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House
File
2714
-
Introduced
HOUSE
FILE
2714
BY
COMMITTEE
ON
COMMERCE
(SUCCESSOR
TO
HSB
517)
A
BILL
FOR
An
Act
relating
to
licensing
of
service
companies,
motor
1
vehicle
service
contracts,
and
residential
service
2
contracts,
and
providing
civil
penalties.
3
BE
IT
ENACTED
BY
THE
GENERAL
ASSEMBLY
OF
THE
STATE
OF
IOWA:
4
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Section
1.
Section
523C.1,
Code
2026,
is
amended
by
adding
1
the
following
new
subsections:
2
NEW
SUBSECTION
.
1A.
“Communicating
in
a
verifiable
3
manner”
means
communication
by
in-person
delivery,
first
4
class
mail,
email,
or,
if
there
is
an
auditable
record
of
the
5
communication,
by
telephone
or
software
application
on
an
6
electronic
device.
7
NEW
SUBSECTION
.
1B.
“Gross
consideration”
means
the
total
8
value
of
a
service
contract
without
deducting
any
expenses
or
9
costs.
10
NEW
SUBSECTION
.
6A.
“Person”
means
an
individual
or
a
11
business
entity.
12
NEW
SUBSECTION
.
12A.
“Service
contract
holder”
means
the
13
original
purchaser
of
a
service
contract
or
the
successor
in
14
interest
or
transferee
entitled
to
services
under
the
service
15
contract.
16
NEW
SUBSECTION
.
12B.
“Substitute
part”
means
a
part
that
is
17
not
issued
by
the
original
part
manufacturer,
including
but
not
18
limited
to
a
remanufactured
part,
an
aftermarket
part,
and
a
19
part
obtained
from
a
salvage
yard.
20
NEW
SUBSECTION
.
12C.
“Support
services”
means
a
person
that
21
provides
services
that
support,
or
a
person
that
works
under
22
the
direction
of,
a
licensed
service
company
in
connection
with
23
the
issuance,
offer
for
sale,
sale,
or
administration
of
a
24
service
contract
in
this
state,
including
but
not
limited
to
a
25
person
that
provides
marketing,
administrative,
or
technical
26
support
to
a
service
company.
27
Sec.
2.
Section
523C.1,
subsection
4,
Code
2026,
is
amended
28
to
read
as
follows:
29
4.
“Motor
vehicle”
means
any
vehicle
that
is
self-propelled
30
vehicle
and
subject
to
registration
under
chapter
321
.
31
Sec.
3.
Section
523C.1,
subsection
10,
Code
2026,
is
amended
32
to
read
as
follows:
33
10.
“Residential
service
contract”
means
a
contract
or
34
agreement
between
a
residential
customer
and
a
service
company
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which
undertakes,
for
a
predetermined
fee
and
for
any
period
1
of
time,
to
service,
maintain,
repair,
replace,
or
indemnify
2
expenses
for
all
or
any
part
of
the
operational
or
structural
3
components,
appliances,
or
electrical,
mechanical,
plumbing,
4
heating,
cooling,
or
air-conditioning
systems
of
residential
5
property
in
the
state
which
fails
due
to
normal
wear
or
tear
or
6
inherent
defect
.
“Residential
service
contract”
also
includes
7
a
contract
which
provides
for
the
service,
repair,
replacement,
8
or
maintenance
of
property
for
,
or
damage
resulting
from
power
9
surges,
roof
leakage,
and
or
accidental
damage.
10
Sec.
4.
Section
523C.2,
Code
2026,
is
amended
by
striking
11
the
section
and
inserting
in
lieu
thereof
the
following:
12
523C.2
License
required.
13
1.
A
person
shall
not,
directly
or
indirectly,
issue,
14
offer
for
sale,
or
sell,
a
motor
vehicle
service
contract
or
15
residential
service
contract
in
this
state
unless
the
person
16
is
licensed
under
this
chapter.
17
2.
This
chapter
shall
not
apply
to
any
person
that
provides
18
support
services.
A
service
company
that
utilizes
support
19
services
shall
ensure
the
support
services’
compliance
with
the
20
issuance,
offer
for
sale,
or
sale
of
a
service
contract
under
21
this
chapter.
22
3.
A
service
company
shall
maintain
a
license
for
the
23
duration
of
time
that
the
service
company
is
contractually
24
obligated
to
a
service
contract
holder
under
the
terms
of
a
25
service
contract,
unless
otherwise
ordered
by
the
commissioner
26
after
a
hearing
conducted
pursuant
to
chapter
17A.
27
4.
A
service
company
shall
report
to
the
commissioner
28
within
thirty
calendar
days
any
material
change
to
the
29
information
submitted
by
the
service
company
in
the
service
30
company’s
initial
license
application,
or
license
renewal
31
application,
including
a
change
in
the
service
company’s
32
contact
information,
ownership,
officers
or
directors
directly
33
responsible
for
the
provider’s
service
contract
business,
34
or
any
other
change
that
substantially
affects
the
service
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company’s
operations
in
the
state.
1
5.
A
service
company
shall
report
to
the
commissioner
any
2
administrative
action
taken
against
the
service
company
related
3
to
the
service
company’s
service
contract
business
in
another
4
jurisdiction
within
thirty
calendar
days
of
final
disposition
5
of
the
administrative
action.
The
report
must
include
a
copy
6
of
the
order,
consent
to
the
order,
and
other
relevant
legal
7
documents.
8
6.
Within
thirty
calendar
days
of
the
initial
pretrial
9
hearing
date,
a
service
company
shall
report
to
the
10
commissioner
a
criminal
prosecution
in
any
jurisdiction
of
an
11
owner
with
more
than
a
ten
percent
ownership
stake,
an
officer,
12
or
a
director
directly
responsible
for
the
service
contract
13
business
of
the
service
company,
for
an
offense
involving
14
dishonesty
or
a
false
statement
including
but
not
limited
15
to
fraud,
theft,
misappropriation
of
funds,
falsification
16
of
documents,
deceptive
acts
or
practices,
or
other
related
17
offenses.
