Missouri Senate

Senate Committee Substitute

DELIVERY OF MOTOR VEHICLE EXTENDED SERVICE CONTRACTS - This act makes it unlawful for a motor vehicle extended service contract provider to fail to deliver a fully executed motor vehicle extended service contract to the consumer within a commercially feasible time period (no more than 45 days), from the date the consumer's initial payment is processed. The act also makes it unlawful for any provider, administrator, or producer who sell such contracts to fail to deliver a copy of an unsigned copy of the written contract to the consumer, if requested, prior to the time the consumer's initial payment is processed. Offerors may also direct the consumer to a website containing an unsigned copy of the service contract. (Section 385.205).

LICENSING - The act also modifies who may sell motor vehicle extended service contracts. The authorized employees of motor vehicle dealers, motor vehicle manufacturers, lenders, and other entities may sell such contracts. Business entity producers or individual producers licensed under the provisions of this act as may sell such contracts. Business entity producers must pay an initial and renewal licensure fee not to exceed $100. Individual producers must pay an initial and renewal licensure fee not to exceed $25. Examinations for individual producers are waived. Producer licenses issued under the act are valid for a period of 2 years and must be renewed biennially. Business entities must provide a list to the director of all of their locations at which they offer service contracts (Section 385.207).

FREE LOOK PERIOD - The act modifies the free look period provision for reviewing a motor vehicle extended service contract. Under the act, motor vehicle extended service contracts shall contain a free look period that allows the purchaser to return the contract to the provider within at least 20 business days of the mailing date of the contract or the purchase date if the contract is executed and delivered at the time of sale. If a claim is made under the contract during the free look period, the provider shall refund to the contract holder the full purchase price less any claims that have been paid (Section 385.206.14). The act further provides that a motor vehicle extended service contract shall state that a service contract holder may cancel the contract after the free look period at any time and the provider must refund 100% of the unearned pro rata provider fee, less any claims paid. A reasonable administrative fee may be surcharged by the provider in an amount not to exceed $50 (Section 385.206.13).

DECEPTIVE PRACTICES - The act modifies the law regarding what constitutes a deceptive practice under the motor vehicle extended service contract act. The act forbids providers, administrators, and other sellers of such contracts from using the word "warranty" in their materials. In addition, such entities shall not represent in any manner a false or deceptive statement with respect to:

(1) An affiliation with a motor vehicle manufacturer or dealer;

(2) Possession of information regarding a motor vehicle owner's current motor vehicle manufacturer's original equipment warranty;

(3) The expiration of a motor vehicle owner's current motor vehicle manufacturer's original equipment warranty;

(4) A requirement that such motor vehicle owner register for a new motor vehicle extended service contract with such provider in order to maintain coverage under the motor vehicle owner's current motor vehicle extended service contract or manufacturer's original equipment warranty; or

(5) Any term or provision of a motor vehicle extended service contract.

The act also makes it unlawful for a person to use fraud in the connection with the offer or sale of a motor vehicle extended service contract. Employing fraud in connection with the sale of a motor vehicle extended service contract is a level 3 violation under the insurance code (civil penalties of $5,000 per violation, etc.). In addition, persons engaged in fraud in connection with the sale of a service contract shall be guilty of a felony, be subject to imprisonment for a term not to exceed 10 years, and be ordered to pay restitution(Section 385.208).

SUSPENSION AND REVOCATION OF LICENSE - The act establishes the statutory reasons for which the director may suspend or revoke a license to sell motor vehicle extended service contracts. For example, the director may suspend an individual's license for having been convicted of a felony or a crime involving moral turpitude. The act also establishes the appeals process an aggrieved license holder may follow if the holder's license is suspended or revoked. Appeals shall be made to the administrative hearing commission. The act also requires motor vehicle extended service contract producers to notify the director of address changes, license revocations, or civil actions within 30 days. In addition, producers must report to the director any felony proceedings initiated by any state or the federal government within 30 days of the initial pretrial hearing date or arraignment (Section 385.209).

REGISTRY OF MOTOR VEHICLE EXTENDED SERVICE PRODUCERS - Under the act, a provider registered to issue motor vehicle extended service contracts must maintain a register of business entity producers who are authorized to sell such contracts in this state. Within 30 days of a provider authorizing a producer to sell motor vehicle extended service contracts, the provider shall enter the name and license number of the producer in the company registry of appointed motor vehicle extended service contract producers. Within 30 days of a provider terminating a business entity producer's appointment to sell motor vehicle extended service contracts, the provider shall update the registry with the effective date of the termination. Under the act, providers having information relating to any cause for discipline under the act must notify the director of this information in writing (Section 385.211).

STEPHEN WITTE