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A bill to be entitled 1
An act relating to asset protection products; amending 2
s. 520.02, F.S.; revising the definition of the term 3
"guaranteed asset protection product"; amending s. 4
520.07, F.S.; providing that an entity may offer a 5
buyer a contract that does not provide for a r efund 6
only if the entity also offers that buyer a bona fide 7
option to purchase a comparable contract that provides 8
for a refund; providing requirements for guaranteed 9
asset protection products; creating a new part II of 10
chapter 520, F.S., entitled "Vehicle Value Protection 11
Agreements"; creating s. 520.1501, F.S.; providing a 12
short title; creating s. 520.1502, F.S.; providing 13
definitions; creating s. 520.1503, F.S.; providing 14
requirements for offering vehicle value protection 15
agreements for personal use vehi cles; creating s. 16
520.1504, F.S.; providing disclosure requirements; 17
creating s. 520.1505, F.S.; exempting certain 18
commercial transactions; creating s. 520.1506, F.S.; 19
providing penalties for violations; amending s. 20
521.003, F.S.; defining the term "excess wear and use 21
waiver"; creating s. 521.007, F.S.; providing for 22
extended wear and use waivers in motor vehicle lease 23
agreements; providing requirements; amending ss. 24
24.118, 501.604, and 671.304, F.S.; conforming 25
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provisions to changes made by the act; prov iding an 26
effective date. 27
28
Be It Enacted by the Legislature of the State of Florida: 29
30
Section 1. Subsection (7) of section 520.02, Florida 31
Statutes, is amended to read: 32
520.02 Definitions. —In this act, unless the context or 33
subject matter otherwis e requires: 34
(7) "Guaranteed asset protection product" means a loan, 35
lease, or retail installment contract term, or modification or 36
addendum to a loan, lease, or retail installment contract, under 37
which a creditor agrees with or without a separate charge, to 38
cancel or waive a customer's liability for payment of some or 39
all of the amount by which the debt exceeds the value of the 40
collateral that has incurred total physical damage or is the 41
subject of an unrecovered theft . A guaranteed asset protection 42
product may also provide, with or without a separate charge, a 43
benefit that waives a portion of, or provides a customer with a 44
credit towards, the purchase of a replacement motor vehicle . 45
Such a product is not insurance for purposes of the Florida 46
Insurance Code. This subsection also applies to all guaranteed 47
asset protection and related products issued before October 1, 48
2008. 49
Section 2. Paragraph (g) of subsection (11) of section 50
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520.07, Florida Statutes, is amended, and paragraphs (h) and (i) 51
are added to that subsection, to read: 52
520.07 Requirements and prohibitions as to retail 53
installment contracts. — 54
(11) In conjunction with entering into any new retail 55
installment contract or contract for a loan, a motor vehicle 56
retail installment seller as defined in s. 520.02, a sales 57
finance company as defined in s. 520.02, or a retail lessor as 58
defined in s. 521.003, and any assignee of such an entity, may 59
offer, for a fee or otherwise, optional guaranteed asset 60
protection products in accordance with this chapter . The motor 61
vehicle retail installment seller, sales finance company, retail 62
lessor, or assignee may not require the purchase of a guaranteed 63
asset protection product as a condition for making the loan. In 64
order to offer any guaranteed asset protection pro duct, a motor 65
vehicle retail installment seller, sales finance company, or 66
retail lessor, and any assignee of such an entity, shall comply 67
with the following: 68
(g) If a contract for a guaranteed asset protection 69
product is terminated, the entity shall ref und to the buyer any 70
unearned fees paid for the contract unless the contract provides 71
otherwise. A refund is not due to a consumer who receives a 72
benefit under such product. In order to receive a refund, the 73
buyer must notify the entity of the event termin ating the 74
contract and request a refund within 90 days after the 75
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occurrence of the event terminating the contract. An entity may 76
offer a buyer a contract that does not provide for a refund only 77
if the entity also offers that buyer a bona fide option to 78
purchase a comparable contract that provides for a refund. An 79
entity may offer a buyer a contract that does not provide for a 80
refund only if the entity also offers that buyer a bona fide 81
option to purchase a comparable contract that provides for a 82
refund. Except for refunds pursuant to paragraph (h), an 83
administrative fee deducted from a refund under this section may 84
not exceed $75. 85
