HF 2756

House
File
2756
-
Enrolled
House
File
2756
AN
ACT
RELATING
TO
LICENSING
OF
SERVICE
COMPANIES,
MOTOR
VEHICLE
SERVICE
CONTRACTS,
AND
RESIDENTIAL
SERVICE
CONTRACTS,
AND
PROVIDING
CIVIL
PENALTIES
AND
INCLUDING
EFFECTIVE
DATE
PROVISIONS.
BE
IT
ENACTED
BY
THE
GENERAL
ASSEMBLY
OF
THE
STATE
OF
IOWA:
Section
1.
Section
523C.1,
Code
2026,
is
amended
by
adding
the
following
new
subsections:
NEW
SUBSECTION
.
1A.
“Communicating
in
a
verifiable
manner”
means
communication
by
in-person
delivery,
first
class
mail,
email,
or,
if
there
is
an
auditable
record
of
the
communication,
by
telephone
or
software
application
on
an
electronic
device.
NEW
SUBSECTION
.
1B.
“Gross
consideration”
means
the
total
value
of
a
service
contract
without
deducting
any
expenses
or
costs.
NEW
SUBSECTION
.
6A.
“Person”
means
an
individual
or
a
business
entity.
NEW
SUBSECTION
.
12A.
“Service
contract
holder”
means
the
original
purchaser
of
a
service
contract
or
the
successor
in
interest
or
transferee
entitled
to
services
under
the
service
contract.
NEW
SUBSECTION
.
12B.
“Substitute
part”
means
a
part
that
is
not
issued
by
the
original
part
manufacturer,
including
but
not
limited
to
a
remanufactured
part,
an
aftermarket
part,
and
a
part
obtained
from
a
salvage
yard.
House
File
2756,
p.
2
NEW
SUBSECTION
.
12C.
“Support
services”
means
a
person
that
provides
services
that
support,
or
a
person
that
works
under
the
direction
of,
a
licensed
service
company
in
connection
with
the
issuance,
offer
for
sale,
sale,
or
administration
of
a
service
contract
in
this
state,
including
but
not
limited
to
a
person
that
provides
marketing,
administrative,
or
technical
support
to
a
service
company.
Sec.
2.
Section
523C.1,
subsection
4,
Code
2026,
is
amended
to
read
as
follows:
4.
“Motor
vehicle”
means
any
vehicle
that
is
self-propelled
vehicle
and
subject
to
registration
under
chapter
321
.
Sec.
3.
Section
523C.1,
subsection
10,
Code
2026,
is
amended
to
read
as
follows:
10.
“Residential
service
contract”
means
a
contract
or
agreement
between
a
residential
customer
and
a
service
company
which
undertakes,
for
a
predetermined
fee
and
for
any
period
of
time,
to
service,
maintain,
repair,
replace,
or
indemnify
expenses
for
all
or
any
part
of
the
operational
or
structural
components,
appliances,
or
electrical,
mechanical,
plumbing,
heating,
cooling,
or
air-conditioning
systems
of
residential
property
in
the
state
which
fails
due
to
normal
wear
or
tear
or
inherent
defect
.
“Residential
service
contract”
also
includes
a
contract
which
provides
for
the
service,
repair,
replacement,
or
maintenance
of
property
for
,
or
damage
resulting
from
power
surges,
roof
leakage,
and
or
accidental
damage.
Sec.
4.
Section
523C.2,
Code
2026,
is
amended
by
striking
the
section
and
inserting
in
lieu
thereof
the
following:
523C.2
License
required.
1.
A
person
shall
not,
directly
or
indirectly,
issue,
offer
for
sale,
or
sell,
a
motor
vehicle
service
contract
or
residential
service
contract
in
this
state
unless
the
person
is
licensed
under
this
chapter.
2.
This
chapter
shall
not
apply
to
any
person
that
provides
support
services.
A
service
company
that
utilizes
support
services
shall
ensure
the
support
services’
compliance
with
the
issuance,
offer
for
sale,
or
sale
of
a
service
contract
under
this
chapter.
3.
A
service
company
shall
maintain
a
license
for
the
duration
of
time
that
the
service
company
is
contractually
House
File
2756,
p.
3
obligated
to
a
service
contract
holder
under
the
terms
of
a
service
contract,
unless
otherwise
ordered
by
the
commissioner
after
a
hearing
conducted
pursuant
to
chapter
17A.
4.
A
service
company
shall
report
to
the
commissioner
within
thirty
calendar
days
any
material
change
to
the
information
submitted
by
the
service
company
in
the
service
company’s
initial
license
application,
or
license
renewal
application,
including
a
change
in
the
service
company’s
contact
information,
ownership,
officers,
or
directors
directly
responsible
for
the
service
company’s
service
contract
business,
or
any
other
change
that
substantially
affects
the
service
company’s
operations
in
the
state.
5.
A
service
company
shall
report
to
the
commissioner
any
final
disposition
of
an
administrative
action
taken
against
the
service
company
related
to
the
service
company’s
service
contract
business
in
another
jurisdiction
within
thirty
calendar
days
of
final
disposition
of
the
administrative
action.