The
report
must
include
a
copy
of
the
initial
18
complaint
filed,
the
order
resulting
from
the
hearing,
and
any
19
other
relevant
legal
documents.
20
7.
A
residential
service
contract
and
a
motor
vehicle
21
service
contract
shall
not
be
considered
insurance.
22
Sec.
5.
Section
523C.3,
Code
2026,
is
amended
by
striking
23
the
section
and
inserting
in
lieu
thereof
the
following:
24
523C.3
Application
for
license.
25
1.
Application
for
a
license
as
a
service
company
shall
26
be
filed
with
the
commissioner
on
a
form
approved
by
the
27
commissioner
and
must
include
all
of
the
following
information:
28
a.
The
name
and
principal
address
of
the
applicant.
29
b.
The
state
of
incorporation
of
the
applicant.
30
c.
The
name
and
address
of
the
applicant’s
registered
agent
31
for
service
of
process
in
Iowa.
32
d.
The
legal
name
of
all
of
the
following:
33
(1)
Each
owner
of
the
service
company
that
has
a
greater
34
than
ten
percent
ownership
stake
in
the
service
company.
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(2)
Each
officer
of
the
service
company.
1
(3)
Each
director
directly
responsible
for
the
business
of
2
the
service
company.
3
e.
Evidence
that
the
applicant
has
obtained
any
necessary
4
authority
from
the
secretary
of
state
to
transact
business
in
5
this
state.
An
applicant
whose
home
state
is
not
this
state
6
shall
provide
a
certification,
dated
not
more
than
thirty
7
calendar
days
after
the
date
of
submission
of
an
application,
8
from
the
applicant’s
home
state
that
certifies
the
applicant
is
9
in
good
standing
in
the
applicant’s
home
state.
10
f.
Evidence
of
compliance
with
section
523C.5.
11
g.
A
copy
of
each
motor
vehicle
service
contract
form
to
be
12
used,
issued,
or
offered
for
sale
in
this
state
by
the
service
13
company.
14
h.
A
copy
of
each
residential
service
contract
form
to
be
15
used,
issued,
or
offered
for
sale
in
this
state
by
the
service
16
company.
17
i.
A
national
association
of
insurance
commissioners’
18
biographical
affidavit
and
the
verification
of
the
biographical
19
affidavit
for
the
chief
executive
officer
and
chief
financial
20
officer
of
the
service
company,
or
for
the
individuals
in
21
the
equivalent
positions.
The
service
company
shall
use
a
22
third-party
vendor
from
a
list
of
vendors
approved
by
the
23
commissioner
to
verify
the
biographical
affidavits.
The
24
service
company
shall
pay
all
costs
associated
with
the
25
required
verifications.
26
j.
A
list
of
any
disciplinary
actions
taken
against
the
27
service
company,
or
any
of
the
service
company’s
owners
who
28
have
an
ownership
stake
in
the
service
company
of
more
than
29
ten
percent,
officers,
or
directors
directly
responsible
for
30
the
provider’s
service
contract
business,
in
the
immediately
31
preceding
five
consecutive
years
by
a
regulatory
agency
or
32
state
attorney
general
in
any
jurisdiction.
33
2.
The
application
must
be
accompanied
by
a
license
fee
in
34
the
amount
of
five
hundred
dollars.
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3.
If
the
application
for
a
service
company
license
contains
1
the
information
under
subsection
1,
is
accompanied
by
the
2
fees
under
subsection
2,
includes
any
additional
information
3
requested
by
the
commissioner
to
verify
the
information
in
4
the
application,
and
the
commissioner
has
not
denied
the
5
application
pursuant
to
section
523C.9,
the
commissioner
shall
6
issue
the
license
to
the
applicant.
7
4.
Fees
collected
under
this
section
shall
be
deposited
8
into
the
service
company
oversight
fund
as
provided
in
section
9
523C.24.
10
Sec.
6.
Section
523C.4,
Code
2026,
is
amended
by
striking
11
the
section
and
inserting
in
lieu
thereof
the
following:
12
523C.4
License
expiration
and
renewal.
13
1.
A
license
issued
under
this
chapter
shall
be
valid
for
a
14
period
of
one
year
and
shall
be
renewed
annually
on
or
before
15
August
31.
A
licensee
must
apply
for
renewal
at
least
ninety
16
calendar
days
prior
to
the
license
expiration
date.
A
license
17
that
is
not
renewed
prior
to
the
expiration
date
shall
be
18
deemed
expired.
19
2.
An
application
for
license
renewal
must
include
the
20
information
required
for
an
initial
license
as
described
in
21
section
523C.3,
subsection
1,
paragraphs
“a”
through
“f”
,
22
and
a
list
of
each
service
contract
form
the
service
company
23
continues
to
use,
offer
for
sale,
or
issue
in
the
state,
24
including
the
service
contract
form
name,
number,
and
the
date
25
the
form
was
last
revised.
26
3.
The
license
renewal
application
must
be
accompanied
by
27
all
of
the
following:
28
a.
A
license
renewal
fee
in
the
amount
of
two
hundred
29
dollars.
30
b.
A
fee
in
the
amount
of
three
percent
of
the
aggregate
31
amount
of
payments
the
service
company
received
for
the
sale
or
32
issuance
of
residential
service
contracts
in
this
state,
less
33
any
refunds
issued,
during
the
immediately
preceding
calendar
34
year,
provided
that
such
fee
must
be
no
greater
than
fifty
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thousand
dollars.
1
c.
In
a
format
prescribed
by
the
commissioner,
information
2
regarding
service
contracts
in
this
state
for
the
service
3
company
in
the
immediately
preceding
calendar
year
itemized
as
4
follows:
5
(1)
The
number
of
motor
vehicle
service
contracts
issued.
6
(2)
The
number
of
residential
service
contracts
issued.
7
(3)
The
number
of
motor
vehicle
service
contracts
canceled.
8
(4)
The
number
of
residential
service
contracts
canceled.
9
(5)
The
number
of
motor
vehicle
service
contracts
that
10
expired.
11
(6)
The
number
of
residential
service
contracts
that
12
expired.
