On December 19, 2016, the New Jersey Senate passed a bill requiring auto lenders to provide notice prior to installing “payment assurance devices” that can remotely disable an owner’s vehicle for failure to make a payment. 

The bill defines a “payment assurance device” as “a device installed on a motor vehicle with global positioning system capability, starter interrupt capability allowing for the remote enabling or disabling of the motor vehicle, or both, and which is installed pursuant to a motor vehicle consumer’s financing agreement or lease agreement.”

In order to install a payment assurance device, an auto lender must first provide written notice of its installation to the purchaser at the time of purchase and not charge the purchaser for the installation. 

For the auto lender to use the payment assurance device and disable the vehicle, the purchaser must be seven or more days in default “on any term under the financing agreement or lease agreement, including but not limited to the periodic payment due on the purchase or lease.”  In addition, the purchaser must be provided at least seventy-two hours warning before the vehicle is disabled remotely.  The purchaser must also be provided with the ability to start a disabled motor vehicle and use it for at least forty-eight hours in the event of an emergency.  The bill does not address how responsive the auto lender must be to such a request, or what would qualify as an emergency.

Currently, there are no laws in the state of New Jersey that explicitly restrict the use of payment assurance devices.  A bill co-sponsored by New Jersey Assemblymember Paul Moriarty in January 2015, A-4033, that would have prevented auto lenders from using payment assurance devices under any circumstances, did not make it out of chamber and was never advanced for a vote.  Assemblymember Moriarty proposed A-4033 because of allegations of the use of payment assurance devices while the vehicle was in use.  “We have had information about the use of these devices where people are driving down the highway and because they’re a day late on a loan, their car gets turned off while they’re driving and we’ve had people stranded at shopping centers with their kids and they weren’t able to start their car because it was turned off,” Moriarty said. 

The legislation follows on the heels of research performed by Charlie Miller and Chris Valasek, who demonstrated that certain vehicle data access ports could be used to cause late model vehicles to behave in an erratic and unsafe manner. 

The bill, A-756, first passed the New Jersey Assembly by a vote of 53-21, and cleared the New Jersey Senate by a vote of 25-11.  The bill now goes to the desk of Governor Chris Christie.

The bill can be found here.