TRENTON, N.J. – Governor Chris Christie yesterday signed legislation (A756) that regulates the use of remote ignition disabling or “Kill-Switch” devices used by auto lenders and dealers to enforce payments. Christie had conditionally vetoed the initial bill sent to him in December of last year.
One credit union has already discontinued offering these loans because of the legislation. Members with impaired credit will now have to pay higher rates when financing a car, and may be forced to do business with less scrupulous lenders.
The legislation targets payment assurance devices that give lenders the ability to locate an automobile and disable its starter after missed payments. Initially proposed as a prohibition, the NJCUL successfully worked with the sponsors on regulatory standards as an alternative to an out-right ban.
While the legislation was amended to permit the use of such devices, the League continued to oppose it because of two provisions—the interest rate cap and the prohibition against making the borrower responsible for cost of the device. The NJCUL registered its opposition with the Governor’s Office.
In addition to some technical changes, the governor’s conditional veto let stand the fee prohibition but said the interest rate cap should be eliminated as the League had argued.
This new law takes effect July 1. A violation constitutes an unlawful practice under the Consumer Fraud Act, 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.
in Legislative & Political News