The
report
must
include
a
copy
of
the
order,
consent
to
the
order,
and
other
relevant
legal
documents.
6.
Within
thirty
calendar
days
of
the
initial
pretrial
hearing
date,
a
service
company
shall
report
to
the
commissioner
a
criminal
prosecution
in
any
jurisdiction
of
an
owner
with
more
than
a
ten
percent
ownership
stake,
an
officer,
or
a
director
directly
responsible
for
the
service
contract
business
of
the
service
company,
for
an
offense
involving
dishonesty
or
a
false
statement
including
but
not
limited
to
fraud,
theft,
misappropriation
of
funds,
falsification
of
documents,
deceptive
acts
or
practices,
or
other
related
offenses.
The
report
must
include
a
copy
of
the
initial
complaint
filed,
the
order
resulting
from
the
hearing,
and
any
other
relevant
legal
documents.
7.
A
residential
service
contract
and
a
motor
vehicle
service
contract
shall
not
be
considered
insurance.
Sec.
5.
Section
523C.3,
Code
2026,
is
amended
by
striking
the
section
and
inserting
in
lieu
thereof
the
following:
523C.3
Application
for
license.
1.
Application
for
a
license
as
a
service
company
shall
be
filed
with
the
commissioner
on
a
form
approved
by
the
commissioner
and
must
include
all
of
the
following
information:
House
File
2756,
p.
4
a.
The
name
and
principal
address
of
the
applicant.
b.
The
state
of
incorporation
of
the
applicant.
c.
The
name
and
address
of
the
applicant’s
registered
agent
for
service
of
process
in
Iowa.
d.
The
legal
name
of
all
of
the
following:
(1)
Each
owner
of
the
service
company
that
has
a
greater
than
ten
percent
ownership
stake
in
the
service
company.
(2)
Each
officer
of
the
service
company.
(3)
Each
director
directly
responsible
for
the
business
of
the
service
company.
e.
Evidence
that
the
applicant
has
obtained
any
necessary
authority
from
the
secretary
of
state
to
transact
business
in
this
state.
An
applicant
whose
home
state
is
not
this
state
shall
provide
a
certification,
dated
not
more
than
thirty
calendar
days
after
the
date
of
submission
of
an
application,
from
the
applicant’s
home
state
that
certifies
the
applicant
is
in
good
standing
in
the
applicant’s
home
state.
f.
Evidence
of
compliance
with
section
523C.5.
g.
A
copy
of
each
motor
vehicle
service
contract
form
to
be
used,
issued,
or
offered
for
sale
in
this
state
by
the
service
company.
h.
A
copy
of
each
residential
service
contract
form
to
be
used,
issued,
or
offered
for
sale
in
this
state
by
the
service
company.
i.
A
national
association
of
insurance
commissioners’
biographical
affidavit
for
the
chief
executive
officer
and
chief
financial
officer
of
the
service
company,
or
for
the
individuals
in
equivalent
positions.
j.
A
list
of
any
disciplinary
actions
taken
against
the
service
company,
or
any
of
the
service
company’s
owners
who
have
an
ownership
stake
in
the
service
company
of
more
than
ten
percent,
officers,
or
directors
directly
responsible
for
the
provider’s
service
contract
business,
in
the
immediately
preceding
five
consecutive
years
by
a
regulatory
agency
or
state
attorney
general
in
any
jurisdiction.
2.
The
application
must
be
accompanied
by
a
license
fee
in
the
amount
of
five
hundred
dollars.
3.
If
the
application
for
a
service
company
license
contains
the
information
under
subsection
1,
is
accompanied
by
the
House
File
2756,
p.
5
fees
under
subsection
2,
includes
any
additional
information
requested
by
the
commissioner
to
verify
the
information
in
the
application,
and
the
commissioner
has
not
denied
the
application
pursuant
to
section
523C.9,
the
commissioner
shall
issue
the
license
to
the
applicant.
4.
Fees
collected
under
this
section
shall
be
deposited
into
the
service
company
oversight
fund
as
provided
in
section
523C.24.
Sec.
6.
Section
523C.4,
Code
2026,
is
amended
by
striking
the
section
and
inserting
in
lieu
thereof
the
following:
523C.4
License
expiration
and
renewal.
1.
A
license
issued
under
this
chapter
shall
be
valid
for
a
period
of
one
year
and
shall
be
renewed
annually
on
or
before
August
31.
A
licensee
must
apply
for
renewal
at
least
ninety
calendar
days
prior
to
the
license
expiration
date.
A
license
that
is
not
renewed
prior
to
the
expiration
date
may
be
deemed
expired.
2.
An
application
for
license
renewal
must
include
the
information
required
for
an
initial
license
as
described
in
section
523C.3,
subsection
1,
paragraphs
“a”
through
“f”
,
and
a
list
of
each
service
contract
form
the
service
company
continues
to
use,
offer
for
sale,
or
issue
in
the
state,
including
the
service
contract
form
name,
number,
and
the
date
the
form
was
last
revised.
3.
The
license
renewal
application
must
be
accompanied
by
all
of
the
following:
a.