(h) Guaranteed asset protection products may be cancelable 86
or noncancelable after a free look period, which is the period 87
of time from the effective date of the contract until the date 88
the contract may be canceled by the buyer without penalty, fees, 89
or costs, so long as no benefits have been provided. This period 90
may not be less than 30 days. 91
(i) If the termination of the guaran teed asset protection 92
product occurs because of a default under the retail installment 93
contract or contract for a loan, or the repossession of the 94
motor vehicle associated with the retail installment contract or 95
contract for a loan, or any other terminatio n of the retail 96
installment contract or contract for a loan, any refund due may 97
be paid directly to the holder or administrator and applied as a 98
reduction of the amount owed under the retail installment 99
contract or contract for a loan, unless the buyer can show that 100
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the retail installment contract has been paid in full. 101
Section 3. Parts II through VI of chapter 520, Florida 102
Statutes, are redesignated as parts III through VII, 103
respectively. 104
Section 4. Part II of chapter 520, Florida Statutes, 105
consisting of ss. 520.1501-520.1506, F.S., is created to read: 106
Part II 107
Vehicle Value Protection Agreements 108
520.1501 Florida Vehicle Value Protection Agreements Act. —109
This part may be cited as the "Vehicle Value Protection 110
Agreements Act." 111
520.1502 Definitions.—As used in this part, the term: 112
(1) "Administrator" means the person responsible for the 113
administrative or operational function of vehicle value 114
protection agreements, including, but not limited to, the 115
adjudication of claims or benefit requ ests by contract holders. 116
(2) "Commercial" means a transaction wherein the motor 117
vehicle will be primarily used for business or commercial 118
purposes. 119
(3) "Commission" means the Financial Services Commission. 120
(4) "Contract holder" means a person who is the purchaser 121
or holder of a vehicle value protection agreement. 122
(5) "Finance agreement" means a loan, retail installment 123
sales contract, or lease for the purchase, refinancing, or lease 124
of a motor vehicle. 125
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(6) "Motor vehicle" has the same meaning as in s. 316.003. 126
(7) "Provider" means a person that is obligated to provide 127
a benefit under a vehicle value protection agreement. A provider 128
may perform as an administrator or retain the services of a 129
third-party administrator. 130
(8) "Vehicle value prote ction agreement" includes a 131
contractual agreement that provides a benefit towards either the 132
reduction of some or all of the contract holder's current 133
finance agreement deficiency balance or the purchase or lease of 134
a replacement motor vehicle or motor veh icle services, upon the 135
occurrence of an adverse event to the motor vehicle, including, 136
but not limited to, loss, theft, damage, obsolescence, 137
diminished value, or depreciation. The agreements do not include 138
guaranteed asset protection products as describe d in s. 139
520.07(11)(h). Such an agreement is not insurance for the 140
purposes of the Florida Insurance Code. 141
520.1503 Requirements for offering vehicle value 142
protection agreements for personal use vehicles. — 143
(1) Vehicle value protection agreements may be offered, 144
sold, or given to consumers in this state in compliance with 145
this part. 146
(2) Notwithstanding any other provision of law, any amount 147
charged or financed for a vehicle value protection product must 148
be separately stated and is not to be considered a finance 149
charge or interest. 150
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(3) The extension of credit, the terms of credit, and the 151
terms of the related motor vehicle sale or lease may not be 152
conditioned upon the consumer's payment for or financing of any 153
charge for a vehicle value protection agree ment. However, 154
vehicle value protection agreements may be discounted or given 155
at no charge in connection with the purchase of other noncredit 156
related goods or services. 157
(4) A provider may, but is not required to, use an 158
administrator or other designee wh o shall be responsible for any 159
and all of the administration of vehicle value protection 160
agreements in compliance with this part. 161
(5) A vehicle value protection agreement shall not be sold 162
unless the contract holder has been or will be provided access 163
to a copy of the vehicle value protection agreement. 164
(6) A vehicle value protection agreement may not be sold 165
if its coverage is duplicative of another vehicle value 166
protection agreement for the vehicle or of a guaranteed asset 167
protection product. 168
(7) Each provider shall: 169
(a) Insure all of its vehicle value protection agreements 170
