Florida Senate - 2024 SB 902 By Senator Boyd 20-00355B-24 2024902__ 1 A bill to be entitled 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.; prohibiting 6 certain entities from deducting more than a specified 7 amount in administrative fees when providing a refund 8 of a guaranteed asset protection product; authorizing 9 guaranteed asset protection products to be cancelable 10 or noncancelable under certain circumstances; 11 authorizing certain entities to pay refunds directly 12 to the holder or administrator of a loan under certain 13 circumstances; creating s. 520.151, F.S.; providing a 14 short title; creating s. 520.152, F.S.; defining 15 terms; creating s. 520.153, F.S.; authorizing the 16 offer, sale, or gift of vehicle value protection 17 agreements in compliance with a certain act; 18 specifying a requirement regarding the amount charged 19 or financed for a vehicle value protection agreement; 20 prohibiting the conditioning of credit offers or terms 21 for the sale or lease of a motor vehicle upon a 22 consumers payment for or financing of any charge for 23 a vehicle value protection agreement; authorizing 24 discounting or giving the vehicle value protection 25 agreement at no charge under certain circumstances; 26 authorizing providers to use an administrator or other 27 designee for administration of vehicle value 28 protection agreements; prohibiting vehicle value 29 protection agreements from being sold under certain 30 circumstances; specifying financial security 31 requirements for providers; prohibiting additional 32 financial security requirements from being imposed on 33 providers; creating s. 520.154, F.S.; requiring 34 vehicle value protection agreements to include certain 35 disclosures in writing, in clear and understandable 36 language; requiring vehicle value protection 37 agreements to state the terms, restrictions, or 38 conditions governing cancellation by the provider or 39 the contract holder; specifying requirements for 40 notice by the provider, refund of fees, and deduction 41 of fees in the event the vehicle value protection 42 agreement is canceled; creating s. 520.155, F.S.; 43 providing an exemption for vehicle value protection 44 agreements in connection with a commercial 45 transaction; creating s. 520.156, F.S.; providing 46 noncriminal penalties; defining the term violations 47 of a similar nature; amending s. 521.003, F.S.; 48 defining the term excess wear and use waiver; 49 conforming a provision to changes made by the act; 50 creating s. 521.007, F.S.; authorizing a retail lessee 51 to contract with a retail lessor for an excess wear 52 and use waiver; prohibiting conditioning the terms of 53 the consumers motor vehicle lease on his or her 54 payment for any excess wear and use waiver; 55 authorizing discounting or giving the excess wear and 56 use waiver at no charge under certain circumstances; 57 requiring certain disclosures for a lease agreement 58 that includes an excess wear and use waiver; providing 59 construction; providing an effective date. 60 61 Be It Enacted by the Legislature of the State of Florida: 62 63 Section 1.Subsection (7) of section 520.02, Florida 64 Statutes, is amended to read: 65 520.02Definitions.In this act, unless the context or 66 subject matter otherwise requires: 67 (7)Guaranteed asset protection product means a loan, 68 lease, or retail installment contract term, or modification or 69 addendum to a loan, lease, or retail installment contract, under 70 which a creditor agrees, with or without a separate charge, to 71 cancel or waive a customers liability for payment of some or 72 all of the amount by which the debt exceeds the value of the 73 collateral that has incurred total physical damage or is the 74 subject of an unrecovered theft. A guaranteed asset protection 75 product may also provide, with or without a separate charge, a 76 benefit that waives a portion of, or provides a customer with a 77 credit toward, the purchase of a replacement motor vehicle. Such 78 a product is not insurance for purposes of the Florida Insurance 79 Code. This subsection also applies to all guaranteed asset 80 protection and related products issued before October 1, 2008. 81 Section 2.Paragraph (g) of subsection (11) of section 82 520.07, Florida Statutes, is amended, and paragraphs (h) and (i) 83 are added to that subsection, to read: 84 520.07Requirements and prohibitions as to retail 85 installment contracts. 86 (11)In conjunction with entering into any new retail 87 installment contract or contract for a loan, a motor vehicle 88 retail installment seller as defined in s. 520.02, a sales 89 finance company as defined in s. 520.02, or a retail lessor as 90 defined in s. 521.003, and any assignee of such an entity, may 91 offer, for a fee or otherwise, optional guaranteed asset 92 protection products in accordance with this chapter. The motor 93 vehicle retail installment seller, sales finance company, retail 94 lessor, or assignee may not require the purchase of a guaranteed 95 asset protection product as a condition for making the loan. In 96 order to offer any guaranteed asset protection product, a motor 97 vehicle retail installment seller, sales finance company, or 98 retail