A
license
renewal
fee
in
the
amount
of
two
hundred
dollars.
b.
A
fee
in
the
amount
of
three
percent
of
the
aggregate
amount
of
payments
the
service
company
received
for
the
sale
or
issuance
of
residential
service
contracts
in
this
state,
less
any
refunds
issued,
during
the
immediately
preceding
calendar
year,
provided
that
such
fee
must
be
no
greater
than
fifty
thousand
dollars.
c.
In
a
format
prescribed
by
the
commissioner,
information
regarding
service
contracts
in
this
state
for
the
service
company
in
the
immediately
preceding
calendar
year
itemized
as
follows:
(1)
The
number
of
motor
vehicle
service
contracts
issued.
House
File
2756,
p.
6
(2)
The
number
of
residential
service
contracts
issued.
(3)
The
number
of
motor
vehicle
service
contracts
canceled.
(4)
The
number
of
residential
service
contracts
canceled.
(5)
The
number
of
motor
vehicle
service
contracts
that
expired.
(6)
The
number
of
residential
service
contracts
that
expired.
(7)
The
number
of
motor
vehicle
service
contracts
in
effect
on
December
31
of
the
immediately
preceding
calendar
year.
(8)
The
number
of
residential
service
contracts
in
effect
on
December
31
of
the
immediately
preceding
calendar
year.
(9)
The
total
dollar
amount
of
motor
vehicle
service
contract
fees
received
by
the
service
company.
(10)
The
total
dollar
amount
of
residential
service
contract
fees
received
by
the
service
company.
4.
If
the
license
renewal
application
complies
with
this
section,
includes
any
additional
information
requested
by
the
commissioner
to
verify
the
information
in
the
application,
and
the
commissioner
has
not
refused
to
renew
the
license
pursuant
to
section
523C.9,
the
commissioner
shall
renew
the
license.
If
the
commissioner
refuses
renewal
of
a
license
pursuant
to
section
523C.9,
the
refusal
shall
be
in
writing
setting
forth
the
grounds
for
the
refusal.
5.
If
a
service
company
submits
a
license
renewal
application
after
the
license
has
expired,
the
service
company
shall
pay
a
reinstatement
fee
of
eight
hundred
dollars,
and
the
applicable
fees
pursuant
to
subsection
3.
6.
A
service
company
whose
license
has
expired
shall
not
offer,
extend,
or
renew
a
service
contract
until
the
service
company’s
license
has
been
renewed
or
the
service
company
has
been
issued
a
new
license.
Sec.
7.
Section
523C.7,
Code
2026,
is
amended
by
striking
the
section
and
inserting
in
lieu
thereof
the
following:
523C.7
Disclosure
to
service
contract
holders
——
contract
form
——
required
provisions.
1.
A
service
contract
shall
not
be
issued,
sold,
or
offered
for
sale
in
this
state
unless
the
service
company
does
all
of
the
following:
a.
Provides
a
receipt
for
the
purchase
of
the
service
House
File
2756,
p.
7
contract
to
the
service
contract
holder.
b.
Provides
a
complete
sample
copy
of
the
service
contract
to
the
consumer
prior
to
purchase.
A
service
company
may
comply
with
this
paragraph
by
providing
the
consumer
with
a
complete
electronic
sample
copy
of
the
service
contract,
or
directing
the
consumer
to
a
complete
sample
copy
of
the
service
contract
on
an
internet
site.
c.
Provides
a
fully
executed
paper
or
electronic
copy
of
the
service
contract
to
the
service
contract
holder
within
ten
business
days
of
the
date
the
service
contract
holder
purchased
the
service
contract.
A
paper
copy
of
the
executed
service
contract
shall
be
provided
to
the
service
contract
holder
upon
request
of
the
service
contract
holder
at
the
expense
of
the
service
company.
2.
A
service
contract
issued,
sold,
or
offered
for
sale
in
the
state
must
comply
with
all
of
the
following,
as
applicable:
a.
A
service
contract
must
be
written
in
clear,
understandable
language
in
at
least
eight
point
type.
b.
(1)
A
service
contract
insured
under
a
reimbursement
insurance
policy
as
provided
in
section
523C.5,
subsection
1,
must
include
a
statement
in
substantially
the
following
form:
Obligations
of
the
service
company
under
this
service
contract
are
guaranteed
under
a
reimbursement
insurance
policy.
If
the
service
company
fails
to
pay
or
provide
service
on
a
claim
within
sixty
days
after
proof
of
loss
has
been
filed
with
the
service
company,
the
service
contract
holder
is
entitled
to
make
a
claim
directly
against
the
reimbursement
insurance
policy.
(2)
A
service
contract
insured
under
a
reimbursement
insurance
policy
must
conspicuously
state
the
name
and
address
of
the
issuer
of
the
reimbursement
insurance
policy
for
that
service
contract.
A
claim
against
a
reimbursement
insurance
policy
must
also
include
a
claim
for
return
of
any
refund
due
in
accordance
with
paragraphs
“m”
and
“n”
.
c.