under a policy that pays or reimburses in the event the provider 171
fails to perform its obligations under the vehicle value 172
protection agreement that is issued by an insurer licen sed or 173
otherwise authorized or eligible to do business in this state; 174
(b) Maintain a funded reserve account for its obligations 175
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under its contracts issued and outstanding in this state. The 176
reserves shall not be less than 40 percent of gross 177
consideration received, less claims paid, on the sale of the 178
vehicle value protection agreement for all in -force contracts in 179
this state. The reserve shall be placed in a trust with the 180
commission a financial security deposit, having a value of not 181
less than 5 percent of the gross consideration received, less 182
claims paid, on the sale of the vehicle value protection 183
agreements for all vehicle value protection agreements issued 184
and in force in this state, but not less than $25,000, 185
consisting of one of the following: 186
1. A surety bond issued by an authorized surety; 187
2. Securities of the type eligible for deposit by insurers 188
pursuant to s. 625.52; 189
3. Cash; 190
4 A letter of credit issued by a qualified financial 191
institution; or 192
5. Another form of security prescribed by regulations 193
issued by the commission; or 194
(c) Maintain, or together with its parent corporation 195
maintain, a net worth or stockholders' equity of $100 million; 196
and upon request, provide the commission with a copy of the 197
provider's or the provider's pare nt company's most recent Form 198
10-K or Form 20-F filed with the Securities and Exchange 199
Commission (SEC) within the last calendar year, or if the 200
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company does not file with the SEC, a copy of the company's 201
audited financial statements, which shows a net wor th of the 202
provider or its parent company of at least $100 million. If the 203
provider's parent company's Form 10 -K, Form 20-F, or financial 204
statements are filed to meet the provider's financial security 205
requirement, then the parent company shall agree to guar antee 206
the obligations of the provider relating to vehicle value 207
protection agreements sold by the provider in this state. 208
(8) Except for the requirements specified in subsection 209
(7), no other financial security requirements shall be required 210
for vehicle value protection agreement providers. 211
520.1504 Disclosures. — 212
(1) Vehicle value protection agreements must disclose in 213
writing and in clear, understandable language that is easy to 214
read, the following: 215
(a) The name and address of the provider, contract holder, 216
and administrator, if any. 217
(b) The terms of the vehicle value protection agreement, 218
including, without limitation, the purchase price to be paid by 219
the contract holder, if any, the requirements for eligibility, 220
conditions of coverage, an d exclusions. 221
(c) That the vehicle value protection agreement may be 222
canceled by the contract holder within a free look period which 223
is the period of time from the effective date of the contract 224
until the date the contract may be canceled without penalty , 225
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fee, or costs. This period may not be less than 30 days. That, 226
in such event, the contract holder is entitled to a full refund 227
of the purchase price paid by the contract holder, if any, so 228
long as no benefits have been provided. 229
(d) The procedure the c ontract holder must follow, if any, 230
to obtain a benefit under the terms and conditions of the 231
vehicle value protection agreement, including, if applicable, a 232
telephone number or website and address where the contract 233
holder may apply for a benefit. 234
(e) Whether or not the vehicle value protection agreement 235
is cancellable after the free look period and the conditions 236
under which it may be canceled, including the procedures for 237
requesting any refund of the unearned purchase price paid by the 238
contract holder. 239
(f) In the event of cancellation, the method for 240
calculating any refund of the unearned purchase price of the 241
vehicle value protection agreement due. 242
(g) The extension of credit, the terms of the credit, and 243
the terms of the related motor vehicle sale or lease, may not be 244
conditioned upon the purchase of the vehicle value protection 245
agreement. 246
(2) Vehicle value protection agreements shall state the 247
terms, restrictions, and conditions governing cancellation of 248
the vehicle value protection agreement be fore the termination or 249
expiration date of the vehicle value protection agreement by 250
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either the provider or the contract holder. The provider of the 251
vehicle value protection agreement shall mail a written notice 252
