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7 LONG TITLE
8 General Description:
9 This bill addresses vehicle value protection agreements.
10 Highlighted Provisions:
11 This bill:
12 ▸ defines terms;
13 ▸ allows a person to enter into a vehicle value protection agreement under certain
14 circumstances;
15 ▸ details requirements for cancellation of a vehicle value protection agreement;
16 ▸ requires the provider of a benefit under a vehicle value protection agreement to:
17 • obtain contract liability insurance for the vehicle value protection agreement;
18 • provide other security for payment under the vehicle value protection
19 agreement; or
20 • maintain a certain net worth;
21 ▸ authorizes the Division of Consumer Protection (division) to enforce vehicle value
22 protection agreement requirements;
23 ▸ requires the insurer under a contract liability insurance policy for a vehicle value
24 protection agreement and a provider of a vehicle value protection agreement to
25 provide certain information to the division;
26 ▸ provides fines and civil penalties for a violation of vehicle value protection
27 agreement requirements;
28 ▸ requires fines and civil penalties received by the division for a violation to be placed
29 in the Consumer Protection Education and Training Fund;
30 ▸ provides administrative rulemaking authority; and
31 ▸ makes technical and conforming changes.
32 Money Appropriated in this Bill:
33 None
34 Other Special Clauses:
35 This bill provides a special effective date.
36 Utah Code Sections Affected:
37 AMENDS:
38 13-2-1 (Superseded 12/31/23), as last amended by Laws of Utah 2022, Chapter 201
39 13-2-1 (Effective 12/31/23), as last amended by Laws of Utah 2022, Chapters 201, 462
40 ENACTS:
41 13-63-101, Utah Code Annotated 1953
42 13-63-201, Utah Code Annotated 1953
43 13-63-202, Utah Code Annotated 1953
44 13-63-203, Utah Code Annotated 1953
45 13-63-301, Utah Code Annotated 1953
46
47 Be it enacted by the Legislature of the state of Utah:
48 Section 1. Section 13-2-1 (Superseded 12/31/23) is amended to read:
49 13-2-1 (Superseded 12/31/23). Consumer protection division established --
50 Functions.
51 (1) There is established within the Department of Commerce the Division of Consumer
52 Protection.
53 (2) The division shall administer and enforce the following:
54 (a) Chapter 5, Unfair Practices Act;
55 (b) Chapter 10a, Music Licensing Practices Act;
56 (c) Chapter 11, Utah Consumer Sales Practices Act;
57 (d) Chapter 15, Business Opportunity Disclosure Act;
58 (e) Chapter 20, New Motor Vehicle Warranties Act;
59 (f) Chapter 21, Credit Services Organizations Act;
60 (g) Chapter 22, Charitable Solicitations Act;
61 (h) Chapter 23, Health Spa Services Protection Act;
62 (i) Chapter 25a, Telephone and Facsimile Solicitation Act;
63 (j) Chapter 26, Telephone Fraud Prevention Act;
64 (k) Chapter 28, Prize Notices Regulation Act;
65 (l) Chapter 32a, Pawnshop, Secondhand Merchandise, and Catalytic Converter
66 Transaction Information Act;
67 (m) Chapter 34, Utah Postsecondary Proprietary School Act;
68 (n) Chapter 34a, Utah Postsecondary School State Authorization Act;
69 (o) Chapter 41, Price Controls During Emergencies Act;
70 (p) Chapter 42, Uniform Debt-Management Services Act;
71 (q) Chapter 49, Immigration Consultants Registration Act;
72 (r) Chapter 51, Transportation Network Company Registration Act;
73 (s) Chapter 52, Residential Solar Energy Disclosure Act;
74 (t) Chapter 53, Residential, Vocational and Life Skills Program Act;
75 (u) Chapter 54, Ticket Website Sales Act;
76 (v) Chapter 56, Ticket Transferability Act; [
77 (w) Chapter 57, Maintenance Funding Practices Act[
78 (x) Chapter 63, Vehicle Value Protection Agreement Act.