A
service
contract
not
insured
under
a
reimbursement
insurance
policy
must
contain
a
statement
in
substantially
the
following
form:
Obligations
of
the
service
company
under
this
service
contract
are
backed
by
the
full
faith
and
credit
of
the
service
company
House
File
2756,
p.
8
and
are
not
guaranteed
under
a
reimbursement
insurance
policy.
d.
A
service
contract
must
state
the
name
and
address
of
the
service
company
obligated
to
perform
services
under
the
contract,
and
must
conspicuously
identify
the
service
company,
any
third-party
administrator,
and
the
service
contract
holder
to
the
extent
that
the
name
and
address
of
the
service
contract
holder
has
been
furnished.
The
identities
of
such
parties
shall
not
be
required
to
be
printed
on
the
contract
in
advance
and
may
be
added
to
the
contract
at
the
time
of
sale.
e.
A
service
contract
must
clearly
state
the
total
purchase
price
of
the
service
contract
and
the
terms
under
which
the
service
contract
is
sold.
The
total
purchase
price
shall
not
be
required
to
be
printed
on
the
contract
in
advance
and
may
be
added
to
the
contract
at
the
time
of
sale.
f.
If
prior
approval
of
repair
work
is
required,
a
service
contract
must
conspicuously
describe
the
procedure
for
obtaining
prior
approval
and
for
making
a
claim,
including
a
toll-free
telephone
number
for
claim
service,
and
the
procedure
for
obtaining
emergency
repairs
performed
outside
of
normal
business
hours.
g.
A
service
contract
must
clearly
state
any
waiting
period
applicable
to
coverage
under
the
service
contract.
h.
A
service
contract
must
clearly
state
the
existence
of
any
deductible
amount.
i.
A
service
contract
must
specify
the
merchandise
or
services,
or
both,
to
be
provided
and
any
limitations,
exceptions,
or
exclusions.
j.
A
service
contract
must
clearly
state
the
conditions
on
which
the
use
of
substitute
parts
or
services
will
be
allowed.
Such
conditions
must
comply
with
applicable
state
and
federal
laws.
k.
A
service
contract
must
clearly
state
any
terms,
restrictions,
or
conditions
governing
the
transferability
of
the
service
contract.
l.
A
service
contract
must
clearly
state
the
instructions
for
cancellation
of
the
service
contract
by
the
service
contract
holder.
Cancellation
instructions
must
include
the
phone
number,
email
address,
or
mailing
address
necessary
for
the
cancellation
of
the
service
contract.
A
service
company
House
File
2756,
p.
9
shall
accept
cancellation
of
a
service
contract
from
a
service
contract
holder
by
one
or
more
of
the
following
methods:
(1)
Telephone.
(2)
Email.
(3)
The
method
utilized
by
the
service
company
to
enter
into
the
service
contract
with
the
service
contract
holder.
m.
A
service
contract
must
clearly
state
the
terms
and
conditions
governing
the
cancellation
of
the
contract
prior
to
the
termination
or
expiration
date
of
the
contract
by
the
service
company
or
the
service
contract
holder.
If
the
service
company
cancels
the
contract,
the
service
company
shall
mail
a
written
notice
of
termination
to
the
service
contract
holder
at
least
fifteen
calendar
days
before
the
date
of
the
termination.
Prior
notice
of
cancellation
by
the
service
company
shall
not
be
required
if
the
reason
for
cancellation
is
nonpayment
of
the
purchase
price,
a
material
misrepresentation
by
the
service
contract
holder
to
the
service
company
or
the
support
services
for
the
service
company,
or
a
substantial
breach
of
duty
by
the
service
contract
holder
relating
to
the
covered
product
or
use
of
the
covered
product.
The
notice
of
cancellation
must
state
the
effective
date
of
the
cancellation
and
the
reason
for
the
cancellation.
If
a
service
contract
is
canceled
by
the
service
company
for
any
reason
other
than
nonpayment
of
the
purchase
price,
the
service
company
shall
refund
the
service
contract
holder
in
an
amount
equal
to
one
hundred
percent
of
the
unearned
purchase
price
paid,
calculated
on
a
pro
rata
basis
based
upon
elapsed
time
or
mileage,
less
any
claims
paid.
The
service
company
may
also
charge
a
reasonable
administrative
fee
in
an
amount
no
greater
than
ten
percent
of
the
total
purchase
price.
A
penalty
of
ten
percent
of
the
original
dollar
amount
of
the
refund
shall
be
added
to
the
refund
each
month
if
the
refund
is
not
paid
to
the
service
contract
holder
within
thirty
calendar
days.
n.
(1)
A
service
contract
must
permit
the
original
service
contract
holder
who
purchased
the
contract
to
cancel
the
service
contract
within
at
least
thirty
calendar
days
of
the
effective
date
of
the
service
contract,
provided
no
claims
have
been
paid
under
the
service
contract,
or
within
a
longer
period
of
time
as
permitted
under
the
service
contract.
If
House
File
2756,
p.
10
a
claim
has
not
been
paid
under
the
service
contract
prior
to
cancellation
by
the
service
contract
holder,
the
service
contract
is
void
and
the
full
purchase
price
of
the
service
contract
shall
be
refunded
to
the
service
contract
holder.
