Read the full stored bill text
Senate
File
2445
-
Introduced
SENATE
FILE
2445
BY
COMMITTEE
ON
COMMERCE
(SUCCESSOR
TO
SSB
3057)
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
507B.4,
subsection
3,
Code
2026,
is
1
amended
by
adding
the
following
new
paragraph:
2
NEW
PARAGRAPH
.
w.
Service
contracts.
Failure
of
a
person
3
in
the
business
of
service
contracts
to
comply
with
chapter
4
523C.
5
Sec.
2.
Section
523C.1,
Code
2026,
is
amended
by
adding
the
6
following
new
subsections:
7
NEW
SUBSECTION
.
1A.
“Communicating
in
a
verifiable
manner”
8
means
communication
by
in-person
delivery,
email,
or,
if
there
9
is
an
auditable
record
of
the
communication,
by
telephone.
10
NEW
SUBSECTION
.
1B.
“Gross
consideration”
means
the
total
11
value
of
a
service
contract
without
deducting
any
expenses
or
12
costs.
13
NEW
SUBSECTION
.
6A.
“Person”
means
an
individual
or
a
14
business
entity.
15
NEW
SUBSECTION
.
12A.
“Service
contract
holder”
means
the
16
original
purchaser
of
a
service
contract
or
the
successor
in
17
interest
or
transferee
entitled
to
services
under
the
service
18
contract.
19
NEW
SUBSECTION
.
12B.
“Substitute
part”
means
a
part
that
is
20
not
issued
by
the
original
part
manufacturer,
including
but
not
21
limited
to
a
remanufactured
part,
an
aftermarket
part,
and
a
22
part
obtained
from
a
salvage
yard.
23
NEW
SUBSECTION
.
12C.
“Support
services”
means
a
person
that
24
provides
services
that
support,
or
a
person
that
works
under
25
the
direction
of,
a
licensed
service
company
in
connection
with
26
the
issuance,
offer
for
sale,
sale,
or
administration
of
a
27
service
contract
in
this
state,
including
but
not
limited
to
a
28
person
that
provides
marketing,
administrative,
or
technical
29
support
to
a
service
company.
30
Sec.
3.
Section
523C.1,
subsection
4,
Code
2026,
is
amended
31
to
read
as
follows:
32
4.
“Motor
vehicle”
means
any
vehicle
that
is
self-propelled
33
vehicle
and
subject
to
registration
under
chapter
321
.
34
Sec.
4.
Section
523C.2,
Code
2026,
is
amended
by
striking
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the
section
and
inserting
in
lieu
thereof
the
following:
1
523C.2
License
required.
2
1.
A
person
that
will
be
contractually
obligated
to
the
3
service
contract
holder
under
the
terms
of
the
service
contract
4
shall
not
directly
or
indirectly
issue,
offer
for
sale,
or
5
sell
a
motor
vehicle
service
contract
or
residential
service
6
contract
in
this
state
unless
the
person
is
a
licensed
service
7
company.
8
2.
This
chapter
shall
not
apply
to
any
person
that
provides
9
support
services.
A
service
company
that
utilizes
support
10
services
shall
ensure
the
support
services’
compliance
with
the
11
issuance,
offer
for
sale,
or
sale
of
a
service
contract
under
12
this
chapter.
13
3.
A
service
company
shall
maintain
a
license
for
the
14
duration
of
time
that
the
service
company
is
contractually
15
obligated
to
a
service
contract
holder
under
the
terms
of
a
16
service
contract.
17
4.
A
service
company
shall
report
to
the
commissioner
18
within
thirty
calendar
days
any
material
change
to
the
19
information
submitted
by
the
service
company
in
the
service
20
company’s
initial
license
application,
or
license
renewal
21
application,
including
a
change
in
the
service
company’s
22
contact
information,
ownership,
officers
or
directors
directly
23
responsible
for
the
provider’s
service
contract
business,
24
or
any
other
change
that
substantially
affects
the
service
25
company’s
operations
in
the
state.
26
5.
A
service
company
shall
report
to
the
commissioner
27
any
administrative
action
taken
against
the
service
company
28
in
another
jurisdiction
within
thirty
calendar
days
of
final
29
disposition
of
the
administrative
action.
The
report
must
30
include
a
copy
of
the
order,
consent
to
the
order,
and
other
31
relevant
legal
documents.
32
6.
Within
thirty
calendar
days
of
the
initial
pretrial
33
hearing
date,
a
service
company
shall
report
to
the
34
commissioner
a
criminal
prosecution
in
any
jurisdiction
of
an
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owner
with
more
than
a
ten
percent
ownership
stake,
an
officer,
1
or
a
director
directly
responsible
for
the
service
contract
2
business
of
the
service
company,
for
an
offense
involving
3
dishonesty
or
a
false
statement
including
but
not
limited
4
to
fraud,
theft,
misappropriation
of
funds,
falsification
5
of
documents,
deceptive
acts
or
practices,
or
other
related
6
offenses.
The
report
must
include
a
copy
of
the
initial
7
complaint
filed,
the
order
resulting
from
the
hearing,
and
any
8
other
relevant
legal
documents.
9
Sec.
5.
Section
523C.3,
Code
2026,
is
amended
by
striking
10
the
section
and
inserting
in
lieu
thereof
the
following:
11
523C.3
Application
for
license.
12
1.
Application
for
a
license
as
a
service
company
shall
13
be
filed
with
the
commissioner
on
a
form
approved
by
the
14
commissioner
and
must
include
all
of
the
following
information:
15
a.
The
name
and
principal
address
of
the
applicant.
16
b.
The
state
of
incorporation
of
the
applicant.
17
c.
The
name
and
address
of
the
applicant’s
registered
agent
18
for
service
of
process
in
Iowa.
19
d.