13
(7)
The
number
of
motor
vehicle
service
contracts
in
effect
14
on
December
31
of
the
immediately
preceding
calendar
year.
15
(8)
The
number
of
residential
service
contracts
in
effect
on
16
December
31
of
the
immediately
preceding
calendar
year.
17
(9)
The
total
dollar
amount
of
motor
vehicle
service
18
contract
fees
received
by
the
service
company.
19
(10)
The
total
dollar
amount
of
residential
service
20
contract
fees
received
by
the
service
company.
21
4.
If
the
license
renewal
application
complies
with
this
22
section,
includes
any
additional
information
requested
by
the
23
commissioner
to
verify
the
information
in
the
application,
and
24
the
commissioner
has
not
refused
to
renew
the
license
pursuant
25
to
section
523C.9,
the
commissioner
shall
renew
the
license.
26
If
the
commissioner
refuses
renewal
of
a
license
pursuant
to
27
section
523C.9,
the
refusal
shall
be
in
writing
setting
forth
28
the
grounds
for
the
refusal.
29
5.
If
a
service
company
submits
a
license
renewal
30
application
after
the
license
has
expired,
the
service
company
31
shall
pay
a
reinstatement
fee
of
eight
hundred
dollars,
and
the
32
applicable
fees
pursuant
to
subsection
3.
33
6.
A
service
company
whose
license
has
expired
shall
not
34
offer,
extend,
or
renew
a
service
contract
until
the
service
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company’s
license
has
been
renewed
or
the
service
company
has
1
been
issued
a
new
license.
2
Sec.
7.
Section
523C.7,
Code
2026,
is
amended
by
striking
3
the
section
and
inserting
in
lieu
thereof
the
following:
4
523C.7
Disclosure
to
service
contract
holders
——
contract
5
form
——
required
provisions.
6
1.
A
service
contract
shall
not
be
issued,
sold,
or
offered
7
for
sale
in
this
state
unless
the
service
company
does
all
of
8
the
following:
9
a.
Provides
a
receipt
for
the
purchase
of
the
service
10
contract
to
the
service
contract
holder.
11
b.
Provides
a
complete
sample
copy
of
the
service
contract
12
to
the
consumer
prior
to
purchase.
A
service
company
may
13
comply
with
this
paragraph
by
providing
the
consumer
with
a
14
complete
electronic
sample
copy
of
the
service
contract,
or
15
directing
the
consumer
to
a
complete
sample
copy
of
the
service
16
contract
on
an
internet
site.
17
c.
Provides
a
fully
executed
paper
or
electronic
copy
of
18
the
service
contract
to
the
service
contract
holder
within
ten
19
business
days
of
the
date
the
service
contract
holder
purchased
20
the
service
contract.
A
paper
copy
of
the
executed
service
21
contract
shall
be
provided
to
the
service
contract
holder
upon
22
request
of
the
service
contract
holder
at
the
expense
of
the
23
service
company.
24
2.
A
service
contract
issued,
sold,
or
offered
for
sale
in
25
the
state
must
comply
with
all
of
the
following,
as
applicable:
26
a.
A
service
contract
must
be
written
in
clear,
27
understandable
language
in
at
least
eight
point
type.
28
b.
(1)
A
service
contract
insured
under
a
reimbursement
29
insurance
policy
as
provided
in
section
523C.5,
subsection
1,
30
must
include
a
statement
in
substantially
the
following
form:
31
Obligations
of
the
service
company
under
this
service
contract
32
are
guaranteed
under
a
reimbursement
insurance
policy.
If
the
33
service
company
fails
to
pay
or
provide
service
on
a
claim
34
within
sixty
days
after
proof
of
loss
has
been
filed
with
35
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the
service
company,
the
service
contract
holder
is
entitled
1
to
make
a
claim
directly
against
the
reimbursement
insurance
2
policy.
3
(2)
A
service
contract
insured
under
a
reimbursement
4
insurance
policy
must
conspicuously
state
the
name
and
address
5
of
the
issuer
of
the
reimbursement
insurance
policy
for
that
6
service
contract.
A
claim
against
a
reimbursement
insurance
7
policy
must
also
include
a
claim
for
return
of
any
refund
due
8
in
accordance
with
paragraphs
“m”
and
“n”
.
9
c.
A
service
contract
not
insured
under
a
reimbursement
10
insurance
policy
must
contain
a
statement
in
substantially
the
11
following
form:
12
Obligations
of
the
service
company
under
this
service
contract
13
are
backed
by
the
full
faith
and
credit
of
the
service
company
14
and
are
not
guaranteed
under
a
reimbursement
insurance
policy.
15
d.
A
service
contract
must
state
the
name
and
address
of
16
the
service
company
obligated
to
perform
services
under
the
17
contract,
and
must
conspicuously
identify
the
service
company,
18
any
third-party
administrator,
and
the
service
contract
holder
19
to
the
extent
that
the
name
and
address
of
the
service
contract
20
holder
has
been
furnished.
The
identities
of
such
parties
21
shall
not
be
required
to
be
printed
on
the
contract
in
advance
22
and
may
be
added
to
the
contract
at
the
time
of
sale.
23
e.
A
service
contract
must
clearly
state
the
total
purchase
24
price
of
the
service
contract
and
the
terms
under
which
the
25
service
contract
is
sold.
The
total
purchase
price
shall
not
26
be
required
to
be
printed
on
the
contract
in
advance
and
may
be
27
added
to
the
contract
at
the
time
of
sale.
28
f.
If
prior
approval
of
repair
work
is
required,
a
service
29
contract
must
conspicuously
describe
the
procedure
for
30
obtaining
prior
approval
and
for
making
a
claim,
including
a
31
toll-free
telephone
number
for
claim
service,
and
the
procedure
32
for
obtaining
emergency
repairs
performed
outside
of
normal
33
business
hours.
34
g.
A
service
contract
must
clearly
state
any
waiting
period
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applicable
to
coverage
under
the
service
contract.
1
h.
A
service
contract
must
clearly
state
the
existence
of
2
any
deductible
amount.
3
i.
A
service
contract
must
specify
the
merchandise
or
4
services,
or
both,
to
be
provided
and
any
limitations,
5
exceptions,
or
exclusions.
