Bill Summary – FastDemocracy

Enrolled Copy                                                                             S.B. 216
                      VEHICLE VALUE PROTECTION AGREEMENTS
                                        2023 GENERAL SESSION
                                            STATE OF UTAH
                                Chief Sponsor: Wayne A. Harper
                                   House Sponsor: A. Cory Maloy
 6
 LONG TITLE
 General Description:
        This bill addresses vehicle value protection agreements.
 Highlighted Provisions:
        This bill:
        < defines terms;
        < allows a person to enter into a vehicle value protection agreement under certain
 circumstances;
        < details requirements for cancellation of a vehicle value protection agreement;
        < requires the provider of a benefit under a vehicle value protection agreement to:
            C     obtain contract liability insurance for the vehicle value protection agreement;
            C     provide other security for payment under the vehicle value protection
 agreement; or
            C     maintain a certain net worth;
        < authorizes the Division of Consumer Protection (division) to enforce vehicle value
 protection agreement requirements;
        < requires the insurer under a contract liability insurance policy for a vehicle value
 protection agreement and a provider of a vehicle value protection agreement to
 provide certain information to the division;
        < provides fines and civil penalties for a violation of vehicle value protection
 agreement requirements;
        < requires fines and civil penalties received by the division for a violation to be placed
 in the Consumer Protection Education and Training Fund;
       S.B. 216                                                                   Enrolled Copy
        < provides administrative rulemaking authority; and
        < makes technical and conforming changes.
 Money Appropriated in this Bill:
        None
 Other Special Clauses:
        This bill provides a special effective date.
 Utah Code Sections Affected:
 AMENDS:
        13-2-1 (Superseded 12/31/23), as last amended by Laws of Utah 2022, Chapter 201
        13-2-1 (Effective 12/31/23), as last amended by Laws of Utah 2022, Chapters 201, 462
 ENACTS:
        13-63-101, Utah Code Annotated 1953
        13-63-201, Utah Code Annotated 1953
        13-63-202, Utah Code Annotated 1953
        13-63-203, Utah Code Annotated 1953
        13-63-301, Utah Code Annotated 1953
46
 Be it enacted by the Legislature of the state of Utah:
        Section 1. Section 13-2-1 (Superseded 12/31/23) is amended to read:
        13-2-1 (Superseded 12/31/23). Consumer protection division established --
 Functions.
        (1) There is established within the Department of Commerce the Division of Consumer
 Protection.
        (2) The division shall administer and enforce the following:
        (a) Chapter 5, Unfair Practices Act;
        (b) Chapter 10a, Music Licensing Practices Act;
        (c) Chapter 11, Utah Consumer Sales Practices Act;
        (d) Chapter 15, Business Opportunity Disclosure Act;
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      Enrolled Copy                                                                      S.B. 216
        (e) Chapter 20, New Motor Vehicle Warranties Act;
        (f) Chapter 21, Credit Services Organizations Act;
        (g) Chapter 22, Charitable Solicitations Act;
        (h) Chapter 23, Health Spa Services Protection Act;
        (i) Chapter 25a, Telephone and Facsimile Solicitation Act;
        (j) Chapter 26, Telephone Fraud Prevention Act;
        (k) Chapter 28, Prize Notices Regulation Act;
        (l) Chapter 32a, Pawnshop, Secondhand Merchandise, and Catalytic Converter
 Transaction Information Act;
        (m) Chapter 34, Utah Postsecondary Proprietary School Act;
        (n) Chapter 34a, Utah Postsecondary School State Authorization Act;
        (o) Chapter 41, Price Controls During Emergencies Act;
        (p) Chapter 42, Uniform Debt-Management Services Act;
        (q) Chapter 49, Immigration Consultants Registration Act;
        (r) Chapter 51, Transportation Network Company Registration Act;
        (s) Chapter 52, Residential Solar Energy Disclosure Act;
        (t) Chapter 53, Residential, Vocational and Life Skills Program Act;
        (u) Chapter 54, Ticket Website Sales Act;
        (v) Chapter 56, Ticket Transferability Act; [and]
        (w) Chapter 57, Maintenance Funding Practices Act[.]; and
        (x) Chapter 63, Vehicle Value Protection Agreement Act.
        Section 2. Section 13-2-1 (Effective 12/31/23) is amended to read:
        13-2-1 (Effective 12/31/23). Consumer protection division established --
 Functions.
        (1) There is established within the Department of Commerce the Division of Consumer
 Protection.