79 Section 2. Section 13-2-1 (Effective 12/31/23) is amended to read:
80 13-2-1 (Effective 12/31/23). Consumer protection division established --
81 Functions.
82 (1) There is established within the Department of Commerce the Division of Consumer
83 Protection.
84 (2) The division shall administer and enforce the following:
85 (a) Chapter 5, Unfair Practices Act;
86 (b) Chapter 10a, Music Licensing Practices Act;
87 (c) Chapter 11, Utah Consumer Sales Practices Act;
88 (d) Chapter 15, Business Opportunity Disclosure Act;
89 (e) Chapter 20, New Motor Vehicle Warranties Act;
90 (f) Chapter 21, Credit Services Organizations Act;
91 (g) Chapter 22, Charitable Solicitations Act;
92 (h) Chapter 23, Health Spa Services Protection Act;
93 (i) Chapter 25a, Telephone and Facsimile Solicitation Act;
94 (j) Chapter 26, Telephone Fraud Prevention Act;
95 (k) Chapter 28, Prize Notices Regulation Act;
96 (l) Chapter 32a, Pawnshop, Secondhand Merchandise, and Catalytic Converter
97 Transaction Information Act;
98 (m) Chapter 34, Utah Postsecondary Proprietary School Act;
99 (n) Chapter 34a, Utah Postsecondary School State Authorization Act;
100 (o) Chapter 41, Price Controls During Emergencies Act;
101 (p) Chapter 42, Uniform Debt-Management Services Act;
102 (q) Chapter 49, Immigration Consultants Registration Act;
103 (r) Chapter 51, Transportation Network Company Registration Act;
104 (s) Chapter 52, Residential Solar Energy Disclosure Act;
105 (t) Chapter 53, Residential, Vocational and Life Skills Program Act;
106 (u) Chapter 54, Ticket Website Sales Act;
107 (v) Chapter 56, Ticket Transferability Act;
108 (w) Chapter 57, Maintenance Funding Practices Act; [
109 (x) Chapter 61, Utah Consumer Privacy Act[
110 (y) Chapter 63, Vehicle Value Protection Agreement Act.
111 Section 3. Section 13-63-101 is enacted to read:
112
113
114 13-63-101. Definitions.
115 As used in this chapter:
116 (1) "Administrative functions" means the same as that term is defined in Section
117 31A-6b-102.
118 (2) "Agreement administrator" means a person who provides administrative functions
119 related to a vehicle value protection agreement.
120 (3) "Covered vehicle" means a vehicle that is covered under a vehicle value protection
121 agreement.
122 (4) "Division" means the Division of Consumer Protection established in Section
123 13-2-1.
124 (5) "Finance agreement" means the same as that term is defined in Section
125 31A-6b-102.
126 (6) "Insurer" means the same as that term is defined in Section 31A-1-301.
127 (7) "Preliminary period" means a time period that:
128 (a) begins the day on which the vehicle value protection agreement becomes effective;
129 and
130 (b) ends the last day on which the purchaser may cancel the vehicle value protection
131 agreement with a full refund.
132 (8) "Provider" means a person who is obligated to provide a benefit to another person
133 under a vehicle value protection agreement.
134 (9) "Purchaser" means a person who purchases a benefit from another person under a
135 vehicle value protection agreement.
136 (10) "Security" means the same as that term is defined in Section 31A-1-301.
137 (11) "Vehicle" means the same as that term is defined in Section 31A-6b-102.
138 (12) (a) "Vehicle value protection agreement" means an agreement for a separate
139 charge between a provider and purchaser under which the provider agrees to, upon damage,
140 total loss, or unrecovered theft of the purchaser's covered vehicle, provide a benefit to the
141 purchaser that may be applied to:
142 (i) the cash value of the covered vehicle when traded in for a replacement vehicle;
143 (ii) the finance agreement for a replacement vehicle; or
144 (iii) the purchase or lease price of a replacement vehicle.
145 (b) "Vehicle value protection agreement" includes:
146 (i) a vehicle trade-in agreement;
147 (ii) a vehicle diminished value agreement;
148 (iii) a vehicle cash down payment protection agreement; and
149 (iv) a vehicle depreciation benefit agreement.
150 (c) "Vehicle value protection agreement" does not include:
151 (i) insurance or an insurance contract regulated under Title 31A, Insurance Code;
152 (ii) a guaranteed asset protection waiver, as defined in Section 31A-6b-102;
153 (iii) a debt cancellation agreement, as defined in Section 31A-21-108; or
154 (iv) a debt suspension contract, as defined in Section 31A-21-108.