6
j.
A
service
contract
must
clearly
state
the
conditions
on
7
which
the
use
of
substitute
parts
or
services
will
be
allowed.
8
Such
conditions
must
comply
with
applicable
state
and
federal
9
laws.
10
k.
A
service
contract
must
clearly
state
any
terms,
11
restrictions,
or
conditions
governing
the
transferability
of
12
the
service
contract.
13
l.
A
service
contract
must
clearly
state
the
instructions
14
for
cancellation
of
the
service
contract
by
the
service
15
contract
holder.
Cancellation
instructions
must
include
the
16
phone
number,
email
address,
or
mailing
address
necessary
for
17
the
cancellation
of
the
service
contract.
A
service
company
18
shall
accept
cancellation
of
a
service
contract
from
a
service
19
contract
holder
by
email
or
by
the
method
utilized
by
the
20
service
company
to
enter
into
the
service
contract
with
the
21
service
contract
holder.
22
m.
A
service
contract
must
clearly
state
the
terms
and
23
conditions
governing
the
cancellation
of
the
contract
prior
24
to
the
termination
or
expiration
date
of
the
contract
by
the
25
service
company
or
the
service
contract
holder.
If
the
service
26
company
cancels
the
contract,
the
service
company
shall
mail
a
27
written
notice
of
termination
to
the
service
contract
holder
at
28
least
fifteen
calendar
days
before
the
date
of
the
termination.
29
Prior
notice
of
cancellation
by
the
service
company
shall
not
30
be
required
if
the
reason
for
cancellation
is
nonpayment
of
the
31
purchase
price,
a
material
misrepresentation
by
the
service
32
contract
holder
to
the
service
company
or
the
support
services
33
for
the
service
company,
or
a
substantial
breach
of
duty
by
the
34
service
contract
holder
relating
to
the
covered
product
or
use
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of
the
covered
product.
The
notice
of
cancellation
must
state
1
the
effective
date
of
the
cancellation
and
the
reason
for
the
2
cancellation.
If
a
service
contract
is
canceled
by
the
service
3
company
for
any
reason
other
than
nonpayment
of
the
purchase
4
price,
the
service
company
shall
refund
the
service
contract
5
holder
in
an
amount
equal
to
one
hundred
percent
of
the
6
unearned
purchase
price
paid,
calculated
on
a
pro
rata
basis
7
based
upon
elapsed
time
or
mileage,
less
any
claims
paid.
The
8
service
company
may
also
charge
a
reasonable
administrative
fee
9
in
an
amount
no
greater
than
ten
percent
of
the
total
purchase
10
price.
A
ten
percent
penalty
shall
be
added
to
the
refund
each
11
month
if
the
refund
is
not
paid
to
the
service
contract
holder
12
within
thirty
calendar
days.
13
n.
(1)
A
service
contract
must
permit
the
original
service
14
contract
holder
who
purchased
the
contract
to
cancel
the
15
service
contract
within
at
least
thirty
calendar
days
of
the
16
effective
date
of
the
service
contract,
provided
no
claims
17
have
been
paid
under
the
service
contract,
or
within
a
longer
18
period
of
time
as
permitted
under
the
service
contract.
If
19
a
claim
has
not
been
paid
under
the
service
contract
prior
20
to
cancellation
by
the
service
contract
holder,
the
service
21
contract
is
void
and
the
full
purchase
price
of
the
service
22
contract
shall
be
refunded
to
the
service
contract
holder.
A
23
ten
percent
penalty
shall
be
added
to
the
refund
each
month
if
24
the
refund
is
not
paid
to
the
service
contract
holder
within
25
thirty
calendar
days,
unless
the
service
contract
holder
fails
26
to
provide
the
information
required
by
the
service
contract
to
27
complete
the
cancellation.
28
(2)
If
the
service
contract
holder
cancels
the
service
29
contract
in
violation
of
subparagraph
(1),
the
service
company
30
shall
refund
the
service
contract
holder
an
amount
equal
to
one
31
hundred
percent
of
the
unearned
purchase
price
paid,
calculated
32
on
a
pro
rata
basis
based
upon
elapsed
time
or
mileage,
33
less
any
claims
paid.
The
service
company
may
also
charge
a
34
reasonable
administrative
fee
in
an
amount
no
greater
than
ten
35
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percent
of
the
total
purchase
price.
A
ten
percent
penalty
1
shall
be
added
to
a
refund
each
month
if
the
refund
is
not
paid
2
to
the
service
contract
holder
within
thirty
calendar
days
of
3
the
service
contract
cancellation
request,
unless
the
service
4
contract
holder
fails
to
provide
the
information
required
in
5
the
service
contract
to
complete
the
cancellation.
6
o.
A
service
contract
must
set
forth
all
obligations
and
7
duties
of
the
service
contract
holder,
including
but
not
8
limited
to
the
duty
to
protect
against
any
further
damage,
and
9
the
obligation
to
follow
an
owner’s
manual
and
to
perform,
or
10
have
performed,
all
required
service
or
maintenance.
11
p.
A
service
contract
must
clearly
state
if
the
contract
12
covers
or
excludes
consequential
damages
and
preexisting
13
conditions,
if
applicable.
A
service
contract
may,
but
is
not
14
required
to,
cover
damage
resulting
from
rust,
corrosion,
or
15
damage
caused
by
a
part
or
system
not
covered
under
the
service
16
contract.
17
q.
A
service
contract
must
clearly
state
the
service
call
18
fee,
if
any,
charged
to
the
service
contract
holder.
19
r.
A
service
contract
must
state
the
name
and
address
of
20
the
commissioner,
the
current
toll-free
telephone
number
of
the
21
division,
and
a
statement
that
a
consumer
may
file
a
complaint
22
with
the
division,
including
by
filing
a
complaint
on
the
23
division’s
internet
site.
24
s.