The
legal
name
of
all
of
the
following:
20
(1)
Each
owner
of
the
service
company
that
has
a
greater
21
than
ten
percent
ownership
stake
in
the
service
company.
22
(2)
Each
officer
of
the
service
company.
23
(3)
Each
director
directly
responsible
for
the
business
of
24
the
service
company.
25
e.
A
certificate
of
good
standing
for
the
applicant
issued
26
by
the
secretary
of
state
and
dated
not
more
than
thirty
27
calendar
days
from
the
date
of
the
application.
28
f.
Evidence
of
compliance
with
section
523C.5.
29
g.
A
copy
of
each
motor
vehicle
service
contract
form
to
be
30
used,
issued,
or
offered
for
sale
in
this
state
by
the
service
31
company.
32
h.
A
copy
of
each
residential
service
contract
form
to
be
33
used,
issued,
or
offered
for
sale
in
this
state
by
the
service
34
company.
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i.
A
national
association
of
insurance
commissioners’
1
biographical
affidavit
and
the
verification
of
the
biographical
2
affidavit
for
the
chief
executive
officer
and
chief
financial
3
officer
of
the
service
company,
or
for
the
individuals
in
4
the
equivalent
positions.
The
service
company
shall
use
a
5
third-party
vendor
from
a
list
of
vendors
approved
by
the
6
commissioner
to
verify
the
biographical
affidavits.
The
7
service
company
shall
pay
all
costs
associated
with
the
8
required
verifications.
9
j.
A
list
of
any
disciplinary
actions
taken
against
the
10
service
company,
or
any
of
the
service
company’s
owners,
11
officers,
or
directors
directly
responsible
for
the
provider’s
12
service
contract
business,
in
the
immediately
preceding
ten
13
consecutive
years
by
a
regulatory
agency
or
state
attorney
14
general
in
any
jurisdiction.
15
2.
The
application
must
be
accompanied
by
all
of
the
16
following:
17
a.
A
license
fee
in
the
amount
of
five
hundred
dollars.
18
b.
A
fee
in
the
amount
of
thirty-five
dollars
for
each
motor
19
vehicle
service
contract
form
provided
pursuant
to
subsection
20
1,
paragraph
“g”
.
21
3.
If
the
application
for
a
service
company
license
contains
22
the
information
under
subsection
1,
is
accompanied
by
the
23
fees
under
subsection
2,
includes
any
additional
information
24
requested
by
the
commissioner
to
verify
the
information
in
25
the
application,
and
the
commissioner
has
not
denied
the
26
application
pursuant
to
section
523C.9,
the
commissioner
shall
27
issue
the
license
to
the
applicant.
28
4.
Fees
collected
under
this
section
shall
be
deposited
29
into
the
service
company
oversight
fund
as
provided
in
section
30
523C.24.
31
Sec.
6.
Section
523C.4,
Code
2026,
is
amended
by
striking
32
the
section
and
inserting
in
lieu
thereof
the
following:
33
523C.4
License
expiration
and
renewal.
34
1.
A
license
issued
under
this
chapter
shall
be
valid
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for
a
period
of
one
year
and
shall
be
renewed
annually
on
or
1
before
August
31.
A
license
that
is
not
renewed
prior
to
the
2
expiration
date
shall
be
deemed
expired.
Prior
to
a
license
3
expiration
date,
and
if
a
renewal
application
was
submitted
at
4
least
fourteen
calendar
days
prior
to
the
license
expiration
5
date,
the
commissioner
may
extend
the
renewal
period
for
an
6
additional
thirty
calendar
days.
7
2.
An
application
for
license
renewal
must
include
the
8
information
required
for
an
initial
license
as
described
in
9
section
523C.3,
subsection
1,
paragraphs
“a”
through
“f”
,
10
and
a
list
of
each
service
contract
form
the
service
company
11
continues
to
use,
offer
for
sale,
or
issue
in
the
state,
12
including
the
service
contract
form
name,
number,
and
the
date
13
the
form
was
last
revised.
14
3.
The
license
renewal
application
must
be
accompanied
by
15
all
of
the
following:
16
a.
A
license
renewal
fee
in
the
amount
of
two
hundred
17
dollars.
18
b.
A
fee
in
the
amount
of
three
percent
of
the
aggregate
19
amount
of
payments
the
service
company
received
for
the
sale
or
20
issuance
of
residential
service
contracts
in
this
state
during
21
the
period
beginning
on
the
date
the
service
company’s
license
22
was
issued
until
the
date
of
the
service
company’s
renewal
23
filing,
provided
that
such
fee
must
be
no
greater
than
fifty
24
thousand
dollars.
25
c.
A
fee
in
the
amount
of
thirty-five
dollars
for
each
motor
26
vehicle
service
contract
form
filed
with
the
commissioner
that
27
the
service
company
continues
to
use,
offer
for
sale,
or
issue
28
in
the
state.
29
d.
Information
regarding
service
contracts
for
the
service
30
company
in
the
immediately
preceding
calendar
year
itemized
as
31
follows:
32
(1)
The
number
of
motor
vehicle
service
contracts
issued.
33
(2)
The
number
of
residential
service
contracts
issued.
34
(3)
The
number
of
motor
vehicle
service
contracts
canceled.
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(4)
The
number
of
residential
service
contracts
canceled.
1
(5)
The
number
of
motor
vehicle
service
contracts
that
2
expired.
3
(6)
The
number
of
residential
service
contracts
that
4
expired.
5
(7)
The
number
of
motor
vehicle
service
contracts
in
effect
6
on
December
31
of
the
immediately
preceding
calendar
year.
7
(8)
The
number
of
residential
service
contracts
in
effect
on
8
December
31
of
the
immediately
preceding
calendar
year.
9
(9)
The
total
dollar
amount
of
refunds
issued
for
all
motor
10
vehicle
service
contracts
that
were
canceled.