lessor, and any assignee of such an entity, shall comply 99 with the following: 100 (g)If a contract for a guaranteed asset protection product 101 is terminated, the entity shall refund to the buyer any unearned 102 fees paid for the contract unless the contract provides 103 otherwise. A refund is not due to a consumer who receives a 104 benefit under such product. In order to receive a refund, the 105 buyer must notify the entity of the event terminating the 106 contract and request a refund within 90 days after the 107 occurrence of the event terminating the contract. An entity may 108 offer a buyer a contract that does not provide for a refund only 109 if the entity also offers that buyer a bona fide option to 110 purchase a comparable contract that provides for a refund. An 111 entity may not deduct more than $75 in administrative fees from 112 a refund made under this subsection. 113 (h)Guaranteed asset protection products may be cancelable 114 or noncancelable after a free-look period as defined in s. 115 520.152. 116 (i)If the termination of the guaranteed asset protection 117 product occurs because of a default under the retail installment 118 contract or contract for a loan, the repossession of the motor 119 vehicle associated with the retail installment contract or 120 contract for a loan, or any other termination of the retail 121 installment contract or contract for a loan, the entity may pay 122 any refund due directly to the holder or administrator and apply 123 the refund as a reduction of the amount owed under the retail 124 installment contract or contract for a loan, unless the buyer 125 can show that the retail installment contract has been paid in 126 full. 127 Section 3.Section 520.151, Florida Statutes, is created to 128 read: 129 520.151Florida Vehicle Value Protection Agreements Act. 130 Sections 520.151-520.156 may be cited as the Florida Vehicle 131 Value Protection Agreements Act. 132 Section 4.Section 520.152, Florida Statutes, is created to 133 read: 134 520.152Definitions.As used in ss. 520.151-520.156, unless 135 the context or subject matter otherwise requires, the term: 136 (1)Administrator means the person who is responsible for 137 the administrative or operational function of managing vehicle 138 value protection agreements, including, but not limited to, the 139 adjudication of claims or benefit requests by contract holders. 140 (2)Commercial transaction means a transaction in which 141 the motor vehicle subject to the transaction is used primarily 142 for business or commercial purposes. 143 (3)Commission means the Financial Services Commission. 144 (4)Contract holder means a person who is the purchaser 145 or holder of a vehicle value protection agreement. 146 (5)Finance agreement means a loan, retail installment 147 sales contract, or lease for the purchase, refinancing, or lease 148 of a motor vehicle. 149 (6)Free-look period means the period of time, commencing 150 on the effective date of the contract, during which the buyer 151 may cancel the contract for a full refund of the purchase price. 152 This period may not be shorter than 30 days. 153 (7)Motor vehicle has the same meaning as provided in s. 154 520.02. 155 (8)Person means an individual, a partnership, a 156 corporation, an association, or any other group, however 157 organized. 158 (9)Provider means a person that is obligated to provide 159 a benefit under a vehicle value protection agreement. A provider 160 may function as an administrator or retain the services of a 161 third-party administrator. 162 (10)Vehicle value protection agreement includes a 163 contractual agreement that provides a benefit toward either the 164 reduction of some or all of the contract holders current 165 finance agreement deficiency balance or the purchase or lease of 166 a replacement motor vehicle or motor vehicle services upon the 167 occurrence of an adverse event to the motor vehicle, including, 168 but not limited to, loss, theft, damage, obsolescence, 169 diminished value, or depreciation. The term does not include 170 guaranteed asset protection products as defined in s. 520.02. 171 Such a product is not insurance for purposes of the Florida 172 Insurance Code. 173 Section 5.Section 520.153, Florida Statutes, is created to 174 read: 175 520.153Requirements and prohibitions as to vehicle value 176 protection agreements. 177 (1)Vehicle value protection agreements may be offered, 178 sold, or given to consumers in this state in compliance with 179 this act. 180 (2)Notwithstanding any other law, any amount charged or 181 financed for a vehicle value protection agreement is not 182 considered a finance charge or interest and must be separately 183 stated in the finance agreement and in the vehicle value 184 protection agreement. 185 (3)The extension of credit, the terms of credit, or the 186 terms of the related motor vehicle sale or lease may not be 187 conditioned upon the consumers payment for or financing of any 188 charge for a vehicle value protection agreement. However, a 189 vehicle value protection agreement may be discounted or given at 190 no charge in connection with the purchase of other noncredit 191 related goods or services. 