to the contract holder at the last known add ress of the contract 253
holder contained in the records of the provider at least 5 days 254
before cancellation by the provider. Prior notice is not 255
required if the reason for cancellation is nonpayment of the 256
provider fee, a material misrepresentation by the con tract 257
holder to the provider or administrator, or a substantial breach 258
of duties by the contract holder relating to the covered product 259
or its use. The notice shall state the effective date of the 260
cancellation and the reason for the cancellation. If a vehi cle 261
value protection agreement is canceled by the provider for a 262
reason other than nonpayment of the provider fee, the provider 263
shall refund to the contract holder 100 percent of the unearned 264
pro rata provider fee paid by the contract holder, if any. If 265
coverage under the vehicle value protection agreement continues 266
after a claim, then any refund may deduct claims paid. A 267
reasonable administrative fee, not to exceed $75, may be charged 268
by the provider. 269
520.1505 Commercial transactions exempt. —Sections 520.1504 270
and 520.1606 do not apply to vehicle value protection agreements 271
offered in connection with a commercial transaction. 272
520.1506 Penalties. —Any provider, administrator, or any 273
other person who willfully and intentionally violates any 274
provision of this part commits a noncriminal violation, as 275
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defined in s. 775.08(3), punishable by a fine not to exceed $500 276
per violation and no more than $10,000 in the aggregate for all 277
violations of similar nature. For purposes of this section, 278
violations are of a simi lar nature if each violation consists of 279
the same or similar course of conduct, action, or practice, 280
irrespective of the number of times the conduct, action, or 281
practice, which is determined to be a violation of this part 282
occurred. 283
Section 5. Section 5 21.003, Florida Statutes, is amended 284
to read: 285
521.003 Definitions. —As used in this chapter ss. 521.001-286
521.006, the term: 287
(1) "Adjusted or net capitalized cost" means the 288
capitalized cost, less any capitalized cost -reduction payments 289
made by the retail lessee at the inception of the lease 290
agreement. The adjusted or net capitalized cost shall serve as 291
the basis for calculating the amount of the retail lessee's 292
periodic payment under the lease agreement. 293
(2) "Capitalized cost" means the agreed -upon total amount 294
which, after deducting any capitalized cost reductions, serves 295
as the basis for calculating the amount of the periodic payment 296
under the lease agreement. The capitalized cost may include, 297
without limitation: 298
(a) Taxes. 299
(b) Registration fees. 300
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(c) License fees. 301
(d) Insurance charges. 302
(e) Charges for guaranteed auto protection or GAP 303
coverage. 304
(f) Charges for service contracts and extended warranties. 305
(g) Fees and charges for accessories and for installing 306
accessories. 307
(h) Charges for delivery, service, and repair. 308
(i) Administrative fees, acquisition fees, and any and all 309
fees or charges for providing services incidental to the lease 310
agreement. 311
(j) The unpaid balance of any amount financed under an 312
outstanding motor vehicle loan ag reement or motor vehicle retail 313
installment contract with respect to a motor vehicle used as a 314
trade-in. 315
(k) The unpaid portion of the early termination obligation 316
under an outstanding lease agreement. 317
(l) The first periodic payment due at the inceptio n of the 318
lease agreement. 319
(3) "Capitalized cost reduction" means a payment made by 320
cash, check, credit card debit, net vehicle trade -in, rebate, or 321
other similar means in the nature of a down payment or credit, 322
made by the retail lessee at the inception of the lease 323
agreement, for the purpose of reducing the capitalized cost and 324
shall not include any periodic payments received by the retail 325
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lessor at the inception of the lease agreement. 326
(4) "Excess wear and use waiver" means a contractual 327
agreement wherein a lessor agrees, with or without a separate 328
charge, to cancel or waive all or part of amounts that may 329
become due under a lease agreement as a result of excessive wear 330
and use of a motor vehicle, which agreement must be part of, or 331
a separate addendum to, the lease agreement. Such waivers may 332
also cancel or waive amounts due for excess mileage. 333
(5)(4) "Lease agreement" means a written agreement entered 334
into in this state for the transfer from a retail lessor to a 335
retail lessee of the right to possess and use a motor vehicle in 336
exchange for consideration for a scheduled term exceeding 4 337