A
penalty
of
ten
percent
of
the
original
dollar
amount
of
the
refund
shall
be
added
to
the
refund
each
month
if
the
refund
is
not
paid
to
the
service
contract
holder
within
thirty
calendar
days,
unless
the
service
contract
holder
fails
to
provide
the
information
required
by
the
service
contract
to
complete
the
cancellation.
(2)
If
the
service
contract
holder
cancels
the
service
contract
in
violation
of
subparagraph
(1),
the
service
company
shall
refund
the
service
contract
holder
an
amount
equal
to
one
hundred
percent
of
the
unearned
purchase
price
paid,
calculated
on
a
pro
rata
basis
based
upon
elapsed
time
or
mileage,
less
any
claims
paid.
The
service
company
may
also
charge
a
reasonable
administrative
fee
in
an
amount
no
greater
than
ten
percent
of
the
total
purchase
price.
A
penalty
of
ten
percent
of
the
original
dollar
amount
of
the
refund
shall
be
added
to
a
refund
each
month
if
the
refund
is
not
paid
to
the
service
contract
holder
within
thirty
calendar
days
of
the
service
contract
cancellation
request,
unless
the
service
contract
holder
fails
to
provide
the
information
required
in
the
service
contract
to
complete
the
cancellation.
o.
A
service
contract
must
set
forth
all
obligations
and
duties
of
the
service
contract
holder,
including
but
not
limited
to
the
duty
to
protect
against
any
further
damage,
and
the
obligation
to
follow
an
owner’s
manual
and
to
perform,
or
have
performed,
all
required
service
or
maintenance.
p.
A
service
contract
must
clearly
state
if
the
contract
covers
or
excludes
consequential
damages
and
preexisting
conditions,
if
applicable.
A
service
contract
may,
but
is
not
required
to,
cover
damage
resulting
from
rust,
corrosion,
or
damage
caused
by
a
part
or
system
not
covered
under
the
service
contract.
q.
A
service
contract
must
clearly
state
the
service
call
fee,
if
any,
charged
to
the
service
contract
holder.
r.
A
service
contract
must
state
the
name
and
address
of
the
commissioner,
the
current
toll-free
telephone
number
of
the
House
File
2756,
p.
11
division,
and
a
statement
that
a
consumer
may
file
a
complaint
with
the
division,
including
by
filing
a
complaint
on
the
division’s
internet
site.
s.
A
service
contract
must
state
that
if
the
claim
covered
under
a
residential
service
contract
relates
to
the
total
loss
of
heating,
cooling,
or
plumbing,
or
substantial
loss
of
electrical
service,
and
the
claim
being
made
by
the
service
contract
holder
is
essential
to
the
health
and
safety
of
the
service
contract
holder
or,
if
applicable,
the
service
contract
holder’s
family,
the
service
company
shall
ensure
all
of
the
following:
(1)
Repair
or
replacement
of
the
essential
good
commences
within
forty-eight
hours
after
the
report
of
the
claim,
and
is
completed
as
soon
as
reasonably
practicable.
(2)
Notice
is
provided
to
the
service
contract
holder
if
a
repair
cannot
practicably
be
completed
within
three
calendar
days
after
the
report
of
the
claim.
The
service
company
shall
provide
a
status
report
to
the
service
contract
holder
by
communicating
in
a
verifiable
manner
as
soon
as
practicable,
but
no
later
than
three
calendar
days
after
the
date
of
the
report
of
the
claim.
The
status
report
must
include
all
of
the
following:
(a)
A
list
of
all
required
repairs,
replacements,
or
services,
and
the
estimated
cost
to
the
service
contract
holder
if
known.
(b)
The
primary
reason
the
required
repair,
replacement,
or
service
will
take
longer
than
three
calendar
days,
including
the
status
of
all
parts
required
for
the
repair,
replacement,
or
service.
(c)
The
current
estimated
length
of
time
to
complete
the
repair,
replacement,
or
service.
(d)
The
telephone
number
of
the
service
company
in
the
event
the
service
contract
holder
or
the
commissioner
wants
to
make
an
inquiry
concerning
the
claim,
and
a
commitment
by
the
service
company
to
respond
to
an
inquiry
no
later
than
one
business
day
after
the
date
the
inquiry
is
received.
Sec.
8.
NEW
SECTION
.
523C.8
Service
contract
forms
——
fees.
1.
A
service
company
shall
file
with
the
division
an
accurate
copy
of
each
service
contract
form
prior
to
using
the
House
File
2756,
p.
12
service
contract
form
for
the
sale
of
a
service
contract
in
this
state.
2.
At
the
time
of
filing
a
new
or
modified
motor
vehicle
service
contract
form
with
the
division
a
service
company
shall
pay
a
fee
in
the
amount
of
thirty-five
dollars
for
a
new
or
modified
motor
vehicle
service
contract
form
filed
with
the
division.