11
(10)
The
total
dollar
amount
of
refunds
issued
for
all
12
residential
service
contracts
that
were
canceled.
13
(11)
The
total
dollar
amount
of
motor
vehicle
service
14
contract
fees
received
by
the
service
company.
15
(12)
The
total
dollar
amount
of
residential
service
16
contract
fees
received
by
the
service
company.
17
(13)
The
number
of
lawsuits
filed
by
a
third
party
or
18
a
regulatory
agency
against
the
service
company
during
the
19
immediately
preceding
calendar
year
regarding
service
contracts
20
issued,
offered
for
sale,
or
sold
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.
A
service
company
whose
license
has
expired,
and
is
34
not
within
an
additional
thirty-day
extension
period
granted
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by
the
commissioner
pursuant
to
section
523C.4,
subsection
1,
1
shall
not
offer,
extend,
or
renew
a
service
contract
until
the
2
service
company’s
license
has
been
renewed,
or
the
service
3
company
has
been
issued
a
new
license.
4
b.
If,
at
the
time
a
service
contract
is
issued
or
sold
in
5
this
state,
the
service
company
has
an
expired
license
that
is
6
not
within
an
additional
thirty-day
extension
period
granted
7
by
the
commissioner
pursuant
to
section
523C.4,
subsection
1,
8
the
service
contract
may
be
canceled
at
the
discretion
of
the
9
service
contract
holder.
If
a
service
contract
holder
chooses
10
to
cancel
a
service
contract,
the
full
purchase
price
of
the
11
service
contract,
less
any
claims
paid,
shall
be
refunded
to
12
the
service
contract
holder
within
thirty
calendar
days.
A
ten
13
percent
penalty
shall
be
added
to
the
refund
each
month
if
the
14
refund
is
not
paid
to
the
service
contract
holder
within
the
15
thirty
calendar
days.
16
Sec.
7.
Section
523C.7,
Code
2026,
is
amended
by
striking
17
the
section
and
inserting
in
lieu
thereof
the
following:
18
523C.7
Disclosure
to
service
contract
holders
——
contract
19
form
——
required
provisions.
20
1.
A
service
contract
shall
not
be
issued,
sold,
or
offered
21
for
sale
in
this
state
unless
the
service
company
does
all
of
22
the
following:
23
a.
Provides
a
receipt
for
the
purchase
of
the
service
24
contract
to
the
service
contract
holder.
25
b.
Provides
a
complete
sample
copy
of
the
service
contract
26
to
the
consumer
prior
to
purchase.
A
service
company
may
27
comply
with
this
paragraph
by
providing
the
consumer
with
a
28
complete
electronic
sample
copy
of
the
service
contract,
or
29
directing
the
consumer
to
a
complete
sample
copy
of
the
service
30
contract
on
an
internet
site.
A
paper
copy
of
the
sample
31
service
contract
shall
be
provided
upon
request
of
the
consumer
32
at
the
expense
of
the
service
company.
33
c.
Provides
a
fully
executed
paper
or
electronic
copy
of
34
the
service
contract
to
the
service
contract
holder
within
ten
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calendar
days
of
the
date
the
service
contract
holder
purchased
1
the
service
contract.
A
paper
copy
of
the
executed
service
2
contract
shall
be
provided
to
the
service
contract
holder
upon
3
request
of
the
service
contract
holder
at
the
expense
of
the
4
service
company.
5
2.
A
service
contract
issued,
sold,
or
offered
for
sale
in
6
the
state
must
comply
with
all
of
the
following,
as
applicable:
7
a.
A
service
contract
must
be
written
in
clear,
8
understandable
language
in
at
least
ten
point
type.
9
b.
(1)
A
service
contract
insured
under
a
reimbursement
10
insurance
policy
as
provided
in
section
523C.5,
subsection
1,
11
must
include
a
statement
in
substantially
the
following
form:
12
Obligations
of
the
service
company
under
this
service
contract
13
are
guaranteed
under
a
reimbursement
insurance
policy.
If
the
14
service
company
fails
to
pay
or
provide
service
on
a
claim
15
within
sixty
days
after
proof
of
loss
has
been
filed
with
16
the
service
company,
the
service
contract
holder
is
entitled
17
to
make
a
claim
directly
against
the
reimbursement
insurance
18
policy.
19
(2)
A
service
contract
insured
under
a
reimbursement
20
insurance
policy
must
conspicuously
state
the
name
and
address
21
of
the
issuer
of
the
reimbursement
insurance
policy
for
that
22
service
contract.
A
claim
against
a
reimbursement
insurance
23
policy
must
also
include
a
claim
for
return
of
any
refund
due
24
in
accordance
with
paragraphs
“m”
and
“n”
.
25
c.
A
service
contract
not
insured
under
a
reimbursement
26
insurance
policy
must
contain
a
statement
in
substantially
the
27
following
form:
28
Obligations
of
the
service
company
under
this
service
contract
29
are
backed
by
the
full
faith
and
credit
of
the
service
company
30
and
are
not
guaranteed
under
a
reimbursement
insurance
policy.
31
d.
A
service
contract
must
state
the
name
and
address
of
32
the
service
company
obligated
to
perform
services
under
the
33
contract,
and
must
conspicuously
identify
the
service
company,
34
any
third-party
administrator,
and
the
service
contract
holder
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to
the
extent
that
the
name
and
address
of
the
service
contract
1
holder
has
been
furnished.
The
identities
of
such
parties
2
shall
not
be
required
to
be
printed
on
the
contract
in
advance
3
and
may
be
added
to
the
contract
at
the
time
of
sale.
4
e.
A
service
contract
must
clearly
state
the
total
purchase
5
price
of
the
service
contract
and
the
terms
under
which
the
6
service
contract
is
sold.
