Bill Text: FL S0902 | 2024 | Regular Session | Enrolled


Bill Title: Motor Vehicle Retail Financial Agreements

Spectrum: Slight Partisan Bill (? 2-1)

Status: (Passed) 2024-05-07 - Chapter No. 2024-142 [S0902 Detail]

Download: Florida-2024-S0902-Enrolled.html
       ENROLLED
       2024 Legislature                            CS for CS for SB 902
       
       
       
       
       
       
                                                              2024902er
    1  
    2         An act relating to motor vehicle retail financial
    3         agreements; amending s. 520.02, F.S.; revising the
    4         definition of the term “guaranteed asset protection
    5         product”; amending s. 520.07, F.S.; requiring entities
    6         to refund the portions of the purchase price of the
    7         contract for a guaranteed asset protection product
    8         under certain circumstances; prohibiting certain
    9         entities from deducting more than a specified amount
   10         in administrative fees when providing a refund of a
   11         guaranteed asset protection product; authorizing
   12         guaranteed asset protection products to be cancelable
   13         or noncancelable under certain circumstances;
   14         authorizing certain entities to pay refunds directly
   15         to the holder or administrator of a loan under certain
   16         circumstances; creating s. 520.151, F.S.; providing a
   17         short title; creating s. 520.152, F.S.; defining
   18         terms; creating s. 520.153, F.S.; authorizing the
   19         offer, sale, or gift of vehicle value protection
   20         agreements in compliance with a certain act;
   21         specifying a requirement regarding the amount charged
   22         or financed for a vehicle value protection agreement;
   23         prohibiting the conditioning of credit offers or terms
   24         for the sale or lease of a motor vehicle upon a
   25         consumer’s payment for or financing of any charge for
   26         a vehicle value protection agreement; authorizing
   27         discounting or giving the vehicle value protection
   28         agreement at no charge under certain circumstances;
   29         authorizing providers to use an administrator or other
   30         designee for administration of vehicle value
   31         protection agreements; prohibiting vehicle value
   32         protection agreements from being sold under certain
   33         circumstances; specifying financial security
   34         requirements for providers; prohibiting additional
   35         financial security requirements from being imposed on
   36         providers; creating s. 520.154, F.S.; requiring
   37         vehicle value protection agreements to include certain
   38         disclosures in writing, in clear and understandable
   39         language; requiring vehicle value protection
   40         agreements to state the terms, restrictions, or
   41         conditions governing cancellation by the provider or
   42         the contract holder; specifying requirements for
   43         notice by the provider, refund of fees, and deduction
   44         of fees in the event the vehicle value protection
   45         agreement is canceled; creating s. 520.155, F.S.;
   46         providing an exemption for vehicle value protection
   47         agreements in connection with a commercial
   48         transaction; creating s. 520.156, F.S.; providing
   49         noncriminal penalties; defining the term “violations
   50         of a similar nature”; creating s. 520.157, F.S.;
   51         defining the term “excess wear and use waiver”;
   52         authorizing a retail lessee to contract with a retail
   53         lessor for an excess wear and use waiver; prohibiting
   54         conditioning the terms of the consumer’s motor vehicle
   55         lease on his or her payment for any excess wear and
   56         use waiver; authorizing discounting or giving the
   57         excess wear and use waiver at no charge under certain
   58         circumstances; requiring certain disclosures for a
   59         lease agreement that includes an excess wear and use
   60         waiver; providing construction; providing an effective
   61         date.
   62          
   63  Be It Enacted by the Legislature of the State of Florida:
   64  
   65         Section 1. Subsection (7) of section 520.02, Florida
   66  Statutes, is amended to read:
   67         520.02 Definitions.—In this act, unless the context or
   68  subject matter otherwise requires:
   69         (7) “Guaranteed asset protection product” means a loan,
   70  lease, or retail installment contract term, or modification or
   71  addendum to a loan, lease, or retail installment contract, under
   72  which a creditor agrees, with or without a separate charge, to
   73  cancel or waive a customer’s liability for payment of some or
   74  all of the amount by which the debt exceeds the value of the
   75  collateral that has incurred total physical damage or is the
   76  subject of an unrecovered theft. A guaranteed asset protection
   77  product may also provide, with or without a separate charge, a
   78  benefit that waives a portion of, or provides a customer with a
   79  credit toward, the purchase of a replacement motor vehicle. Such
   80  a product is not insurance for purposes of the Florida Insurance
   81  Code. This subsection also applies to all guaranteed asset