        (2) The division shall administer and enforce the following:
        (a) Chapter 5, Unfair Practices Act;
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       S.B. 216                                                                     Enrolled Copy
        (b) Chapter 10a, Music Licensing Practices Act;
        (c) Chapter 11, Utah Consumer Sales Practices Act;
        (d) Chapter 15, Business Opportunity Disclosure Act;
        (e) Chapter 20, New Motor Vehicle Warranties Act;
        (f) Chapter 21, Credit Services Organizations Act;
        (g) Chapter 22, Charitable Solicitations Act;
        (h) Chapter 23, Health Spa Services Protection Act;
        (i) Chapter 25a, Telephone and Facsimile Solicitation Act;
        (j) Chapter 26, Telephone Fraud Prevention Act;
        (k) Chapter 28, Prize Notices Regulation Act;
        (l) Chapter 32a, Pawnshop, Secondhand Merchandise, and Catalytic Converter
 Transaction Information Act;
        (m) Chapter 34, Utah Postsecondary Proprietary School Act;
        (n) Chapter 34a, Utah Postsecondary School State Authorization Act;
        (o) Chapter 41, Price Controls During Emergencies Act;
        (p) Chapter 42, Uniform Debt-Management Services Act;
        (q) Chapter 49, Immigration Consultants Registration Act;
        (r) Chapter 51, Transportation Network Company Registration Act;
        (s) Chapter 52, Residential Solar Energy Disclosure Act;
        (t) Chapter 53, Residential, Vocational and Life Skills Program Act;
        (u) Chapter 54, Ticket Website Sales Act;
        (v) Chapter 56, Ticket Transferability Act;
        (w) Chapter 57, Maintenance Funding Practices Act; [and]
        (x) Chapter 61, Utah Consumer Privacy Act[.]; and
        (y) Chapter 63, Vehicle Value Protection Agreement Act.
        Section 3. Section 13-63-101 is enacted to read:
             CHAPTER 63. VEHICLE VALUE PROTECTION AGREEMENT ACT
                                     Part 1. General Provisions
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        Enrolled Copy                                                                           S.B. 216
           13-63-101. Definitions.
           As used in this chapter:
           (1) "Administrative functions" means the same as that term is defined in Section
 31A-6b-102.
           (2) "Agreement administrator" means a person who provides administrative functions
 related to a vehicle value protection agreement.
           (3) "Covered vehicle" means a vehicle that is covered under a vehicle value protection
 agreement.
           (4) "Division" means the Division of Consumer Protection established in Section
 13-2-1.
           (5) "Finance agreement" means the same as that term is defined in Section
 31A-6b-102.
           (6) "Insurer" means the same as that term is defined in Section 31A-1-301.
           (7) "Preliminary period" means a time period that:
           (a) begins the day on which the vehicle value protection agreement becomes effective;
 and
           (b) ends the last day on which the purchaser may cancel the vehicle value protection
 agreement with a full refund.
           (8) "Provider" means a person who is obligated to provide a benefit to another person
 under a vehicle value protection agreement.
           (9) "Purchaser" means a person who purchases a benefit from another person under a
 vehicle value protection agreement.
           (10) "Security" means the same as that term is defined in Section 31A-1-301.
           (11) "Vehicle" means the same as that term is defined in Section 31A-6b-102.
           (12) (a) "Vehicle value protection agreement" means an agreement for a separate
 charge between a provider and purchaser under which the provider agrees to, upon damage,
 total loss, or unrecovered theft of the purchaser's covered vehicle, provide a benefit to the
 purchaser that may be applied to:
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       S.B. 216                                                                       Enrolled Copy
        (i) the cash value of the covered vehicle when traded in for a replacement vehicle;
        (ii) the finance agreement for a replacement vehicle; or
        (iii) the purchase or lease price of a replacement vehicle.
        (b) "Vehicle value protection agreement" includes:
        (i) a vehicle trade-in agreement;
        (ii) a vehicle diminished value agreement;
        (iii) a vehicle cash down payment protection agreement; and
        (iv) a vehicle depreciation benefit agreement.
        (c) "Vehicle value protection agreement" does not include:
        (i) insurance or an insurance contract regulated under Title 31A, Insurance Code;
        (ii) a guaranteed asset protection waiver, as defined in Section 31A-6b-102;
        (iii) a debt cancellation agreement, as defined in Section 31A-21-109; or
        (iv) a debt suspension contract, as defined in Section 31A-21-109.
        Section 4. Section 13-63-201 is enacted to read:
                               Part 2. Vehicle Value Protection Agreements
        13-63-201. Vehicle value protection agreement -- Required disclosures -- Finance
 agreement conditions.
        (1) A person may not issue, sell, offer to sell, or otherwise provide a vehicle value
 protection agreement that does not comply with this chapter.
        (2) A vehicle value protection agreement shall conspicuously disclose:
        (a) the name, address, and contact information of:
        (i) the provider;
        (ii) the agreement administrator, if any; and
        (iii) the purchaser;
        (b) the terms of the vehicle value protection agreement, including:
        (i) the charges under the vehicle value protection agreement;
        (ii) the benefit eligibility requirements;
        (iii) the conditions imposed by the vehicle value protection agreement; and
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        Enrolled Copy                                                                             S.B. 216
          (iv) the procedure a purchaser is required to follow to obtain the benefit; and
          (c) subject to Subsection (3), the terms or restrictions governing cancellation of the
 vehicle value protection agreement, including:
          (i) that the purchaser may cancel the vehicle value protection agreement during the
 preliminary period;
          (ii) the length of the preliminary period;
          (iii) the purchaser's right to a refund for cancellation under Section 13-63-203; and
          (iv) the methodology for calculating any refund to the purchaser for cancellation.