months, whether or not the retail lessee has the option to 338
purchase or otherwise become the owner of the motor vehicle upon 339
expiration of the agreement. The term does n ot include an 340
agreement which covers an absolute sale, a sale pending 341
approval, or a retail installment sale, including a transaction 342
or contract which is governed by the Motor Vehicle Retail Sales 343
Finance Act of Florida. 344
(6)(5) "Lease transaction" means a presentation made to 345
the retail lessee concerning the motor vehicle, including a 346
sales presentation or a document presented to the retail lessee, 347
resulting in the execution of a lease agreement. 348
(7)(6) "Motor vehicle" means a motor vehicle of the type 349
and kind required to be registered and titled under chapters 319 350
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and 320, excluding a recreational vehicle, moped, motorcycle 351
powered by a motor with a displacement of 50 cubic centimeters 352
or less, or a mobile home. 353
(8)(7) "Retail lessee" means an individual who executes a 354
lease agreement for a motor vehicle from a retail lessor 355
primarily for personal, family, or household purposes. 356
(9)(8) "Retail lessor" means a person who regularly 357
engages in the business of selling or leas ing motor vehicles and 358
who offers or arranges a lease agreement for a motor vehicle. 359
The term includes an agent or affiliate who acts on behalf of 360
the retail lessor and excludes any assignee of the lease 361
agreement. 362
Section 6. Section 521.007, Florida S tatutes, is created 363
to read: 364
521.007 Extended wear and use waiver. — 365
(1) A retail lessee may contract with a retail lessor for 366
an excess wear and use waiver in connection with a lease 367
agreement. 368
(2) The terms of the related motor vehicle lease may not 369
be conditioned upon the consumer's payment for any extended wear 370
and use waiver. However, extended wear and use waivers may be 371
discounted or given at no charge in connection with the purchase 372
of other noncredit related goods. 373
(3) A lease agreement that includes an excess wear and use 374
waiver must disclose: 375
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(a) The total charge for the excess wear and use waiver. 376
(b) Any exclusions or limitations on the amount of excess 377
wear and use that may be waived under the excess wear and use 378
waiver. 379
(c) The terms, restrictions, and conditions governing 380
cancellation of the excess wear and use waiver before the 381
termination or expiration excess wear and use waiver, which may 382
include an administrative fee not to exceed $75. 383
(4) Such a product is not insurance for purposes of the 384
Florida Insurance Code. 385
Section 7. Subsection (1) of section 24.118, Florida 386
Statutes, is amended to read: 387
24.118 Other prohibited acts; penalties. — 388
(1) UNLAWFUL EXTENSIONS OF CREDIT. —Any retailer who 389
extends credit or lends money t o a person for the purchase of a 390
lottery ticket commits is guilty of a misdemeanor of the second 391
degree, punishable as provided in s. 775.082 or s. 775.083. This 392
subsection does shall not be construed to prohibit the purchase 393
of a lottery ticket through th e use of a credit or charge card 394
or other instrument issued by a bank, savings association, 395
credit union, or charge card company or by a retailer pursuant 396
to part IV part III of chapter 520, provided that any such 397
purchase from a retailer shall be in addit ion to the purchase of 398
goods and services other than lottery tickets having a cost of 399
no less than $20. 400
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Section 8. Subsection (13) of section 501.604, Florida 401
Statutes, is amended to read: 402
501.604 Exemptions. —The provisions of this part, except 403
ss. 501.608 and 501.616(6) and (7), do not apply to: 404
(13) A commercial telephone seller licensed pursuant to 405
chapter 516 or part IV part III of chapter 520. For purposes of 406
this exemption, the seller must solicit to sell a consumer good 407
or service within the scope of his or her license and the 408
completed transaction must be subject to the provisions of 409
chapter 516 or part IV part III of chapter 520. 410
Section 9. Paragraph (d) of subsection (2) of section 411
671.304, Florida Statutes, is amended to read: 412
671.304 Laws not repealed; precedence where code 413
provisions in conflict with other laws; certain statutory 414
remedies retained.— 415
(2) The following laws and parts of laws are specifically 416
not repealed and shall take precedence over any provisions of 417
this code which may be inconsistent or in conflict therewith: 418
(d) Chapter 520—Retail installment sales (Part I, Motor 419
Vehicle Sales Finance Act; Part IV Part III, Retail Installment 420
Sales Act; Part V Part IV, Installment Sales Finance Act). 421
Section 10. This act shall take effect October 1, 2024. 422