The
total
purchase
price
shall
not
7
be
required
to
be
printed
on
the
contract
in
advance
and
may
be
8
added
to
the
contract
at
the
time
of
sale.
9
f.
If
prior
approval
of
repair
work
is
required,
a
service
10
contract
must
conspicuously
describe
the
procedure
for
11
obtaining
prior
approval
and
for
making
a
claim,
including
a
12
toll-free
telephone
number
for
claim
service,
and
the
procedure
13
for
obtaining
emergency
repairs
performed
outside
of
normal
14
business
hours.
15
g.
A
service
contract
must
clearly
state
any
waiting
period
16
applicable
to
coverage
under
the
service
contract,
and
the
date
17
on
which
coverage
begins.
18
h.
A
service
contract
must
clearly
state
the
existence
of
19
any
deductible
amount.
20
i.
A
service
contract
must
specify
the
merchandise
or
21
services,
or
both,
to
be
provided
and
any
limitations,
22
exceptions,
or
exclusions.
23
j.
A
service
contract
must
clearly
state
the
conditions
on
24
which
the
use
of
substitute
parts
or
services
will
be
allowed.
25
Such
conditions
must
comply
with
applicable
state
and
federal
26
laws.
27
k.
A
service
contract
must
clearly
state
any
terms,
28
restrictions,
or
conditions
governing
the
transferability
of
29
the
service
contract.
30
l.
A
service
contract
must
clearly
state
the
instructions
31
for
cancellation
of
the
service
contract
by
the
service
32
contract
holder.
Cancellation
instructions
must
include
all
33
necessary
information
for
a
service
contract
holder
to
complete
34
a
cancellation.
Cancellation
instructions
must
include
the
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phone
number,
email
address,
or
mailing
address
necessary
for
1
the
cancellation
of
the
service
contract,
as
well
as
any
other
2
information
that
the
service
contract
holder
must
use
to
cancel
3
the
contract.
A
service
company
shall
accept
cancellation
of
a
4
service
contract
from
a
service
contract
holder
by
telephone,
5
email,
or
mail,
or
any
other
cost-effective
and
accessible
6
method
of
communication.
The
method
of
cancellation
utilized
7
by
a
service
company
for
the
cancellation
of
a
service
contract
8
shall
be
as
accessible
as
the
method
utilized
by
the
service
9
company
for
the
service
contract
holder
to
enter
into
the
10
service
contract.
11
m.
A
service
contract
must
clearly
state
the
terms
and
12
conditions
governing
the
cancellation
of
the
contract
prior
13
to
the
termination
or
expiration
date
of
the
contract
by
the
14
service
company
or
the
service
contract
holder.
If
the
service
15
company
cancels
the
contract,
the
service
company
shall
mail
a
16
written
notice
of
termination
to
the
service
contract
holder
at
17
least
fifteen
calendar
days
before
the
date
of
the
termination.
18
Prior
notice
of
cancellation
by
the
service
company
shall
not
19
be
required
if
the
reason
for
cancellation
is
nonpayment
of
the
20
purchase
price,
a
material
misrepresentation
by
the
service
21
contract
holder
to
the
service
company
or
the
support
services
22
for
the
service
company,
or
a
substantial
breach
of
duty
by
the
23
service
contract
holder
relating
to
the
covered
product
or
use
24
of
the
covered
product.
The
notice
of
cancellation
must
state
25
the
effective
date
of
the
cancellation
and
the
reason
for
the
26
cancellation.
If
a
service
contract
is
canceled
by
the
service
27
company
for
any
reason
other
than
nonpayment
of
the
purchase
28
price,
the
service
company
shall
refund
the
service
contract
29
holder
in
an
amount
equal
to
one
hundred
percent
of
the
30
unearned
purchase
price
paid,
calculated
on
a
pro
rata
basis
31
based
upon
elapsed
time
or
mileage,
less
any
claims
paid.
The
32
service
company
may
also
charge
a
reasonable
administrative
fee
33
in
an
amount
no
greater
than
ten
percent
of
the
total
purchase
34
price.
A
ten
percent
penalty
shall
be
added
to
the
refund
each
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month
if
the
refund
is
not
paid
to
the
service
contract
holder
1
within
thirty
calendar
days.
2
n.
(1)
A
service
contract
must
permit
the
original
service
3
contract
holder
who
purchased
the
contract
to
cancel
the
4
service
contract
within
at
least
thirty
calendar
days
of
the
5
effective
date
of
the
service
contract,
provided
no
claims
6
have
been
paid
under
the
service
contract,
or
within
a
longer
7
period
of
time
as
permitted
under
the
service
contract.
If
8
a
claim
has
not
been
paid
under
the
service
contract
prior
9
to
cancellation
by
the
service
contract
holder,
the
service
10
contract
is
void
and
the
full
purchase
price
of
the
service
11
contract
shall
be
refunded
to
the
service
contract
holder.
A
12
ten
percent
penalty
shall
be
added
to
the
refund
each
month
if
13
the
refund
is
not
paid
to
the
service
contract
holder
within
14
thirty
calendar
days,
unless
the
service
contract
holder
fails
15
to
provide
the
information
required
by
the
service
contract
to
16
complete
the
cancellation.
17
(2)
If
the
service
contract
holder
cancels
the
service
18
contract
in
violation
of
subparagraph
(1),
the
service
company
19
shall
refund
the
service
contract
holder
an
amount
equal
to
one
20
hundred
percent
of
the
unearned
purchase
price
paid,
calculated
21
on
a
pro
rata
basis
based
upon
elapsed
time
or
mileage,
22
less
any
claims
paid.
The
service
company
may
also
charge
a
23
reasonable
administrative
fee
in
an
amount
no
greater
than
ten
24
percent
of
the
total
purchase
price.