   82  protection products issued before October 1, 2008.
   83         Section 2. Paragraph (g) of subsection (11) of section
   84  520.07, Florida Statutes, is amended, and paragraphs (h) and (i)
   85  are added to that subsection, to read:
   86         520.07 Requirements and prohibitions as to retail
   87  installment contracts.—
   88         (11) In conjunction with entering into any new retail
   89  installment contract or contract for a loan, a motor vehicle
   90  retail installment seller as defined in s. 520.02, a sales
   91  finance company as defined in s. 520.02, or a retail lessor as
   92  defined in s. 521.003, and any assignee of such an entity, may
   93  offer, for a fee or otherwise, optional guaranteed asset
   94  protection products in accordance with this chapter. The motor
   95  vehicle retail installment seller, sales finance company, retail
   96  lessor, or assignee may not require the purchase of a guaranteed
   97  asset protection product as a condition for making the loan. In
   98  order to offer any guaranteed asset protection product, a motor
   99  vehicle retail installment seller, sales finance company, or
  100  retail lessor, and any assignee of such an entity, shall comply
  101  with the following:
  102         (g) If a contract for a guaranteed asset protection product
  103  is terminated, the entity shall refund to the buyer all any
  104  unearned portions of the purchase price of fees paid for the
  105  contract unless the contract provides otherwise. A refund is not
  106  due to a consumer who receives a benefit under such product. In
  107  order to receive a refund, the buyer must notify the entity of
  108  the event terminating the contract and request a refund within
  109  90 days after the occurrence of the event terminating the
  110  contract. An entity may offer a buyer a contract that does not
  111  provide for a refund only if the entity also offers that buyer a
  112  bona fide option to purchase a comparable contract that provides
  113  for a refund. An entity may not deduct more than $75 in
  114  administrative fees from a refund made under this subsection.
  115         (h)Guaranteed asset protection products may be cancelable
  116  or noncancelable after a free-look period as defined in s.
  117  520.152.
  118         (i)If the termination of the guaranteed asset protection
  119  product occurs because of a default under the retail installment
  120  contract or contract for a loan, the repossession of the motor
  121  vehicle associated with the retail installment contract or
  122  contract for a loan, or any other termination of the retail
  123  installment contract or contract for a loan, the entity may pay
  124  any refund due directly to the holder or administrator and apply
  125  the refund as a reduction of the amount owed under the retail
  126  installment contract or contract for a loan, unless the buyer
  127  can show that the retail installment contract has been paid in
  128  full.
  129         Section 3. Section 520.151, Florida Statutes, is created to
  130  read:
  131         520.151Florida Vehicle Value Protection Agreements Act.
  132  Sections 520.151-520.156 may be cited as the “Florida Vehicle
  133  Value Protection Agreements Act.
  134         Section 4. Section 520.152, Florida Statutes, is created to
  135  read:
  136         520.152 Definitions.—As used in ss. 520.151-520.156, unless
  137  the context or subject matter otherwise requires, the term:
  138         (1)“Administrator” means the person who is responsible for
  139  the administrative or operational function of managing vehicle
  140  value protection agreements, including, but not limited to, the
  141  adjudication of claims or benefit requests by contract holders.
  142         (2)“Commercial transaction” means a transaction in which
  143  the motor vehicle subject to the transaction is used primarily
  144  for business or commercial purposes.
  145         (3)“Contract holder” means a person who is the purchaser
  146  or holder of a vehicle value protection agreement.
  147         (4)“Finance agreement” means a loan, retail installment
  148  sales contract, or lease for the purchase, refinancing, or lease
  149  of a motor vehicle.
  150         (5)“Free-look period” means the period of time, commencing
  151  on the effective date of the contract, during which the buyer
  152  may cancel the contract for a full refund of the purchase price.
  153  This period may not be shorter than 30 days.
  154         (6)“Motor vehicle” has the same meaning as provided in s.
  155  520.02.
  156         (7)“Provider” means a person that is obligated to provide
  157  a benefit under a vehicle value protection agreement. A provider
  158  may function as an administrator or retain the services of a
  159  third-party administrator.
  160         (8)“Vehicle value protection agreement” includes a
  161  contractual agreement that provides a benefit toward either the
  162  reduction of some or all of the contract holder’s current
  163  finance agreement deficiency balance or the purchase or lease of
  164  a replacement motor vehicle or motor vehicle services upon the
  165  occurrence of an adverse event to the motor vehicle, including,
  166  but not limited to, loss, theft, damage, obsolescence,
  167  diminished value, or depreciation. The term does not include
  168  guaranteed asset protection products as defined in s. 520.02.
  169  Such a product is not insurance for purposes of the Florida
