NJ lawmaker moves to ban unsolicited checks

AP News
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Posted: Nov 30, 2009 10:29 AM

One New Jersey lawmaker wants to stop a marketing technique that he believes is deceptive.

Assemblyman Paul Moriarty recently introduced legislation that would bar businesses from mailing consumers unsolicited checks that, once cashed or deposited, enroll them in costly programs. The measure will likely first be considered by the Consumer Affairs committee, although a hearing date has not been scheduled.

Moriarty says he was spurred to push the legislation after a constituent showed him an unsolicited $8.25 check they received from a business. Cashing the check would have enrolled the constituent in an automotive roadside assistance program that costs $15.99 per month.

"These 'free money' offers are at their best deceptive and, at their worst, downright dishonest," said Moriarty, D-Turnersville. "Right now, consumers are at their most vulnerable to fall for a scheme that appears to offer them instant cash but would end up costing them much more in the long-run."

If the proposed legislation becomes law, no person or business would be allowed to send consumers unsolicited checks which, upon being redeemed, would automatically charge the recipient a fee or enroll them in a club, service plan or other continuing agreement.

However, checks related to legitimate banking services or stemming from a pre-existing and direct business-to-consumer relationship would be permitted.

Violators would be cited under the state's Consumer Fraud Act and face up to $10,000 in fines for a first offense, and $20,000 for subsequent offenses, among other penalties.

"Instead of relying on tricks, companies looking to sell their services in New Jersey should go back to the old-fashioned way: earning consumers' trust," Moriarty said.

In the Senate, a similar measure has been introduced by Jeff Van Drew, D-Cape May County.