A
ten
percent
penalty
25
shall
be
added
to
a
refund
each
month
if
the
refund
is
not
paid
26
to
the
service
contract
holder
within
thirty
calendar
days
of
27
the
service
contract
cancellation
request,
unless
the
service
28
contract
holder
fails
to
provide
the
information
required
in
29
the
service
contract
to
complete
the
cancellation.
30
o.
A
service
contract
must
set
forth
all
obligations
and
31
duties
of
the
service
contract
holder,
including
but
not
32
limited
to
the
duty
to
protect
against
any
further
damage,
and
33
the
obligation
to
follow
an
owner’s
manual
and
to
perform,
or
34
have
performed,
all
required
service
or
maintenance.
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p.
A
service
contract
must
clearly
state
if
the
contract
1
covers
or
excludes
consequential
damages
and
preexisting
2
conditions,
if
applicable.
A
service
contract
may,
but
is
not
3
required
to,
cover
damage
resulting
from
rust,
corrosion,
or
4
damage
caused
by
a
part
or
system
not
covered
under
the
service
5
contract.
6
q.
A
service
contract
must
clearly
state
the
service
call
7
fee,
if
any,
charged
to
the
service
contract
holder.
8
r.
A
service
contract
must
state
the
name
and
address
of
9
the
commissioner,
the
current
toll-free
telephone
number
of
the
10
division,
and
a
statement
that
a
consumer
may
file
a
complaint
11
with
the
division,
including
by
filing
a
complaint
on
the
12
division’s
internet
site.
13
s.
If
a
residential
service
contract
relates
to
heating,
14
cooling,
plumbing,
refrigeration,
or
electrical
service,
15
and
the
claim
being
made
by
the
service
contract
holder
is
16
essential
to
the
health
and
safety
of
the
service
contract
17
holder
or,
if
applicable,
the
service
contract
holder’s
family,
18
the
service
company
shall
ensure
all
of
the
following:
19
(1)
Repair
or
replacement
of
the
essential
good
commences
20
within
forty-eight
hours
after
the
report
of
the
claim,
and
is
21
completed
as
soon
as
reasonably
practicable.
22
(2)
If
the
service
company
determines
that
the
service
23
company
cannot
complete
a
repair,
replacement,
or
service
24
within
three
calendar
days
after
the
report
of
the
claim,
25
the
service
contract
holder
may
seek
an
outside
provider
to
26
complete
the
repair,
replacement,
or
service.
The
service
27
company
shall
cover
reasonable
costs
associated
with
a
repair,
28
replacement,
or
service
completed
by
an
outside
service
29
provider
up
to
the
maximum
dollar
amount
covered
by
the
service
30
contract.
31
(3)
Notice
is
provided
to
the
service
contract
holder
if
a
32
repair
cannot
practicably
be
completed
within
three
calendar
33
days
after
the
report
of
the
claim.
The
service
company
shall
34
provide
a
status
report
to
the
service
contract
holder
by
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communicating
in
a
verifiable
manner
as
soon
as
practicable,
1
but
no
later
than
three
calendar
days
after
the
date
of
the
2
report
of
the
claim.
The
status
report
must
include
all
of
the
3
following:
4
(a)
A
list
of
all
required
repairs,
replacements,
or
5
services
and
the
estimated
cost
to
the
service
contract
holder.
6
(b)
The
primary
reason
the
required
repair,
replacement,
or
7
service
will
take
longer
than
three
calendar
days,
including
8
the
status
of
all
parts
required
for
the
repair,
replacement,
9
or
service.
10
(c)
The
current
estimated
length
of
time
to
complete
the
11
repair,
replacement,
or
service.
12
(d)
The
telephone
number
of
the
service
company
in
the
13
event
the
service
contract
holder
or
the
commissioner
wants
14
to
make
an
inquiry
concerning
the
claim,
and
a
commitment
by
15
the
service
company
to
respond
to
an
inquiry
no
later
than
one
16
business
day
after
the
date
the
inquiry
is
received.
17
(e)
A
statement
that
if
the
service
contract
holder
is
not
18
satisfied
with
the
manner
in
which
the
service
company
handles
19
the
claim
under
the
terms
of
a
service
contract,
the
service
20
contract
holder
may
file
a
complaint
with
the
division
pursuant
21
to
paragraph
“r”
.
22
(f)
A
notice
to
the
service
contract
holder
that
the
23
service
contract
holder
may
seek
an
outside
service
provider
24
to
complete
the
repair,
replacement,
or
service,
and
that
the
25
service
company
will
cover
reasonable
costs
associated
with
a
26
repair,
replacement,
or
service
completed
by
an
outside
service
27
provider
up
to
the
maximum
dollar
amount
covered
by
the
service
28
contract.
29
Sec.
8.
NEW
SECTION
.
523C.8
Service
contract
forms
——
fees.
30
1.
A
service
company
shall
file
with
the
division
an
31
accurate
copy
of
each
service
contract
form
prior
to
using
the
32
service
contract
form
for
the
sale
of
a
service
contract
in
33
this
state.
34
2.
At
the
time
of
filing
each
motor
vehicle
service
contract
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form
with
the
division
a
service
company
shall
pay
a
fee
in
the
1
amount
of
thirty-five
dollars
for
each
motor
vehicle
service
2
contract
form.
3
3.
Notwithstanding
section
523C.7,
a
service
company
may
4
continue
to
use
a
service
contract
form
that
is
noncompliant
5
with
this
chapter
until
August
31,
2027,
provided
no
changes
6
are
made
to
the
service
contract
form
and
the
service
contract
7
form
was
filed
with
the
division
in
2026.
8
Sec.
9.
Section
523C.9,
Code
2026,
is
amended
by
striking
9
the
section
and
inserting
in
lieu
thereof
the
following:
10
523C.9
License
denial,
nonrenewal,
suspension,
or
revocation.