A
service
contract
must
state
that
if
the
claim
covered
25
under
a
residential
service
contract
relates
to
the
total
loss
26
of
heating,
cooling,
plumbing,
or
refrigeration,
or
substantial
27
loss
of
electrical
service,
and
the
claim
being
made
by
the
28
service
contract
holder
is
essential
to
the
health
and
safety
29
of
the
service
contract
holder
or,
if
applicable,
the
service
30
contract
holder’s
family,
the
service
company
shall
ensure
all
31
of
the
following:
32
(1)
Repair
or
replacement
of
the
essential
good
commences
33
within
forty-eight
hours
after
the
report
of
the
claim,
and
is
34
completed
as
soon
as
reasonably
practicable.
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(2)
Notice
is
provided
to
the
service
contract
holder
if
a
1
repair
cannot
practicably
be
completed
within
three
calendar
2
days
after
the
report
of
the
claim.
The
service
company
shall
3
provide
a
status
report
to
the
service
contract
holder
by
4
communicating
in
a
verifiable
manner
as
soon
as
practicable,
5
but
no
later
than
three
calendar
days
after
the
date
of
the
6
report
of
the
claim.
The
status
report
must
include
all
of
the
7
following:
8
(a)
A
list
of
all
required
repairs,
replacements,
or
9
services
and
the
estimated
cost
to
the
service
contract
holder.
10
(b)
The
primary
reason
the
required
repair,
replacement,
or
11
service
will
take
longer
than
three
calendar
days,
including
12
the
status
of
all
parts
required
for
the
repair,
replacement,
13
or
service.
14
(c)
The
current
estimated
length
of
time
to
complete
the
15
repair,
replacement,
or
service.
16
(d)
The
telephone
number
of
the
service
company
in
the
17
event
the
service
contract
holder
or
the
commissioner
wants
18
to
make
an
inquiry
concerning
the
claim,
and
a
commitment
by
19
the
service
company
to
respond
to
an
inquiry
no
later
than
one
20
business
day
after
the
date
the
inquiry
is
received.
21
(e)
A
statement
that
if
the
service
contract
holder
is
not
22
satisfied
with
the
manner
in
which
the
service
company
handles
23
the
claim
under
the
terms
of
a
service
contract,
the
service
24
contract
holder
may
file
a
complaint
with
the
division
on
the
25
division’s
internet
site.
26
Sec.
8.
NEW
SECTION
.
523C.8
Service
contract
forms
——
fees.
27
1.
A
service
company
shall
file
with
the
division
an
28
accurate
copy
of
each
service
contract
form
prior
to
using
the
29
service
contract
form
for
the
sale
of
a
service
contract
in
30
this
state.
31
2.
At
the
time
of
filing
a
new
or
modified
motor
vehicle
32
service
contract
form
with
the
division
a
service
company
shall
33
pay
a
fee
in
the
amount
of
thirty-five
dollars
for
a
new
or
34
modified
motor
vehicle
service
contract
form
filed
with
the
35
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division.
1
3.
Notwithstanding
section
523C.7,
a
service
company
may
2
continue
to
use
a
service
contract
form
that
is
noncompliant
3
with
this
chapter
until
January
1,
2028,
provided
no
changes
4
are
made
to
the
service
contract
form
and
the
service
contract
5
form
was
filed
with
the
division
before
July
1,
2026.
6
Sec.
9.
Section
523C.9,
Code
2026,
is
amended
by
striking
7
the
section
and
inserting
in
lieu
thereof
the
following:
8
523C.9
License
denial,
nonrenewal,
suspension,
or
revocation.
9
1.
The
commissioner
may,
at
the
commissioner’s
discretion
10
and
without
advance
notice
or
hearing,
immediately
suspend
a
11
service
company’s
license
if
the
commissioner
finds
that
any
of
12
the
following
are
true:
13
a.
The
service
company
is
insolvent
or
impaired.
14
b.
A
proceeding
for
receivership,
conservatorship,
15
rehabilitation,
or
other
delinquency
proceeding
regarding
the
16
service
company
has
been
commenced
in
any
state.
17
c.
The
financial
condition
or
business
practices
of
the
18
service
company
otherwise
pose
an
imminent
threat
to
the
public
19
health,
safety,
or
welfare
of
the
residents
of
this
state.
20
2.
The
commissioner
may
suspend
or
revoke
the
license
of,
21
deny
an
application
for
a
license
from,
or
refuse
to
renew
the
22
license
of,
a
service
company,
or
may
levy
a
civil
penalty
as
23
provided
in
section
523C.13
against
a
service
company,
for
any
24
of
the
following
reasons:
25
a.
The
service
company
violated
this
chapter,
a
lawful
26
order,
regulation,
or
subpoena
issued
by
the
commissioner
or
a
27
regulatory
authority
of
another
state.
28
b.
The
service
company
failed
to
pay
a
final
judgment
29
rendered
against
the
service
company
in
this
state
within
sixty
30
calendar
days
after
the
date
the
judgment
became
final.
31
c.
The
service
company,
without
just
cause,
refused
32
to
perform,
or
negligently
or
incompetently
performed,
a
33
service
required
to
be
performed
under
the
service
company’s
34
service
contracts
and
the
refusal,
or
negligent
or
incompetent
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performance,
has
occurred
with
such
frequency
as
determined
by
1
the
commissioner,
as
to
indicate
the
general
business
practices
2
of
the
service
company.
3
d.
The
service
company
violated
section
523C.13.
4
e.
The
service
company
failed
to
demonstrate
financial
5
responsibility
pursuant
to
section
523C.5,
if
applicable.
6
f.
The
service
company
failed
to
maintain
a
corporate
7
certificate
of
good
standing
pursuant
to
section
523C.3,
8
subsection
1.
9
g.
The
service
company
provided
incorrect,
misleading,
10
incomplete,
or
materially
untrue
information
in
the
service
11
company’s
license
application.
12
h.
The
service
company
obtained
or
attempted
to
obtain
a
13
license
through
misrepresentation
or
fraud.
14
i.
The
service
company
improperly
withheld,
misappropriated,
15
or
converted
any
money
or
property
received
in
the
course
of
16
business
as
a
service
company.
17
j.
The
service
company
intentionally
misrepresented
the
18
terms
of
an
actual
or
proposed
service
contract.
19
k.