155 Section 4. Section 13-63-201 is enacted to read:
156
157 13-63-201. Vehicle value protection agreement -- Required disclosures -- Finance
158 agreement conditions.
159 (1) A person may not issue, sell, offer to sell, or otherwise provide a vehicle value
160 protection agreement that does not comply with this chapter.
161 (2) A vehicle value protection agreement shall conspicuously disclose:
162 (a) the name, address, and contact information of:
163 (i) the provider;
164 (ii) the agreement administrator, if any; and
165 (iii) the purchaser;
166 (b) the terms of the vehicle value protection agreement, including:
167 (i) the charges under the vehicle value protection agreement;
168 (ii) the benefit eligibility requirements;
169 (iii) the conditions imposed by the vehicle value protection agreement; and
170 (iv) the procedure a purchaser is required to follow to obtain the benefit;
171 (c) subject to Subsection (3), the terms or restrictions governing cancellation of the
172 vehicle value protection agreement, including:
173 (i) that the purchaser may cancel the vehicle value protection agreement during the
174 preliminary period;
175 (ii) the length of the preliminary period;
176 (iii) the purchaser's right to a refund for cancellation under Section 13-63-202; and
177 (iv) the methodology for calculating any refund to the purchaser for cancellation.
178 (3) The disclosure described in Subsection (2)(c)(i) shall:
179 (a) be written in dark bold with at least 12-point type on the first page of the vehicle
180 value protection agreement; and
181 (b) read as follows: "IN ACCORDANCE WITH UTAH CODE SECTION 13-63-203,
182 YOU, THE PURCHASER, MAY CANCEL THIS AGREEMENT AT ANY TIME BEFORE
183 THE END OF THE PRELIMINARY PERIOD DESCRIBED IN THIS AGREEMENT."
184 (4) The provider shall provide the purchaser a copy of the vehicle value protection
185 agreement at the time the provider and purchaser enter into the vehicle value protection
186 agreement.
187 (5) A finance agreement or vehicle purchase agreement may not be conditioned on a
188 purchaser entering into a vehicle value protection agreement.
189 Section 5. Section 13-63-202 is enacted to read:
190 13-63-202. Liability insurance -- Security for payment -- Provider net worth
191 value.
192 (1) A provider under a vehicle value protection agreement shall:
193 (a) insure all vehicle value protection agreements the provider enters into under a
194 contractual liability insurance policy that:
195 (i) (A) is issued by an insurer authorized to do business in this state that has a surplus
196 as to policyholders and paid-in capital of less than $10,000,000 and more than $5,000,000 and
197 provides evidence to the division that the insurer maintains a ratio of net written premiums to
198 surplus as to policyholders and paid-in capital of not greater than three to one; or
199 (B) is issued by an insurer authorized to do business in this state that has as a surplus as
200 to policyholders and paid-in capital of more than $10,000,000; and
201 (ii) (A) requires the insurer to reimburse the purchaser if the provider fails to perform
202 the provider's obligations under a vehicle value protection agreement;
203 (B) covers any amount the provider is required to pay for failure to perform under a
204 vehicle value protection agreement; and
205 (C) allows a purchaser to file with the insurer a claim for reimbursement under the
206 vehicle value protection agreement if the provider does not pay the purchaser within 60 days
207 after the day on which proof of damage, total loss, or unrecovered theft of the covered vehicle
208 is provided to the provider in accordance with the terms of the vehicle value protection
209 agreement;
210 (b) (i) maintain a funded reserve account to cover the provider's obligations under all
211 vehicle value protection agreements the provider enters into that is equal to or greater than 40%
212 of money received by, less claims paid to, the provider for the vehicle value protection
213 agreements; and
214 (ii) place in trust with the division a security that is equal to at least 5% of money
215 received by, less claims paid to, the provider for all vehicle value protection agreements the
216 provider enters into and more than $25,000; or
217 (c) maintain, or together with the provider's parent company maintain, a net worth or
218 stockholders' equity of $100,000,000.
219 (2) (a) An insurer described in Subsection (1)(a) shall annually file with the division:
220 (i) a copy of the insurer's audited financial statements;
221 (ii) the insurer's National Association of Insurance Commissioner annual statement;
222 and
223 (iii) the actuarial certification filed in the insurer's state of domicile.