11
1.
The
commissioner
may
suspend
or
revoke
the
license
of,
12
deny
an
application
for
a
license
from,
or
refuse
to
renew
the
13
license
of,
a
service
company,
or
may
levy
a
civil
penalty
as
14
provided
in
section
523C.13
against
a
service
company,
for
any
15
of
the
following
reasons:
16
a.
The
service
company
violated
this
chapter,
a
lawful
17
order,
regulation,
or
subpoena.
18
b.
The
service
company
failed
to
pay
a
final
judgment
19
rendered
against
the
service
company
in
this
state
within
sixty
20
calendar
days
after
the
date
the
judgment
became
final.
21
c.
The
service
company,
without
just
cause,
refused
22
to
perform,
or
negligently
or
incompetently
performed,
a
23
service
required
to
be
performed
under
the
service
company’s
24
service
contracts
and
the
refusal,
or
negligent
or
incompetent
25
performance,
has
occurred
with
such
frequency
as
to
indicate
26
the
general
business
practices
of
the
service
company
are
27
negligent
or
incompetent,
as
determined
by
the
commissioner.
28
d.
The
service
company
violated
section
523C.13.
29
e.
The
service
company
failed
to
demonstrate
financial
30
responsibility
pursuant
to
section
523C.5,
if
applicable.
31
f.
The
service
company
failed
to
maintain
a
corporate
32
certificate
of
good
standing
with
the
secretary
of
state.
33
g.
The
service
company
provided
incorrect,
misleading,
34
incomplete,
or
materially
untrue
information
in
the
service
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company’s
license
application.
1
h.
The
service
company
obtained
or
attempted
to
obtain
a
2
license
through
misrepresentation
or
fraud.
3
i.
The
service
company
improperly
withheld,
misappropriated,
4
or
converted
any
money
or
property
received
in
the
course
of
5
business
as
a
service
company.
6
j.
The
service
company
intentionally
misrepresented
the
7
terms
of
an
actual
or
proposed
service
contract.
8
k.
Within
the
immediately
preceding
ten
consecutive
years,
9
an
owner,
officer,
or
director
of
the
service
company
has
10
been
convicted
of
a
criminal
offense
involving
any
aspect
of
11
a
business
involving
securities,
commodities,
investments,
12
franchises,
insurance,
banking,
or
finance.
13
l.
An
owner,
officer,
or
director
of
the
service
company
14
has
been
convicted
of
a
criminal
offense
involving
dishonesty
15
or
a
false
statement,
including
but
not
limited
to
fraud,
16
theft,
misappropriation
of
funds,
falsification
of
documents,
17
deceptive
acts
or
practices,
or
other
related
offenses.
18
m.
The
service
company
admitted
to
committing,
or
was
found
19
to
have
committed,
any
unfair
trade
practice
or
fraud.
20
n.
The
service
company
used
fraudulent,
coercive,
21
or
dishonest
practices,
or
demonstrated
incompetence,
22
untrustworthiness,
or
financial
irresponsibility,
in
conducting
23
business
in
this
state
or
any
other
state.
24
o.
The
service
company
had
a
service
company
license
or
its
25
equivalent,
denied,
suspended,
or
revoked
in
any
other
state,
26
province,
district,
or
territory.
27
p.
The
service
company
failed,
or
refused,
to
cooperate
in
28
an
investigation
conducted
by
the
commissioner
of
insurance.
29
2.
If
the
commissioner
suspends
or
revokes
the
license
of,
30
denies
the
application
for
licensure
of,
or
refuses
to
renew
31
the
license
of,
a
service
company
pursuant
to
this
section,
the
32
commissioner
shall
notify
the
service
company
in
writing
and
33
provide
the
reason
for
the
suspension,
revocation,
denial,
or
34
nonrenewal.
The
licensee
or
applicant
may
request
a
hearing
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on
the
suspension,
revocation,
nonrenewal,
or
denial,
and
a
1
hearing
shall
be
conducted
according
to
section
507B.6.
2
Sec.
10.
Section
523C.13,
Code
2026,
is
amended
by
striking
3
the
section
and
inserting
in
lieu
thereof
the
following:
4
523C.13
Prohibited
acts
or
practices
——
penalty
——
violations
5
——
contracts
voided.
6
1.
A
service
company,
or
the
service
company’s
support
7
services,
that
offers
service
contracts
for
sale
in
this
state
8
shall
not,
directly
or
indirectly,
represent
in
any
manner,
9
whether
by
written
solicitation
or
telemarketing,
a
false,
10
deceptive,
or
misleading
statement
with
respect
to
any
of
the
11
following:
12
a.
The
service
company’s
affiliation
with
a
motor
vehicle
13
manufacturer
or
importer.
14
b.
The
validity
or
expiration
of
a
warranty.
15
c.
A
motor
vehicle
service
contract
holder’s
coverage
16
under
a
motor
vehicle
service
contract,
including
statements
17
suggesting
that
the
service
contract
holder
must
purchase
a
18
new
service
contract
in
order
to
maintain
coverage
under
the
19
existing
service
contract
or
warranty.
20
d.
Descriptions
of
the
service
contract
as
a
“policy”.
21
2.
A
licensed
service
company
which
offers
service
22
contracts
for
sale
in
this
state
shall
not,
directly
or
23
indirectly,
do
any
of
the
following:
24
a.
Fail
to
complete,
or
fail
to
ensure
the
completion
of,
a
25
repair,
maintenance,
replacement,
service,
or
indemnification
26
of
expenses
associated
with
a
covered
claim
within
a
reasonable
27
period
of
time.
28
b.
Create
or
use
any
advertising
that
does
not
include
the
29
name
of
the
licensed
service
company.
30
c.