If
a
service
company
files
a
modified
motor
vehicle
service
contract
form,
and
the
only
modification
to
the
motor
vehicle
service
contract
form
is
information
required
by
section
523C.7,
subsection
2,
paragraph
“r”
,
the
service
company
shall
not
be
required
to
pay
a
fee
for
filing
the
modified
motor
vehicle
service
contract
form.
3.
Notwithstanding
section
523C.7,
a
service
company
may
continue
to
use
a
service
contract
form
that
is
noncompliant
with
this
chapter
until
January
1,
2028,
provided
no
changes
are
made
to
the
service
contract
form
and
the
service
contract
form
was
filed
with
the
division
before
January
1,
2027.
Sec.
9.
Section
523C.9,
Code
2026,
is
amended
by
striking
the
section
and
inserting
in
lieu
thereof
the
following:
523C.9
License
denial,
nonrenewal,
suspension,
or
revocation.
1.
The
commissioner
may,
at
the
commissioner’s
discretion
and
without
advance
notice
or
hearing,
immediately
suspend
a
service
company’s
license
if
the
commissioner
finds
that
any
of
the
following
are
true:
a.
The
service
company
is
insolvent
or
impaired.
b.
A
proceeding
for
receivership,
conservatorship,
rehabilitation,
or
other
delinquency
proceeding
regarding
the
service
company
has
been
commenced
in
any
state.
c.
The
financial
condition
or
business
practices
of
the
service
company
otherwise
pose
an
imminent
threat
to
the
public
health,
safety,
or
welfare
of
the
residents
of
this
state.
2.
The
commissioner
may
suspend
or
revoke
the
license
of,
deny
an
application
for
a
license
from,
or
refuse
to
renew
the
license
of,
a
service
company,
or
may
levy
a
civil
penalty
as
provided
in
section
523C.13
against
a
service
company,
for
any
of
the
following
reasons:
a.
The
service
company
violated
this
chapter,
a
lawful
order,
regulation,
or
subpoena
issued
by
the
commissioner
or
a
regulatory
authority
of
another
state.
House
File
2756,
p.
13
b.
The
service
company
failed
to
pay
a
final
judgment
rendered
against
the
service
company
in
this
state
within
sixty
calendar
days
after
the
date
the
judgment
became
final.
c.
The
service
company,
without
just
cause,
refused
to
perform,
or
negligently
or
incompetently
performed,
a
service
required
to
be
performed
under
the
service
company’s
service
contracts
and
the
refusal,
or
negligent
or
incompetent
performance,
has
occurred
with
such
frequency
as
determined
by
the
commissioner,
as
to
indicate
the
general
business
practices
of
the
service
company.
d.
The
service
company
violated
section
523C.13.
e.
The
service
company
failed
to
demonstrate
financial
responsibility
pursuant
to
section
523C.5,
if
applicable.
f.
The
service
company
failed
to
maintain
a
corporate
certificate
of
good
standing
pursuant
to
section
523C.3,
subsection
1.
g.
The
service
company
provided
incorrect,
misleading,
incomplete,
or
materially
untrue
information
in
the
service
company’s
license
application.
h.
The
service
company
obtained
or
attempted
to
obtain
a
license
through
misrepresentation
or
fraud.
i.
The
service
company
improperly
withheld,
misappropriated,
or
converted
any
money
or
property
received
in
the
course
of
business
as
a
service
company.
j.
The
service
company
intentionally
misrepresented
the
terms
of
an
actual
or
proposed
service
contract.
k.
Within
the
immediately
preceding
ten
consecutive
years,
an
owner
who
has
an
ownership
stake
in
the
service
company
of
more
than
ten
percent,
an
officer,
or
a
director
directly
responsible
for
the
business
of
the
service
company
has
been
convicted
of
a
criminal
offense
involving
any
aspect
of
a
business
involving
securities,
commodities,
investments,
franchises,
insurance,
banking,
or
finance.
l.
An
owner
who
has
an
ownership
stake
in
the
service
company
of
more
than
ten
percent,
an
officer,
or
a
director
directly
responsible
for
the
business
of
the
service
company
has
been
convicted
of
a
criminal
offense
involving
dishonesty
or
a
false
statement,
including
but
not
limited
to
fraud,
theft,
misappropriation
of
funds,
falsification
of
documents,
House
File
2756,
p.
14
deceptive
acts
or
practices,
or
other
related
offenses.
m.
The
service
company
admitted
to
committing,
or
was
found
to
have
committed,
any
unfair
trade
practice
or
fraud.
n.
The
service
company
used
fraudulent,
coercive,
or
dishonest
practices,
or
demonstrated
incompetence,
untrustworthiness,
or
financial
irresponsibility,
in
conducting
business
in
this
state
or
any
other
state.
o.
The
service
company
had
a
service
company
license
or
its
equivalent,
denied,
suspended,
or
revoked
in
any
other
state,
province,
district,
or
territory.
p.
The
service
company
failed,
or
refused,
to
cooperate
in
an
investigation
conducted
by
the
commissioner
of
insurance.
q.
The
commissioner
has
found
the
service
company
to
be
incompetent,
untrustworthy,
financially
irresponsible,
or
not
of
good
personal
or
business
reputation.
r.
