Zombie contracts targeted under NJ bill

Have you ever had a service contract automatically renew without your knowledge? A trio of New Jersey lawmakers are taking aim at companies that rope people into endless contracts by making it so difficult to get out of them.

One assemblyman called them Zombie contracts.

"I've heard a lot of people call them Zombie contracts because these are contracts that you just can't kill and it's really become a problem," said Assemblyman Dan Benson (D-Hamilton).

Benson is sponsoring a measure, along with Assemblymen Paul Moriarty (D-Turnersville) and John Wisniewski (D-Sayreville), that was unanimously approved by the full Assembly on May 14. The measure, which does not yet have a sponsor in the Senate, would require companies to notify customers when a contract is to be automatically renewed.

"Within 30 to 60 days prior to the deadline for cancellation you have to notify and tell people when does it (the contract) renew, for how long (and) are there any other charges," Benson said. "If they change the rules on how that's going to be done they have to notify the customer about that too."

According to Benson, in this era of automatic charges to credit cards or bank accounts, people often get endlessly roped into extended and costly contracts. He said if contract renewal terms had to be made clear, costumers would have the chance to review the contract and make an informed decision to continue or to terminate.

"Sometimes contracts are entered into a year, or even two years, before the automatic renewal clause kicks in," said Moriarty in an emailed press release. "This bill will protect consumers by ensuring that they have the opportunity to cancel any unwanted service prior to renewal of an additional term."

Late last month Acting Attorney General John Hoffman announced that New Jersey signed onto a multistate settlement agreement with Florists' Transworld Delivery, Inc. and its subsidiary FTD.com, Inc. The settlement also included the online social networking company Classmates.

A multistate investigation found that consumers who visited websites controlled by FTD and Classmates often were sold 'trial term' subscriptions by the two companies, but weren't adequately told that the subscriptions would renew automatically once the trial period ended and that their credit cards would be billed for the renewal until the costumer actively cancelled the subscription.

Under the agreement, FTD and Classmates are paying a total of $8 million to 22 participating states, including New Jersey.

The bill was first introduced in January 2014.