Use
any
method
of
marketing
that
may
induce
the
purchase
31
of
a
service
contract
through
force,
fear,
or
threats,
whether
32
explicit
or
implied.
33
d.
Create
or
use
any
service
contract
marketing
materials
34
that
contain
incorrect
or
misleading
information.
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e.
Use,
offer
for
sale,
or
issue
in
this
state
a
service
1
contract
form
that
has
not
been
submitted
as
part
of
a
license
2
application
pursuant
to
section
523C.3,
as
part
of
a
license
3
application
renewal
pursuant
to
section
523C.4,
or
submitted
4
to
the
division
during
the
service
company’s
current
license
5
period.
6
3.
The
commissioner
may
adopt
rules
pursuant
to
7
chapter
17A
that
regulate
service
contracts
to
prohibit
8
misrepresentation,
false
advertising,
defamation,
boycotts,
9
coercion,
intimidation,
false
statements
and
entries,
and
10
unfair
discrimination
or
practices.
If
the
commissioner
finds
11
that
a
person
has
violated
rules
adopted
under
this
section,
12
the
commissioner
may
order
any
of
the
following:
13
a.
Payment
of
a
civil
penalty
of
not
more
than
one
thousand
14
dollars
for
each
act
or
violation,
not
to
exceed
an
aggregate
15
of
ten
thousand
dollars,
unless
the
person
knew
or
reasonably
16
should
have
known
the
person
was
in
violation
of
this
section,
17
in
which
case
the
civil
penalty
shall
be
no
more
than
five
18
thousand
dollars
for
each
act
or
violation,
not
to
exceed
an
19
aggregate
of
fifty
thousand
dollars
in
any
one
consecutive
20
six-month
period.
If
the
commissioner
finds
a
violation
of
21
this
section
was
directed,
encouraged,
condoned,
ignored,
22
or
ratified
by
the
employer
of
the
person
the
commissioner
23
may
assess
the
penalty
to
the
employer
and
not
the
person.
24
Any
civil
penalties
collected
under
this
subsection
shall
be
25
deposited
as
provided
in
section
505.7.
26
b.
Suspension
or
revocation
of
the
person’s
license,
if
the
27
person
knew
or
reasonably
should
have
known
the
person
was
in
28
violation
of
this
section.
29
4.
A
violation
of
this
chapter
constitutes
an
unlawful
30
practice
pursuant
to
section
714.16.
31
5.
A
person
shall
not
engage,
directly
or
indirectly,
in
any
32
unfair
method
of
competition,
or
an
unfair
or
deceptive
act
or
33
practice,
in
the
business
of
service
contracts.
Any
violation
34
of
this
chapter
constitutes
an
unfair
method
of
competition,
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or
an
unfair
or
deceptive
act
or
practice.
If,
after
hearing,
1
the
commissioner
determines
that
a
person
has
engaged
in
an
2
unfair
method
of
competition
or
an
unfair
or
deceptive
act
or
3
practice,
sections
507B.6
through
507B.8
shall
apply.
4
Sec.
11.
Section
523C.22,
Code
2026,
is
amended
to
read
as
5
follows:
6
523C.22
Claim
procedures.
7
A
licensed
service
company
shall
promptly
provide
a
8
detailed
written
explanation
to
the
service
contract
holder,
9
describing
the
reasons
for
denying
a
claim
or
for
the
offer
10
of
a
compromise
settlement,
based
on
all
relevant
facts
or
11
legal
requirements
and
referring
to
applicable
provisions
of
12
the
service
contract.
The
written
explanation
must
provide
13
an
itemized
list
of
services
covered
by,
and
not
covered
14
by,
the
service
company
under
the
service
contract.
The
15
written
explanation
must
provide
instructions
to
the
service
16
contract
holder
on
the
process
for
an
appeal,
second
review,
17
arbitration,
or
similar
provisions
included
in
the
contract,
18
as
well
as
information
on
how
to
file
a
complaint
with
the
19
division,
including
the
internet
site
on
which
to
locate
the
20
division’s
complaint
form.
21
Sec.
12.
Section
523C.23,
subsection
1,
paragraph
c,
Code
22
2026,
is
amended
by
striking
the
paragraph.
23
Sec.
13.
Section
523C.23,
subsection
2,
Code
2026,
is
24
amended
to
read
as
follows:
25
2.
Except
as
provided
in
section
523C.19
,
a
A
proceeding
26
instituted
under
this
chapter
shall
be
conducted
pursuant
to
27
chapter
17A
and
rules
adopted
by
the
commissioner
pursuant
to
28
chapter
17A
.
29
Sec.
14.
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,
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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
with
other
regulatory
13
authorities
or
government
agencies,
or
may
publish
service
14
company-related
data
or
information
collected
under
this
15
chapter.
Such
information
may
be
redacted
so
that
neither
16
personally
identifiable
information
nor
service
company
17
identifiable
information
is
made
available.
18
Sec.
15.
Section
714.16,
subsection
2,
Code
2026,
is
amended
19
by
adding
the
following
new
paragraph:
20
NEW
PARAGRAPH
.
t.
It
is
an
unlawful
practice
for
a
person
21
to
violate
chapter
523C.
22
Sec.
16.
REPEAL.
Section
523C.19,
Code
2025,
is
repealed.
23
EXPLANATION
24
The
inclusion
of
this
explanation
does
not
constitute
agreement
with
25
the
explanation’s
substance
by
the
members
of
the
general
assembly.
26
This
bill
relates
to
the
licensing
of
service
companies,
27
motor
vehicle
service
contracts,
and
residential
service
28
contracts.
29
The
bill
prohibits
a
person
that
will
be
contractually
30
obligated
to
a
service
contract
holder
under
the
terms
of
a
31
service
contract
from
issuing,
offering
for
sale,
or
selling
a
32
motor
vehicle
service
contract
or
residential
service
contract
33
in
the
state
unless
the
person
is
a
licensed
service
company.