192 (4)A provider may use an administrator or other designee 193 to administer a vehicle value protection agreement. 194 (5)A vehicle value protection agreement may not be sold to 195 any person unless he or she has been or will be provided access 196 to a copy of such vehicle value protection agreement at a 197 reasonable time after such vehicle value protection agreement is 198 sold. 199 (6)A vehicle value protection agreement may not be sold if 200 coverage is duplicative of another vehicle value protection 201 agreement sold to a person or duplicative of a guaranteed asset 202 protection product. 203 (7)Each provider shall do one of the following: 204 (a)Insure all of its vehicle value protection agreements 205 under a policy that pays or reimburses the contract holder in 206 the event the provider fails to perform its obligations under 207 the vehicle value protection agreement. The insurer must be 208 licensed or otherwise authorized or eligible to do business in 209 this state. 210 (b)Maintain a funded reserve account for its obligations 211 under its contracts issued and outstanding in this state. The 212 reserves may not be less than 40 percent of gross consideration 213 received, less claims paid, on the sale of the vehicle value 214 protection agreement for all in-force contracts in this state. 215 The reserve must be placed in trust with the commission and have 216 a financial security deposit valued at not less than 5 percent 217 of the gross consideration received, less claims paid, on the 218 sale of the vehicle value protection agreements for all vehicle 219 value protection agreements issued and in force in this state, 220 but at least $25,000. The reserve account must consist of one of 221 the following: 222 1.A surety bond issued by an authorized surety. 223 2.Securities of the type eligible for deposit by insurers 224 as provided in s. 625.52. 225 3.Cash. 226 4.A letter of credit issued by a qualified financial 227 institution. 228 5.Another form of security prescribed by commission 229 regulation. 230 (c)Maintain, or together with its parent corporation 231 maintain, a net worth or stockholders equity of $100 million 232 and, upon request, provide the commission with a copy of the 233 providers or the providers parent companys Form 10-K or Form 234 20-F filed with the Securities and Exchange Commission within 235 the last calendar year, or if the company does not file with the 236 Securities and Exchange Commission, a copy of the companys 237 audited financial statements, which must show a net worth of the 238 provider or its parent company of at least $100 million. If the 239 providers parent companys Form 10-K, Form 20-F, or financial 240 statements are filed to meet the providers financial security 241 requirement, the parent company must agree to guarantee the 242 obligations of the provider relating to vehicle value protection 243 agreements sold by the provider in this state. 244 (8)A financial security requirement other than those 245 imposed in subsection (7) may not be imposed on vehicle value 246 protection agreement providers. 247 Section 6.Section 520.154, Florida Statutes, is created to 248 read: 249 520.154Disclosures. 250 (1)A vehicle value protection agreement must disclose in 251 writing, in clear, understandable language, all of the 252 following: 253 (a)The name and address of the provider, contract holder, 254 and administrator, if any. 255 (b)The terms of the vehicle value protection agreement, 256 including, but not limited to, the purchase price to be paid by 257 the contract holder, if any, the requirements for eligibility 258 and conditions of coverage, and any exclusions. 259 (c)Whether the vehicle value protection agreement may be 260 canceled by the contract holder during a free-look period as 261 defined in s. 520.152, and that, in the event of cancellation, 262 the contract holder is entitled to a full refund of the purchase 263 price, if any, so long as no benefits have been provided. 264 (d)The procedure the contract holder must follow, if any, 265 to obtain a benefit under the terms and conditions of the 266 vehicle value protection agreement, including, if applicable, a 267 telephone number, website, or mailing address where the contract 268 holder may apply for a benefit. 269 (e)Whether the vehicle value protection agreement is 270 cancelable after the free-look period and the conditions under 271 which it may be canceled, including the procedures for 272 requesting any refund of the unearned purchase price paid by the 273 contract holder. In the event that the agreement is cancelable, 274 it must include the methodology for calculating any refund due 275 of the unearned purchase price of the vehicle value protection 276 agreement. 277 (f)That the extension of credit, the terms of the credit, 278 or the terms of the related motor vehicle sale or lease may not 279 be conditioned upon the purchase of the vehicle value protection 280 agreement. 