  170  Insurance Code.
  171         Section 5. Section 520.153, Florida Statutes, is created to
  172  read:
  173         520.153Requirements and prohibitions as to vehicle value
  174  protection agreements.—
  175         (1)Vehicle value protection agreements may be offered,
  176  sold, or given to consumers in this state in compliance with
  177  this act.
  178         (2)Notwithstanding any other law, any amount charged or
  179  financed for a vehicle value protection agreement is not
  180  considered a finance charge or interest and must be separately
  181  stated in the finance agreement and in the vehicle value
  182  protection agreement.
  183         (3)The extension of credit, the terms of credit, or the
  184  terms of the related motor vehicle sale or lease may not be
  185  conditioned upon the consumer’s payment for or financing of any
  186  charge for a vehicle value protection agreement. However, a
  187  vehicle value protection agreement may be discounted or given at
  188  no charge in connection with the purchase of other noncredit
  189  related goods or services.
  190         (4)A provider may use an administrator or other designee
  191  to administer a vehicle value protection agreement.
  192         (5)A vehicle value protection agreement may not be sold to
  193  any person unless he or she has been or will be provided access
  194  to a copy of such vehicle value protection agreement at a
  195  reasonable time after such vehicle value protection agreement is
  196  sold.
  197         (6)A vehicle value protection agreement may not be sold if
  198  coverage is duplicative of another vehicle value protection
  199  agreement sold to a person or duplicative of a guaranteed asset
  200  protection product.
  201         (7)Each provider shall do one of the following:
  202         (a)Insure all of its vehicle value protection agreements
  203  under a policy that pays or reimburses the contract holder in
  204  the event the provider fails to perform its obligations under
  205  the vehicle value protection agreement. The insurer must be
  206  licensed or otherwise authorized or eligible to do business in
  207  this state.
  208         (b)Maintain a funded reserve account for its obligations
  209  under its contracts issued and outstanding in this state. The
  210  reserves may not be less than 40 percent of gross consideration
  211  received, less claims paid, on the sale of the vehicle value
  212  protection agreement for all in-force contracts in this state.
  213  The reserve must be placed in trust with the office and have a
  214  financial security deposit valued at not less than 5 percent of
  215  the gross consideration received, less claims paid, on the sale
  216  of the vehicle value protection agreements for all vehicle value
  217  protection agreements issued and in force in this state, but at
  218  least $25,000. The reserve account must consist of one of the
  219  following:
  220         1.A surety bond issued by an authorized surety.
  221         2.Securities of the type eligible for deposit by insurers
  222  as provided in s. 625.52.
  223         3.Cash.
  224         4.A letter of credit issued by a qualified financial
  225  institution.
  226         (c)Maintain, or together with its parent corporation
  227  maintain, a net worth or stockholders’ equity of $100 million
  228  and, upon request, provide the office with a copy of the
  229  provider’s or the provider’s parent company’s Form 10-K or Form
  230  20-F filed with the Securities and Exchange Commission within
  231  the last calendar year, or if the company does not file with the
  232  Securities and Exchange Commission, a copy of the company’s
  233  audited financial statements, which must show a net worth of the
  234  provider or its parent company of at least $100 million. If the
  235  provider’s parent company’s Form 10-K, Form 20-F, or financial
  236  statements are filed to meet the provider’s financial security
  237  requirement, the parent company must agree to guarantee the
  238  obligations of the provider relating to vehicle value protection
  239  agreements sold by the provider in this state.
  240         (8)A financial security requirement other than those
  241  imposed in subsection (7) may not be imposed on vehicle value
  242  protection agreement providers.
  243         Section 6. Section 520.154, Florida Statutes, is created to
  244  read:
  245         520.154Disclosures.—
  246         (1)A vehicle value protection agreement must disclose in
  247  writing, in clear, understandable language, all of the
  248  following:
  249         (a)The name and address of the provider, contract holder,
  250  and administrator, if any.
  251         (b)The terms of the vehicle value protection agreement,
  252  including, but not limited to, the purchase price to be paid by
  253  the contract holder, if any, the requirements for eligibility
  254  and conditions of coverage, and any exclusions.
  255         (c)Whether the vehicle value protection agreement may be
  256  canceled by the contract holder during a free-look period as
  257  defined in s. 520.152, and that, in the event of cancellation,
  258  the contract holder is entitled to a full refund of the purchase
  259  price, if any, so long as no benefits have been provided.
  260         (d)The procedure the contract holder must follow, if any,
  261  to obtain a benefit under the terms and conditions of the