Within
the
immediately
preceding
ten
consecutive
years,
20
an
owner
who
has
an
ownership
stake
in
the
service
company
21
of
more
than
ten
percent,
an
officer,
or
a
director
directly
22
responsible
for
the
business
of
the
service
company
has
been
23
convicted
of
a
criminal
offense
involving
any
aspect
of
a
24
business
involving
securities,
commodities,
investments,
25
franchises,
insurance,
banking,
or
finance.
26
l.
An
owner
who
has
an
ownership
stake
in
the
service
27
company
of
more
than
ten
percent,
an
officer,
or
a
director
28
directly
responsible
for
the
business
of
the
service
company
29
has
been
convicted
of
a
criminal
offense
involving
dishonesty
30
or
a
false
statement,
including
but
not
limited
to
fraud,
31
theft,
misappropriation
of
funds,
falsification
of
documents,
32
deceptive
acts
or
practices,
or
other
related
offenses.
33
m.
The
service
company
admitted
to
committing,
or
was
found
34
to
have
committed,
any
unfair
trade
practice
or
fraud.
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n.
The
service
company
used
fraudulent,
coercive,
1
or
dishonest
practices,
or
demonstrated
incompetence,
2
untrustworthiness,
or
financial
irresponsibility,
in
conducting
3
business
in
this
state
or
any
other
state.
4
o.
The
service
company
had
a
service
company
license
or
its
5
equivalent,
denied,
suspended,
or
revoked
in
any
other
state,
6
province,
district,
or
territory.
7
p.
The
service
company
failed,
or
refused,
to
cooperate
in
8
an
investigation
conducted
by
the
commissioner
of
insurance.
9
q.
The
commissioner
has
found
the
service
company
to
be
10
incompetent,
untrustworthy,
financially
irresponsible,
or
not
11
of
good
personal
or
business
reputation.
12
r.
The
service
company
has
refused
to
be
examined
or
to
13
produce
the
service
company’s
accounts,
records,
or
files
for
14
examination,
or
any
individual
responsible
for
the
conduct
15
of
the
affairs
of
the
service
company
has
refused
to
provide
16
information
with
respect
to
the
service
company’s
affairs
or
17
has
refused
to
perform
any
other
legal
obligation
as
to
an
18
examination.
19
s.
The
service
company
has
engaged,
directly
or
indirectly,
20
in
an
unfair
method
of
competition
or
unfair
or
deceptive
act
21
or
practice.
22
3.
If
the
commissioner
suspends
or
revokes
the
license
of,
23
denies
the
application
for
licensure
of,
or
refuses
to
renew
24
the
license
of,
a
service
company
pursuant
to
this
section,
the
25
commissioner
shall
notify
the
service
company
in
writing
and
26
provide
the
reason
for
the
suspension,
revocation,
denial,
or
27
nonrenewal.
The
licensee
or
applicant
may
request
a
hearing
28
on
the
suspension,
revocation,
nonrenewal,
or
denial,
and
a
29
hearing
shall
be
conducted
according
to
chapter
17A.
30
Sec.
10.
Section
523C.13,
Code
2026,
is
amended
by
striking
31
the
section
and
inserting
in
lieu
thereof
the
following:
32
523C.13
Prohibited
acts
or
practices
——
penalty
——
violations
33
——
contracts
voided.
34
1.
A
service
company,
or
the
service
company’s
support
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services,
that
offers
service
contracts
for
sale
in
this
state
1
shall
not,
directly
or
indirectly,
represent
in
any
manner,
2
whether
by
written
solicitation
or
telemarketing,
a
false,
3
deceptive,
or
misleading
statement
with
respect
to
any
of
the
4
following:
5
a.
The
service
company’s
affiliation
with
a
motor
vehicle
6
manufacturer
or
importer.
7
b.
The
validity
or
expiration
of
a
warranty.
8
c.
A
motor
vehicle
service
contract
holder’s
coverage
9
under
a
motor
vehicle
service
contract,
including
statements
10
suggesting
that
the
service
contract
holder
must
purchase
a
11
new
service
contract
in
order
to
maintain
coverage
under
the
12
existing
service
contract
or
warranty.
13
d.
Descriptions
of
the
service
contract
as
a
“policy”.
14
2.
A
licensed
service
company
which
offers
service
15
contracts
for
sale
in
this
state
shall
not,
directly
or
16
indirectly,
do
any
of
the
following:
17
a.
Fail
to
complete,
or
fail
to
ensure
the
completion
of,
a
18
repair,
maintenance,
replacement,
service,
or
indemnification
19
of
expenses
associated
with
a
covered
claim
within
a
reasonable
20
period
of
time.
21
b.
Create
or
use
any
advertising
that
does
not
include
the
22
name
of
the
licensed
service
company
or
direct
consumers
to
an
23
internet
site
where
the
name
of
the
licensed
service
company
24
can
be
found.
25
c.
Use
any
method
of
marketing
that
may
induce
the
purchase
26
of
a
service
contract
through
force,
fear,
or
threats,
whether
27
explicit
or
implied.
28
d.
Create
or
use
any
service
contract
marketing
materials
29
that
contain
incorrect
or
misleading
information.
30
e.
Use,
offer
for
sale,
or
issue
in
this
state
a
service
31
contract
form
that
has
not
been
submitted
as
part
of
a
license
32
application
pursuant
to
section
523C.3,
as
part
of
a
license
33
application
renewal
pursuant
to
section
523C.4,
or
submitted
34
to
the
division
during
the
service
company’s
current
license
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period.
1
3.
The
commissioner
may
adopt
rules
pursuant
to
2
chapter
17A
that
regulate
service
contracts
to
prohibit
3
misrepresentation,
false
advertising,
defamation,
boycotts,
4
coercion,
intimidation,
false
statements
and
entries,
and
5
unfair
discrimination
or
practices.
6
4.