The
service
company
has
refused
to
be
examined
or
to
produce
the
service
company’s
accounts,
records,
or
files
for
examination,
or
any
individual
responsible
for
the
conduct
of
the
affairs
of
the
service
company
has
refused
to
provide
information
with
respect
to
the
service
company’s
affairs
or
has
refused
to
perform
any
other
legal
obligation
as
to
an
examination.
s.
The
service
company
has
engaged,
directly
or
indirectly,
in
an
unfair
method
of
competition
or
unfair
or
deceptive
act
or
practice.
3.
If
the
commissioner
suspends
or
revokes
the
license
of,
denies
the
application
for
licensure
of,
or
refuses
to
renew
the
license
of,
a
service
company
pursuant
to
this
section,
the
commissioner
shall
notify
the
service
company
in
writing
and
provide
the
reason
for
the
suspension,
revocation,
denial,
or
nonrenewal.
The
licensee
or
applicant
may
request
a
hearing
on
the
suspension,
revocation,
nonrenewal,
or
denial,
and
a
hearing
shall
be
conducted
according
to
chapter
17A.
Sec.
10.
Section
523C.13,
Code
2026,
is
amended
by
striking
the
section
and
inserting
in
lieu
thereof
the
following:
523C.13
Prohibited
acts
or
practices
——
penalty
——
violations
——
contracts
voided.
1.
A
service
company,
or
the
service
company’s
support
services,
that
offers
service
contracts
for
sale
in
this
state
House
File
2756,
p.
15
shall
not,
directly
or
indirectly,
represent
in
any
manner,
whether
by
written
solicitation
or
telemarketing,
a
false,
deceptive,
or
misleading
statement
with
respect
to
any
of
the
following:
a.
The
service
company’s
affiliation
with
a
motor
vehicle
manufacturer
or
importer.
b.
The
validity
or
expiration
of
a
warranty.
c.
A
motor
vehicle
service
contract
holder’s
coverage
under
a
motor
vehicle
service
contract,
including
statements
suggesting
that
the
service
contract
holder
must
purchase
a
new
service
contract
in
order
to
maintain
coverage
under
the
existing
service
contract
or
warranty.
d.
Descriptions
of
the
service
contract
as
a
“policy”.
2.
A
licensed
service
company
which
offers
service
contracts
for
sale
in
this
state
shall
not,
directly
or
indirectly,
do
any
of
the
following:
a.
Fail
to
attempt,
in
good
faith,
to
effectuate
the
prompt,
fair,
and
equitable
resolution
of
a
claim
made
under
a
service
contract.
b.
Create
or
use
any
advertising
that
does
not
include
the
name
of
the
licensed
service
company
or
direct
consumers
to
an
internet
site
where
the
name
of
the
licensed
service
company
can
be
found.
c.
Use
any
method
of
marketing
that
may
induce
the
purchase
of
a
service
contract
through
force,
fear,
or
threats,
whether
explicit
or
implied.
d.
Create
or
use
any
service
contract
marketing
materials
that
contain
incorrect
or
misleading
information.
e.
Use,
offer
for
sale,
or
issue
in
this
state
a
service
contract
form
that
has
not
been
submitted
as
part
of
a
license
application
pursuant
to
section
523C.3,
as
part
of
a
license
application
renewal
pursuant
to
section
523C.4,
or
submitted
to
the
division
during
the
service
company’s
current
license
period.
3.
The
commissioner
may
adopt
rules
pursuant
to
chapter
17A
that
regulate
service
contracts
to
prohibit
misrepresentation,
false
advertising,
defamation,
boycotts,
coercion,
intimidation,
false
statements
and
entries,
and
unfair
discrimination
or
practices.
House
File
2756,
p.
16
4.
After
a
hearing,
if
the
commissioner
finds
that
a
person
violated
this
chapter
or
a
rule
adopted
under
this
chapter,
the
commissioner
may
order
the
person
to
cease
and
desist
from
the
violation
and
may
order
the
person
to
pay
a
civil
penalty
of
not
more
than
one
thousand
dollars
for
each
violation,
not
to
exceed
an
aggregate
of
ten
thousand
dollars,
unless
the
person
knew
or
reasonably
should
have
known
the
person
was
in
violation
of
this
chapter,
in
which
case
the
civil
penalty
shall
be
no
more
than
five
thousand
dollars
for
each
violation,
not
to
exceed
an
aggregate
of
fifty
thousand
dollars
in
any
one
consecutive
six-month
period.
If
the
commissioner
finds
a
violation
of
this
chapter
was
directed,
encouraged,
condoned,
ignored,
or
ratified
by
the
employer
of
such
person
or
by
a
service
company,
the
commissioner
shall
assess
a
penalty
to
the
employer
or
service
company.
Any
civil
penalties
collected
under
this
subsection
shall
be
deposited
as
provided
in
section
505.7.
5.
A
violation
of
this
section
or
section
523C.7
constitutes
an
unlawful
practice
pursuant
to
section
714.16.
6.
A
service
contract
issued
or
sold
in
this
state
by
a
service
company
that
was
not
licensed
as
a
service
company
at
the
time
the
service
contract
was
issued
or
sold
shall
be
void
and
unenforceable.