  262  vehicle value protection agreement, including, if applicable, a
  263  telephone number, website, or mailing address where the contract
  264  holder may apply for a benefit.
  265         (e)Whether the vehicle value protection agreement is
  266  cancelable after the free-look period and the conditions under
  267  which it may be canceled, including the procedures for
  268  requesting any refund of the unearned purchase price paid by the
  269  contract holder. In the event that the agreement is cancelable,
  270  it must include the methodology for calculating any refund due
  271  of the unearned purchase price of the vehicle value protection
  272  agreement.
  273         (f)That the extension of credit, the terms of the credit,
  274  or the terms of the related motor vehicle sale or lease may not
  275  be conditioned upon the purchase of the vehicle value protection
  276  agreement.
  277         (2)A vehicle value protection agreement must state the
  278  terms, restrictions, or conditions governing cancellation of the
  279  vehicle value protection agreement before the termination or
  280  expiration date of the vehicle value protection agreement by
  281  either the provider or the contract holder. The provider of the
  282  vehicle value protection agreement shall mail a written notice
  283  to the contract holder at the last known address of the contract
  284  holder contained in the records of the provider at least 5 days
  285  before cancellation by the provider, which notice must state the
  286  effective date of the cancellation and the reason for the
  287  cancellation. However, such prior notice is not required if the
  288  reason for cancellation is nonpayment of the provider fee, a
  289  material misrepresentation by the contract holder to the
  290  provider or administrator, or a substantial breach of duties by
  291  the contract holder relating to the covered motor vehicle or its
  292  use. If a vehicle value protection agreement is canceled by the
  293  provider for a reason other than nonpayment of the provider fee,
  294  the provider must refund to the contract holder 100 percent of
  295  the unearned pro rata provider fee paid by the contract holder,
  296  if any. If coverage under the vehicle value protection agreement
  297  continues after a claim, any refund may reflect a deduction for
  298  claims paid and, at the discretion of the provider, an
  299  administrative fee of not more than $75.
  300         Section 7. Section 520.155, Florida Statutes, is created to
  301  read:
  302         520.155Commercial transactions exempt.—Sections 520.154
  303  and 520.156 do not apply to vehicle value protection agreements
  304  offered in connection with a commercial transaction.
  305         Section 8. Section 520.156, Florida Statutes, is created to
  306  read:
  307         520.156Penalties.—A provider, an administrator, or any
  308  other person who willfully and intentionally violates ss.
  309  520.151-520.155 commits a noncriminal violation as defined in s.
  310  775.08(3), punishable by a fine not to exceed $500 per violation
  311  and not more than $10,000 in the aggregate for all violations of
  312  a similar nature. For purposes of this section, the term
  313  violations of a similar nature” means violations that consist
  314  of the same or similar course of conduct, action, or practice,
  315  irrespective of the number of times the action, conduct, or
  316  practice determined to be a violation of ss. 520.151-520.155
  317  occurred.
  318         Section 9. Section 520.157, Florida Statutes, is created to
  319  read:
  320         520.157 Excess wear and use waiver.—
  321         (1)For purposes of this section, the term excess wear and
  322  use waiver” means a contractual agreement wherein a lessor
  323  agrees, regardless of whether subject to a separate fee, to
  324  cancel or waive all or part of amounts that may become due under
  325  a lease agreement as a result of excess wear and use of a motor
  326  vehicle, which agreement must be part of, or a separate addendum
  327  to, the lease agreement. Such waivers may also cancel or waive
  328  amounts due for excess mileage.
  329         (2)A retail lessee may contract with a retail lessor for
  330  an excess wear and use waiver in connection with a lease
  331  agreement.
  332         (3)The terms of the related motor vehicle lease may not be
  333  conditioned upon the consumer’s payment for any excess wear and
  334  use waiver. However, excess wear and use waivers may be
  335  discounted or given at no charge in connection with the purchase
  336  of other noncredit-related goods.
  337         (4)A lease agreement that includes an excess wear and use
  338  waiver must disclose all of the following:
  339         (a)The total charge for the excess wear and use waiver.
  340         (b)Any exclusions or limitations on the amount of excess
  341  wear and use which may be waived under the excess wear and use
  342  waiver.
  343         (c)The terms, restrictions, or conditions governing
  344  cancellation of the excess wear and use waiver before the
  345  termination or expiration of the excess wear and use waiver,
  346  which may include an administrative fee of not more than $75.
  347         (5)An excess wear and use waiver is not insurance for
  348  purposes of the Florida Insurance Code.
  349         Section 10. This act shall take effect October 1, 2024.

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