After
a
hearing,
if
the
commissioner
finds
that
a
person
7
violated
this
chapter
or
a
rule
adopted
under
this
chapter,
8
the
commissioner
may
order
the
person
to
cease
and
desist
from
9
the
violation
and
may
order
the
person
to
pay
a
civil
penalty
10
of
not
more
than
one
thousand
dollars
for
each
violation,
not
11
to
exceed
an
aggregate
of
ten
thousand
dollars,
unless
the
12
person
knew
or
reasonably
should
have
known
the
person
was
in
13
violation
of
this
chapter,
in
which
case
the
civil
penalty
14
shall
be
no
more
than
five
thousand
dollars
for
each
violation,
15
not
to
exceed
an
aggregate
of
fifty
thousand
dollars
in
any
16
one
consecutive
six-month
period.
If
the
commissioner
finds
a
17
violation
of
this
chapter
was
directed,
encouraged,
condoned,
18
ignored,
or
ratified
by
the
employer
of
such
person
or
by
a
19
service
company,
the
commissioner
shall
assess
a
penalty
to
the
20
employer
or
service
company.
Any
civil
penalties
collected
21
under
this
subsection
shall
be
deposited
as
provided
in
section
22
505.7.
23
5.
A
violation
of
this
chapter
constitutes
an
unlawful
24
practice
pursuant
to
section
714.16.
25
6.
A
service
contract
issued
or
sold
in
this
state
by
a
26
service
company
that
was
not
licensed
as
a
service
company
at
27
the
time
the
service
contract
was
issued
or
sold
shall
be
void
28
and
unenforceable.
29
Sec.
11.
Section
523C.22,
Code
2026,
is
amended
to
read
as
30
follows:
31
523C.22
Claim
procedures.
32
A
licensed
service
company
shall
promptly
provide
a
33
reasonable
written
explanation
to
the
service
contract
holder,
34
describing
explaining
the
reasons
for
denying
a
claim
or
for
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the
offer
of
a
compromise
settlement,
based
on
all
relevant
1
facts
or
legal
requirements
and
referring
to
applicable
2
provisions
of
the
service
contract
legal
and
factual
basis
for
3
the
denial
of
a
claim
or
an
offer
of
a
compromise
settlement
.
4
The
written
explanation
must
provide
instructions
to
the
5
service
contract
holder
on
the
process
for
an
appeal,
second
6
review,
arbitration,
or
similar
provisions
included
in
the
7
contract,
as
well
as
information
on
how
to
file
a
complaint
8
with
the
division,
including
the
internet
site
on
which
to
9
locate
the
division’s
complaint
form.
10
Sec.
12.
Section
523C.23,
subsection
1,
paragraph
b,
Code
11
2026,
is
amended
by
adding
the
following
new
subparagraphs:
12
NEW
SUBPARAGRAPH
.
(4)
During
an
investigation
or
13
proceeding
conducted
under
this
chapter,
the
commissioner
or
14
any
designee
of
the
commissioner
may
administer
oaths
and
15
affirmations,
subpoena
witnesses,
compel
witnesses’
attendance,
16
take
evidence,
and
require
the
production
of
any
records
17
which
the
commissioner
deems
relevant
or
material
to
the
18
investigation
or
proceeding.
19
NEW
SUBPARAGRAPH
.
(5)
Conduct
an
investigation
of
a
20
suspected
violation
of
this
chapter
and
enforce
the
provisions
21
of,
and
impose
any
penalty
or
remedy
authorized
by,
this
22
chapter
against
any
person
who
is
under
investigation
for,
or
23
charged
with,
a
violation
of
this
chapter
even
if
the
person’s
24
license
has
been
surrendered
or
has
lapsed
by
operation
of
law.
25
Sec.
13.
Section
523C.23,
subsection
1,
paragraph
c,
Code
26
2026,
is
amended
by
striking
the
paragraph.
27
Sec.
14.
Section
523C.23,
subsection
3,
Code
2026,
is
28
amended
by
striking
the
subsection.
29
Sec.
15.
NEW
SECTION
.
523C.25
Confidentiality.
30
1.
Notwithstanding
chapter
22,
the
commissioner
shall
31
maintain
the
confidentiality
of
information
submitted
to
the
32
division
or
obtained
by
the
division
in
the
course
of
an
33
investigation,
examination,
or
inquiry
pursuant
to
this
chapter
34
or
the
commissioner’s
licensing
authority,
including
all
notes,
35
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work
papers,
or
other
documents.
Information
obtained
by
1
the
commissioner
in
the
course
of
investigating
a
complaint
2
or
inquiry
may,
at
the
discretion
of
the
commissioner,
be
3
provided
to
the
service
company
that
is
the
subject
of
the
4
complaint
or
inquiry
and
the
consumer
who
filed
the
complaint
5
or
inquiry,
without
waiving
the
confidentiality
afforded
to
6
the
commissioner
or
to
any
other
person
by
this
section.
The
7
commissioner
may
disclose
or
release
information
that
is
8
otherwise
confidential
under
this
subsection
in
the
course
of
9
an
administrative
or
judicial
proceeding.
10
2.
Notwithstanding
subsection
1,
if
the
commissioner
11
determines
that
it
is
necessary
in
the
public
interest,
the
12
commissioner
may
share
information
submitted
to
the
division
13
or
obtained
by
the
division
in
the
course
of
an
investigation,
14
examination,
or
inquiry
pursuant
to
this
chapter
with
other
15
regulatory
authorities
or
government
agencies.
16
3.
Notwithstanding
subsection
1,
if
the
commissioner
17
determines
that
it
is
necessary
in
the
public
interest,
the
18
commissioner
may
publish
service
company-related
data
or
19
information
submitted
to
the
division
or
obtained
by
the
20
division
in
the
course
of
an
investigation,
examination,
or
21
inquiry
pursuant
to
this
chapter.
Such
information
may
be
22
redacted
so
that
neither
personally
identifiable
information
23
nor
service
company
identifiable
information
is
made
available.
24
4.
Notwithstanding
subsection
1,
the
commissioner
may
25
publish
on
the
division’s
internet
site
the
name,
physical
26
address,
telephone
number,
and
license
status
of
any
service
27
company
submitted
to
the
division
or
obtained
by
the
division
28
in
the
course
of
an
investigation,
examination,
or
inquiry
29
pursuant
to
this
chapter.