224 (b) The division may examine a reserve account described in Subsection (1)(b).
225 (c) A provider shall, upon request, provide the division a copy of:
226 (i) the provider's or the provider's parent company's most recent Form 10-K or Form
227 20-F filed with the Securities and Exchange Commission; or
228 (ii) if the provider does not file with the Securities and Exchange Commission, a copy
229 of the provider's audited financial statements that shows the net worth of the provider or the
230 provider's parent company.
231 Section 6. Section 13-63-203 is enacted to read:
232 13-63-203. Preliminary period -- Cancellation -- Refund.
233 (1) (a) A vehicle value protection agreement shall provide for a preliminary period of
234 at least 30 days.
235 (b) If a purchaser cancels a vehicle value protection agreement within the preliminary
236 period, the purchaser is entitled to a refund of the charges under the vehicle value protection
237 agreement as follows:
238 (i) if benefits have not been provided, a full refund; or
239 (ii) if benefits have been provided, a refund to the extent provided for in the vehicle
240 value protection agreement.
241 (2) (a) Except as provided in Subsection (2)(b), if a provider cancels a vehicle value
242 protection agreement, the provider shall mail a written notice to the purchaser at least five days
243 before the day on which the vehicle value protection agreement is canceled.
244 (b) A provider may immediately cancel a vehicle value protection agreement upon
245 sending a notice of cancellation to the purchaser if the reason for the cancellation is:
246 (i) the purchaser's failure to pay the provider's fee under the vehicle value protection
247 agreement; or
248 (ii) the purchaser's breach of the purchaser's duties relating to the covered vehicle.
249 (3) A notice described in Subsection (2) shall include:
250 (a) the effective date of the cancellation; and
251 (b) the reason for the cancellation.
252 (4) If a provider cancels a vehicle value protection agreement for a reason other than
253 the purchaser's failure to pay the provider's fee under the vehicle value protection agreement,
254 the provider:
255 (a) shall refund the purchaser any unearned provider fee under the vehicle value
256 protection agreement;
257 (b) may charge the purchaser an administrative fee of up to $75; and
258 (c) may deduct the amount of a benefit paid under the vehicle value protection
259 agreement from the refund.
260 Section 7. Section 13-63-301 is enacted to read:
261
262 13-63-301. Administration and enforcement -- Division powers -- Fees --
263 Rulemaking.
264 (1) The division shall administer and enforce this chapter in accordance with Chapter
265 2, Division of Consumer Protection.
266 (2) In addition to the division's enforcement powers under Chapter 2, Division of
267 Consumer Protection:
268 (a) the division director may impose an administrative fine of up to $2,500 for each act
269 that is in violation of this chapter, including failure to insure or consider a vehicle value
270 protection agreement as required under Subsection 13-63-202(1); and
271 (b) the division may bring a civil action to enforce this chapter.
272 (3) In a civil action by the division to enforce this chapter, the court may:
273 (a) declare that an act or practice violates this chapter;
274 (b) issue an injunction for a violation of this chapter;
275 (c) order disgorgement of any money received after a violation of this chapter;
276 (d) order payment of disgorged money to an injured individual;
277 (e) impose a civil penalty of up to $2,500 for each violation of this chapter; or
278 (f) award any other relief that the court deems reasonable and necessary.
279 (4) If a court grants judgment or injunctive relief to the division, the court shall award
280 the division:
281 (a) reasonable attorney fees;
282 (b) court costs; and
283 (c) investigative fees.
284 (5) (a) A person who violates an administrative or court order issued for a violation of
285 this chapter is subject to a civil penalty of no more than $5,000 for each violation.
286 (b) A civil penalty authorized under this section may be imposed in any civil action
287 brought by the division.
288 (c) The division shall deposit money received for the payment of a fine or civil penalty
289 under this section into the Consumer Protection Education and Training Fund created in
290 Section 13-2-8.
291 (6) The division may make rules in accordance with Title 63G, Chapter 3, Utah
292 Administrative Rulemaking Act, to administer and enforce this chapter.
293 Section 8. Effective date.
294 (1) Except as provided in Subsection (2), this bill takes effect on May 3, 2023.
295 (2) The amendments to Section 13-2-1 (Effective 12/31/23) take effect on December
296 31, 2023.