehicles as a condition of financing will be required to disclose the existence of the device and whether it has the ability to disable the vehicle’s starter remotely.
Dealers using starter-interrupt technology will not be permitted to disable a vehicle’s starter until a consumer is in default for at least five days on a contract requiring weekly installment payments, and at least 10 days on a contract requiring other installment payments.
Dealers will also be required to warn the consumer at least 72 hours before disabling the starter.
“There are certainly things in that bill that I would advocate as industry best practices, the written disclosure document being one of them,” NIADA senior vice president of legal and government affairs Shaun Petersen told BHPH Report.
“Whether you’re in New Jersey and are required to do that now by law or whether you’re in the state of Texas and not required by law to do it necessarily but should do it as a best practice, it’s a part of what’s recommended that dealers do when using these devices,” Petersen continued.
Petersen and NIADA encouraged BHPH dealers in New Jersey to review their written payment assurance device disclosure document and their policies and procedures for compliance with the new law.
The law will take effect on the first day of the fourth month after the governor signs it.
“The amended bill is now advantageous for both dealers and consumers. It allows transparency for dealers and allows right to cure for consumers, which was never possible in New Jersey before,” NJIADA executive director Paula Frendel said in a news release.
Anthony Bush of Eckert Seamans Cherin & Mellott also worked with NJIADA in the lobbying effort.
“It is important to recognize that this bill provides significant new protections to consumers but also allows dealers that sell to economically challenged individuals to continue to operate profitably,” Bush said in a news release.
BHPH Report closed its conversation with Kirkendall and Petersen asking about the prospects for similar proposals banning GPS and starter-interrupt devices might develop in other states.
“The biggest thing in any kind of lobbying effort — and it certainly played out here — is there is so much education that needs to be done, not just on this issue but across the industry, helping legislators understand all the intricacies of the used-car industry, all of the intricacies in how that fits into the overall auto industry and how that fits into the economy,” Petersen said.
“There is so much that they don’t know and dealers in their sphere, companies like PassTime in their sphere, and all the associations have an important role,” he continued. “That education process made all the difference in getting the sponsor of the ban to at least understand how these things work, to walk them through about how these things work, here’s how they’re used at the dealership, here’s how they benefit the consumer. Eyes start to open and that process of education makes all of the difference.
“I certainly think there’s no need for additional legislation percolating across states because we’ve got these best practices that dealers are involved in. I don’t think state legislatures need to look at New Jersey and say we need something like that,” Petersen went on to say.
Kirkendall added, “We are all for responsible, reasonable legislation. We will actively fight bans because that’s bad for everyone. We’ll be working hard if other states pick this up and continue to educate them to the best of our abilities.”