          (3) The disclosure described in Subsection (2)(c)(i) shall:
          (a) be written in dark bold with at least 12-point type on the first page of the vehicle
 value protection agreement; and
          (b) read as follows: "IN ACCORDANCE WITH UTAH CODE SECTION 13-63-203,
 YOU, THE PURCHASER, MAY CANCEL THIS AGREEMENT AT ANY TIME BEFORE
 THE END OF THE PRELIMINARY PERIOD DESCRIBED IN THIS AGREEMENT."
          (4) The provider shall provide the purchaser a copy of the vehicle value protection
 agreement at the time the provider and purchaser enter into the vehicle value protection
 agreement.
          (5) A finance agreement or vehicle purchase agreement may not be conditioned on a
 purchaser entering into a vehicle value protection agreement.
          Section 5. Section 13-63-202 is enacted to read:
          13-63-202. Liability insurance -- Security for payment -- Provider net worth
 value.
          (1) A provider under a vehicle value protection agreement shall:
          (a) insure all vehicle value protection agreements the provider enters into under a
 contractual liability insurance policy that:
          (i) (A) is issued by an insurer authorized to do business in this state that has a surplus
 as to policyholders and paid-in capital of less than $10,000,000 and more than $5,000,000 and
 provides evidence to the division that the insurer maintains a ratio of net written premiums to
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        S.B. 216                                                                           Enrolled Copy
 surplus as to policyholders and paid-in capital of not greater than three to one; or
        (B) is issued by an insurer authorized to do business in this state that has as a surplus as
 to policyholders and paid-in capital of more than $10,000,000; and
        (ii) (A) requires the insurer to reimburse the purchaser if the provider fails to perform
 the provider's obligations under a vehicle value protection agreement;
        (B) covers any amount the provider is required to pay for failure to perform under a
 vehicle value protection agreement; and
        (C) allows a purchaser to file with the insurer a claim for reimbursement under the
 vehicle value protection agreement if the provider does not pay the purchaser within 60 days
 after the day on which proof of damage, total loss, or unrecovered theft of the covered vehicle
 is provided to the provider in accordance with the terms of the vehicle value protection
 agreement;
        (b) (i) maintain a funded reserve account to cover the provider's obligations under all
 vehicle value protection agreements the provider enters into that is equal to or greater than 40%
 of money received by, less claims paid to, the provider for the vehicle value protection
 agreements; and
        (ii) place in trust with the division a security that is equal to at least 5% of money
 received by, less claims paid to, the provider for all vehicle value protection agreements the
 provider enters into and more than $25,000; or
        (c) maintain, or together with the provider's parent company maintain, a net worth or
 stockholders' equity of $100,000,000.
        (2) (a) An insurer described in Subsection (1)(a) shall annually file with the division:
        (i) a copy of the insurer's audited financial statements;
        (ii) the insurer's National Association of Insurance Commissioner annual statement;
 and
        (iii) the actuarial certification filed in the insurer's state of domicile.
        (b) The division may examine a reserve account described in Subsection (1)(b).
        (c) A provider shall, upon request, provide the division a copy of:
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        Enrolled Copy                                                                            S.B. 216
         (i) the provider's or the provider's parent company's most recent Form 10-K or Form
 20-F filed with the Securities and Exchange Commission; or
         (ii) if the provider does not file with the Securities and Exchange Commission, a copy
 of the provider's audited financial statements that shows the net worth of the provider or the
 provider's parent company.
         Section 6. Section 13-63-203 is enacted to read:
         13-63-203. Preliminary period -- Cancellation -- Refund.
         (1) (a) A vehicle value protection agreement shall provide for a preliminary period of
 at least 30 days.
         (b) If a purchaser cancels a vehicle value protection agreement within the preliminary
 period, the purchaser is entitled to a refund of the charges under the vehicle value protection
 agreement as follows:
         (i) if benefits have not been provided, a full refund; or
         (ii) if benefits have been provided, a refund to the extent provided for in the vehicle
 value protection agreement.
         (2) (a) Except as provided in Subsection (2)(b), if a provider cancels a vehicle value
 protection agreement, the provider shall mail a written notice to the purchaser at least five days
 before the day on which the vehicle value protection agreement is canceled.
         (b) A provider may immediately cancel a vehicle value protection agreement upon
 sending a notice of cancellation to the purchaser if the reason for the cancellation is:
         (i) the purchaser's failure to pay the provider's fee under the vehicle value protection
 agreement; or
         (ii) the purchaser's breach of the purchaser's duties relating to the covered vehicle.
         (3) A notice described in Subsection (2) shall include:
         (a) the effective date of the cancellation; and
         (b) the r