34
The
requirements
of
the
bill
do
not
apply
to
any
person
who
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provides
support
services.
“Support
services”
is
defined
in
1
the
bill.
2
A
service
company
shall
maintain
a
license
for
the
entirety
3
of
any
service
contract
that
the
service
company
has
entered.
4
A
service
company
shall
report
to
the
commissioner
of
insurance
5
(commissioner)
within
30
calendar
days
any
material
change
6
to
the
information
submitted
in
the
initial
or
renewal
7
application,
within
30
days
of
any
administrative
action
taken
8
against
the
service
company,
and
within
30
days
of
the
initial
9
pretrial
hearing
date
in
a
criminal
prosecution
against
the
10
service
company
as
detailed
in
the
bill.
11
An
application
for
a
license
as
a
service
company
shall
12
be
filed
with
the
commissioner,
include
all
information
as
13
described
in
the
bill,
and
be
accompanied
by
a
$500
license
14
fee
and
a
$35
fee
for
each
motor
vehicle
service
contract
form
15
provided
by
the
service
company
in
the
application.
A
license
16
as
a
service
company
is
valid
for
one
year
and
must
be
renewed
17
annually
on
or
before
August
31
of
each
year
following
the
date
18
of
issuance.
19
An
application
for
license
renewal
shall
include
the
20
information
required
for
an
initial
license,
a
list
of
each
21
service
contract
form,
any
additional
information
requested
22
by
the
commissioner
to
verify
the
information
in
the
renewal
23
application,
and
the
information
and
fees
as
described
in
the
24
bill.
If
the
renewal
application
meets
the
requirements,
the
25
commissioner
shall
renew
the
license
unless
otherwise
denied,
26
in
which
case
the
denial
shall
be
in
writing.
27
If
a
service
company
fails
to
renew
their
license
on
or
28
before
the
end
of
the
license
period,
the
company’s
license
29
shall
be
deemed
expired,
and
the
service
company
shall
be
30
subject
to
restrictions
detailed
in
the
bill.
Prior
to
a
31
license
expiration
date,
and
if
a
renewal
application
was
32
submitted
at
least
14
days
prior
to
the
license
expiration
33
date,
the
commissioner
may
extend
the
renewal
period
an
34
additional
30
calendar
days.
If
a
service
company
submits
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an
application
or
renewal
application
after
the
license
has
1
expired,
the
service
company
shall
file
a
service
company
2
license
renewal
application,
including
payment
of
applicable
3
fees.
4
A
service
contract
shall
not
be
issued,
sold,
or
offered
for
5
sale
unless
the
service
company
complies
with
the
requirements
6
of
the
bill.
A
paper
copy
of
the
sample
copy
or
the
service
7
contract
shall
be
provided
upon
the
consumer’s
request
at
the
8
expense
of
the
service
company.
9
A
service
contract
issued,
sold,
or
offered
for
sale
in
the
10
state
shall
comply
with
all
of
the
requirements
described
in
11
the
bill.
The
requirements
for
a
residential
service
contract
12
that
relates
to
goods
that
are
essential
to
the
health
and
13
safety
of
the
service
contract
holder
are
detailed
in
the
bill.
14
A
service
company
may
continue
to
use
a
noncompliant
service
15
contract
form
until
August
31,
2027,
provided
no
changes
are
16
made
to
the
form,
and
the
service
contract
form
was
filed
with
17
the
division
in
2026.
18
The
commissioner
may
suspend
or
revoke
the
license
of,
deny
19
an
application
for
license
from,
or
refuse
to
renew
the
license
20
of
a
service
company,
or
may
levy
a
civil
penalty
against
a
21
service
company,
as
described
in
the
bill,
and
shall
notify
the
22
service
company
in
writing
of
the
reason
for
the
suspension,
23
revocation,
nonrenewal,
or
denial.
The
licensee
or
applicant
24
may
request
a
hearing.
25
A
service
company
that
offers
service
contracts
for
sale,
26
or
the
service
company’s
support
services,
shall
not
represent
27
in
any
manner
a
false,
deceptive,
or
misleading
statement
with
28
respect
to
the
service
company’s
affiliation
with
a
motor
29
vehicle
manufacturer
or
importer,
the
validity
or
expiration
30
of
a
warranty,
or
a
motor
vehicle
service
contract
holder’s
31
coverage
under
a
motor
vehicle
service
contract,
and
shall
not
32
describe
the
service
contract
as
a
policy.
33
A
service
company
shall
not
engage
in
a
prohibited
act
34
or
practice
as
detailed
in
the
bill.
The
commissioner
35
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22
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may
adopt
rules
regulating
service
contracts
to
prohibit
1
misrepresentation,
false
advertising,
defamation,
boycotts,
2
coercion,
intimidation,
false
statements
and
entries,
and
3
unfair
discrimination
or
practices.
If
the
commissioner
finds
4
that
a
person
has
violated
rules
adopted
under
the
bill,
the
5
commissioner
may
order
payment
of
a
civil
penalty
as
described
6
in
the
bill,
or
suspend
or
revoke
a
service
company’s
license.
7
Under
the
bill,
a
person
shall
not
engage
in
any
unfair
method
8
of
competition,
or
an
unfair
or
deceptive
act
or
practice,
in
9
the
service
contract
business.
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
the
division
or
obtained
by
the
15
division
in
the
course
of
an
investigation,
examination,
or
16
inquiry,
including
all
notes,
work
papers,
or
other
documents
17
and
the
information
as
described
in
the
bill.
The
commissioner
18
may
disclose
or
release
information
that
is
otherwise
19
confidential
in
the
circumstances
detailed
in
the
bill.
20
The
bill
repeals
Code
section
523C.19
(cease
and
desist
21
orders).
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