Sec.
11.
Section
523C.22,
Code
2026,
is
amended
to
read
as
follows:
523C.22
Claim
procedures.
A
licensed
service
company
shall
promptly
provide
a
written
explanation
to
the
service
contract
holder,
describing
the
reasons
for
denying
a
claim
or
for
the
offer
of
a
compromise
settlement,
based
on
all
relevant
facts
or
legal
requirements
and
referring
to
applicable
provisions
of
the
service
contract.
The
written
explanation
must
include
the
process
for
filing
a
complaint
with
the
division,
including
the
division’s
internet
site
for
accessing
the
complaint
form.
Sec.
12.
Section
523C.23,
subsection
1,
paragraph
b,
Code
2026,
is
amended
by
adding
the
following
new
subparagraphs:
NEW
SUBPARAGRAPH
.
(4)
During
an
investigation
or
proceeding
conducted
under
this
chapter,
the
commissioner
or
any
designee
of
the
commissioner
may
administer
oaths
and
House
File
2756,
p.
17
affirmations,
subpoena
witnesses,
compel
witnesses’
attendance,
take
evidence,
and
require
the
production
of
any
records
which
the
commissioner
deems
relevant
or
material
to
the
investigation
or
proceeding.
NEW
SUBPARAGRAPH
.
(5)
Conduct
an
investigation
of
a
suspected
violation
of
this
chapter
and
enforce
the
provisions
of,
and
impose
any
penalty
or
remedy
authorized
by,
this
chapter
against
any
person
who
is
under
investigation
for,
or
charged
with,
a
violation
of
this
chapter
even
if
the
person’s
license
has
been
surrendered
or
has
lapsed
by
operation
of
law.
Sec.
13.
Section
523C.23,
subsection
1,
paragraph
c,
Code
2026,
is
amended
by
striking
the
paragraph.
Sec.
14.
Section
523C.23,
subsection
3,
Code
2026,
is
amended
by
striking
the
subsection.
Sec.
15.
NEW
SECTION
.
523C.25
Confidentiality.
1.
Notwithstanding
chapter
22,
the
commissioner
shall
maintain
the
confidentiality
of
information
submitted
to
the
division
or
obtained
by
the
division
in
the
course
of
an
investigation,
examination,
or
inquiry
pursuant
to
this
chapter
or
the
commissioner’s
licensing
authority,
including
all
notes,
work
papers,
or
other
documents.
Information
obtained
by
the
commissioner
in
the
course
of
investigating
a
complaint
or
inquiry
may,
at
the
discretion
of
the
commissioner,
be
provided
to
the
service
company
that
is
the
subject
of
the
complaint
or
inquiry
and
the
consumer
who
filed
the
complaint
or
inquiry,
without
waiving
the
confidentiality
afforded
to
the
commissioner
or
to
any
other
person
by
this
section.
The
commissioner
may
disclose
or
release
information
that
is
otherwise
confidential
under
this
subsection
in
the
course
of
an
administrative
or
judicial
proceeding.
2.
Notwithstanding
subsection
1,
if
the
commissioner
determines
that
it
is
necessary
in
the
public
interest,
the
commissioner
may
share
information
submitted
to
the
division
or
obtained
by
the
division
in
the
course
of
an
investigation,
examination,
or
inquiry
pursuant
to
this
chapter
with
other
regulatory
authorities
or
government
agencies.
3.
Notwithstanding
subsection
1,
if
the
commissioner
determines
that
it
is
necessary
in
the
public
interest,
the
commissioner
may
publish
service
company-related
data
or
House
File
2756,
p.
18
information
submitted
to
the
division
or
obtained
by
the
division
in
the
course
of
an
investigation,
examination,
or
inquiry
pursuant
to
this
chapter.
Such
information
may
be
redacted
so
that
neither
personally
identifiable
information
nor
service
company
identifiable
information
is
made
available.
4.
Notwithstanding
subsection
1,
the
commissioner
may
publish
on
the
division’s
internet
site
the
name,
physical
address,
telephone
number,
and
license
status
of
any
service
company
submitted
to
the
division
or
obtained
by
the
division
in
the
course
of
an
investigation,
examination,
or
inquiry
pursuant
to
this
chapter.
Sec.
16.
Section
714.16,
subsection
2,
Code
2026,
is
amended
by
adding
the
following
new
paragraph:
NEW
PARAGRAPH
.
t.
It
is
an
unlawful
practice
for
a
person
to
violate
section
523C.7
or
523C.13.
Sec.
17.
EFFECTIVE
DATE.
This
Act
takes
effect
January
1,
2027.
______________________________
PAT
GRASSLEY
Speaker
of
the
House
______________________________
AMY
SINCLAIR
President
of
the
Senate
I
hereby
certify
that
this
bill
originated
in
the
House
and
is
known
as
House
File
2756,
Ninety-first
General
Assembly.
______________________________
MEGHAN
NELSON
Chief
Clerk
of
the
House
Approved
_______________,
2026
______________________________
KIM
REYNOLDS
Governor