30
Sec.
16.
Section
714.16,
subsection
2,
Code
2026,
is
amended
31
by
adding
the
following
new
paragraph:
32
NEW
PARAGRAPH
.
t.
It
is
an
unlawful
practice
for
a
person
33
to
violate
chapter
523C.
34
EXPLANATION
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The
inclusion
of
this
explanation
does
not
constitute
agreement
with
1
the
explanation’s
substance
by
the
members
of
the
general
assembly.
2
This
bill
relates
to
the
licensing
of
service
companies,
3
motor
vehicle
service
contracts,
and
residential
service
4
contracts.
5
The
bill
prohibits
a
person
from
issuing,
offering
for
sale,
6
or
selling
a
motor
vehicle
service
contract
or
residential
7
service
contract
in
the
state
unless
the
person
is
a
licensed
8
service
company.
The
requirements
of
the
bill
do
not
apply
to
9
any
person
who
provides
support
services.
“Support
services”
10
is
defined
in
the
bill.
11
A
service
company
shall
maintain
a
license
for
the
12
entirety
of
any
service
contract
that
the
service
company
13
has
entered,
unless
otherwise
ordered
by
the
commissioner
of
14
insurance
(commissioner).
A
service
company
shall
report
to
15
the
commissioner
changes
to
an
application,
administrative
16
actions,
and
criminal
prosecutions
as
detailed
in
the
bill.
17
A
residential
or
motor
vehicle
service
contract
shall
not
be
18
considered
insurance.
19
An
application
for
a
license
as
a
service
company
shall
20
be
filed
with
the
commissioner,
include
all
information
as
21
described
in
the
bill,
and
be
accompanied
by
a
$500
license
22
fee.
A
license
as
a
service
company
is
valid
for
one
year
and
23
must
be
renewed
annually
on
or
before
August
31
following
the
24
date
of
issuance.
A
licensee
must
apply
for
renewal
at
least
25
90
days
prior
to
the
license
expiration
date.
26
An
application
for
license
renewal
shall
include
the
27
information
required
for
an
initial
license,
a
list
of
each
28
service
contract
form,
any
additional
information
requested
by
29
the
commissioner,
and
the
information
and
fees
as
described
in
30
the
bill.
If
the
renewal
application
meets
the
requirements,
31
the
commissioner
shall
renew
the
license
unless
otherwise
32
denied,
in
which
case
the
denial
shall
be
in
writing.
33
If
a
service
company
fails
to
renew
their
license
on
or
34
before
the
end
of
the
license
period,
the
company’s
license
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shall
be
deemed
expired,
and
the
service
company
shall
be
1
subject
to
restrictions
detailed
in
the
bill.
If
a
service
2
company
submits
an
application
or
renewal
application
after
the
3
license
has
expired,
the
service
company
shall
file
a
service
4
company
license
renewal
application,
including
payment
of
5
applicable
fees.
6
A
service
contract
shall
not
be
issued,
sold,
or
offered
for
7
sale
unless
the
service
contract
and
service
company
complies
8
with
the
requirements
of
the
bill.
The
requirements
for
a
9
residential
service
contract
that
relates
to
goods
that
are
10
essential
to
the
health
and
safety
of
the
service
contract
11
holder
are
detailed
in
the
bill.
12
A
service
company
may
continue
to
use
a
noncompliant
service
13
contract
form
until
January
1,
2028,
provided
no
changes
are
14
made
to
the
form,
and
the
service
contract
form
was
filed
with
15
the
division
before
July
1,
2026.
16
The
commissioner
may
suspend
or
revoke
the
license
of,
deny
17
an
application
for
license
from,
or
refuse
to
renew
the
license
18
of
a
service
company,
or
may
levy
a
civil
penalty
against
a
19
service
company,
as
described
in
the
bill,
and
shall
notify
the
20
service
company
in
writing
of
the
reason
for
the
suspension,
21
revocation,
nonrenewal,
or
denial.
The
licensee
or
applicant
22
may
request
a
hearing.
23
A
service
company
that
offers
service
contracts
for
sale,
24
or
the
service
company’s
support
services,
shall
not
represent
25
in
any
manner
a
false,
deceptive,
or
misleading
statement
with
26
respect
to
the
service
company’s
affiliation
with
a
motor
27
vehicle
manufacturer
or
importer,
the
validity
or
expiration
28
of
a
warranty,
or
a
motor
vehicle
service
contract
holder’s
29
coverage
under
a
motor
vehicle
service
contract,
and
shall
not
30
describe
the
service
contract
as
a
policy.
31
A
service
company
shall
not
engage
in
a
prohibited
act
32
or
practice
as
detailed
in
the
bill.
The
commissioner
33
may
adopt
rules
regulating
service
contracts
to
prohibit
34
misrepresentation,
false
advertising,
defamation,
boycotts,
35
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coercion,
intimidation,
false
statements
and
entries,
and
1
unfair
discrimination
or
practices.
If
the
commissioner
finds
2
that
a
person
has
violated
the
bill
or
rules
adopted
under
3
the
bill,
the
commissioner
may
order
the
person
to
cease
and
4
desist
from
the
violation
and
may
order
payment
of
a
civil
5
penalty
as
described
in
the
bill.
A
violation
of
the
bill
is
6
an
unlawful
practice.
A
service
contract
issued
or
sold
by
an
7
unlicensed
service
company
shall
be
void
and
unenforceable.
8
The
requirements
for
an
investigation
or
proceeding
are
9
detailed
in
the
bill.
10
A
written
explanation
to
a
service
contract
holder
for
a
11
denial
of
a
claim
or
offer
of
a
settlement
shall
include
the
12
information
detailed
in
the
bill.
13
The
commissioner
shall
maintain
the
confidentiality
of
14
information
submitted
to
or
obtained
by
the
division
in
the
15
course
of
an
investigation,
examination,
or
inquiry,
including
16
all
notes,
work
papers,
or
other
documents
and
the
information
17
as
described
in
the
bill.
The
commissioner
may
disclose
or
18
release
information
that
is
otherwise
confidential
in
the
19
circumstances
detailed
in
the
bill.
20
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