Fortegra's compliance experts can help you stay up to date on new legal changes in the Automotive F&I industry. Read our regular compliance updates to stay informed.
Staying on top of legal and compliance happenings in Automotive F&I is critical to the health of your business. With that in mind, our compliance gurus are a valuable resource that can help you stay in the know as industry compliance changes.
This month, we’re serving up yet another regulatory update on GAP, plus some changes to vehicle service contracts, both from the Commonwealth of Virginia.
GAP: Virginia HB 2109 - On 3/21/2019 the bill was approved by the Governor – Chapter 799. Bill is effective July 1, 2019.
The bill largely follows the GAPA model act as it codifies:
- GAP waiver is not insurance;
- Required disclosures;
- A free look period is required on a GAP waiver, cancelation options beyond the free look period must be disclosed;
- Retail sellers must insure their obligations with a CLIP; CLIP is optional for other creditors and for gap waivers on leases;
- A GAP waiver must be optional; the extension of or terms of credit or lease may not be conditioned upon the purchase of a GAP waiver;
- Requirements for a CLIP;
- That in order to receive an early termination refund, the borrower must provide a written request;
- The cost of a TILA compliant GAP waiver must be separately stated and is not considered a finance charge or interest;
- An exemption from required disclosures for commercial transactions.
At the request of the Bureau of Insurance, the section on enforcement and penalties has been removed. The bill was also amended to change the definition of "Finance agreement" to “(i) a loan secured by a lien on a motor vehicle or (ii) a lease or retail installment sales contract for the lease or purchase of a motor vehicle.” The bill does not apply to “a debt cancellation or debt suspension contract offered (i) by a bank or credit union regulated pursuant to Title 6.2 or (ii) in compliance with 12 C.F.R. Part 37, 12 C.F.R. Part 721, or other federal law.”
On 2/21/2019 the bill was enrolled, Signed by the Speaker of the House and Senate President. If passed into legislature, bill is effective July 1, 2019.
VSC: Virginia HB 2038 - On 3/14/2019, the bill was approved by the Governor – Chapter 396. Bill is effective July 1, 2019.
Amends the service contract law to remove the universal bond requirement for service contact obligors. The bill also contains enforcement provisions expressly granting the Commissioner authority to:
- Conduct an investigation;
- Issue orders;
- Issue a cease and desist;
- Deny, suspend or revoke registrations; or
- Assess civil penalties of up to $1,000 per violation with an aggregate limit of $10,000 for similar violations.
Finally, the bill requires a service contract disclosure substantially stating: If any promise made in the contract has been denied or has not been honored within 60 days after your request, you may contact the Virginia Department of Agriculture and Consumer Services, Office of Charitable and Regulatory Programs to file a complaint.
On 2/19/2019, the bill was Enrolled and Signed by the Speaker of the House. On 2/20/2019, the bill was signed by the Senate President. If passed into legislature, bill is effective July 1, 2019.
We hope that these recent rulings help you conduct your Automotive F&I business with complete, informed compliance. Check back for more compliance updates from Fortegra’s team of industry leaders in our next newsletter.
Disclaimer: With the understanding this shall not be construed as legal advice on the compliance of your programs, this newsletter does not contain information for all legislation that may affect a provider or administrator. You should review legislative bills in their entirety to determine the impact and what actions are needed, if any, to comply with state laws/regulations.