281 (2)A vehicle value protection agreement must state the 282 terms, restrictions, or conditions governing cancellation of the 283 vehicle value protection agreement before the termination or 284 expiration date of the vehicle value protection agreement by 285 either the provider or the contract holder. The provider of the 286 vehicle value protection agreement shall mail a written notice 287 to the contract holder at the last known address of the contract 288 holder contained in the records of the provider at least 5 days 289 before cancellation by the provider, which notice must state the 290 effective date of the cancellation and the reason for the 291 cancellation. However, such prior notice is not required if the 292 reason for cancellation is nonpayment of the provider fee, a 293 material misrepresentation by the contract holder to the 294 provider or administrator, or a substantial breach of duties by 295 the contract holder relating to the covered motor vehicle or its 296 use. If a vehicle value protection agreement is canceled by the 297 provider for a reason other than nonpayment of the provider fee, 298 the provider must refund to the contract holder 100 percent of 299 the unearned pro rata provider fee paid by the contract holder, 300 if any. If coverage under the vehicle value protection agreement 301 continues after a claim, any refund may reflect a deduction for 302 claims paid and, at the discretion of the provider, an 303 administrative fee of not more than $75. 304 Section 7.Section 520.155, Florida Statutes, is created to 305 read: 306 520.155Commercial transactions exempt.Sections 520.154 307 and 520.155 do not apply to vehicle value protection agreements 308 offered in connection with a commercial transaction. 309 Section 8.Section 520.156, Florida Statutes, is created to 310 read: 311 520.156Penalties.A provider, an administrator, or any 312 other person who willfully and intentionally violates ss. 313 520.151-520.155 commits a noncriminal violation as defined in s. 314 775.08(3), punishable by a fine not to exceed $500 per violation 315 and not more than $10,000 in the aggregate for all violations of 316 a similar nature. For purposes of this section, the term 317 violations of a similar nature means violations that consist 318 of the same or similar course of conduct, action, or practice, 319 irrespective of the number of times the action, conduct, or 320 practice determined to be a violation of ss. 520.151-520.155 321 occurred. 322 Section 9.Section 521.003, Florida Statutes, is amended to 323 read: 324 521.003Definitions.As used in ss. 521.001-521.007 ss. 325 521.001-521.006, the term: 326 (1)Adjusted or net capitalized cost means the 327 capitalized cost, less any capitalized cost-reduction payments 328 made by the retail lessee at the inception of the lease 329 agreement. The adjusted or net capitalized cost shall serve as 330 the basis for calculating the amount of the retail lessees 331 periodic payment under the lease agreement. 332 (2)Capitalized cost means the agreed-upon total amount 333 which, after deducting any capitalized cost reductions, serves 334 as the basis for calculating the amount of the periodic payment 335 under the lease agreement. The capitalized cost may include, 336 without limitation: 337 (a)Taxes. 338 (b)Registration fees. 339 (c)License fees. 340 (d)Insurance charges. 341 (e)Charges for guaranteed auto protection or GAP coverage. 342 (f)Charges for service contracts and extended warranties. 343 (g)Fees and charges for accessories and for installing 344 accessories. 345 (h)Charges for delivery, service, and repair. 346 (i)Administrative fees, acquisition fees, and any and all 347 fees or charges for providing services incidental to the lease 348 agreement. 349 (j)The unpaid balance of any amount financed under an 350 outstanding motor vehicle loan agreement or motor vehicle retail 351 installment contract with respect to a motor vehicle used as a 352 trade-in. 353 (k)The unpaid portion of the early termination obligation 354 under an outstanding lease agreement. 355 (l)The first periodic payment due at the inception of the 356 lease agreement. 357 (3)Capitalized cost reduction means a payment made by 358 cash, check, credit card debit, net vehicle trade-in, rebate, or 359 other similar means in the nature of a down payment or credit, 360 made by the retail lessee at the inception of the lease 361 agreement, for the purpose of reducing the capitalized cost and 362 may shall not include any periodic payments received by the 363 retail lessor at the inception of the lease agreement. 364 (4)Excess wear and use waiver means a contractual 365 agreement wherein a lessor agrees, with or without a separate 366 charge, to cancel or waive all or part of amounts that may 367 become due under a lease agreement as a result of excessive wear 368 and use of a motor vehicle, which agreement must be part of, or 369 a separate addendum to, the lease agreement. Such waivers may 370 also cancel or waive amounts due for excess mileage. 371 (5)Lease agreement means a written agreement entered 372 into in this state for the transfer from a retail lessor to a 373 retail lessee of the right to possess and use a motor vehicle in 374 exchange for consideration for a scheduled term exceeding 4 375 months, whether or not the retail lessee has the option to 376 purchase or otherwise become the owner of the motor vehicle upon 377 expiration of the agreement. The term does not include an 378 agreement which covers an absolute sale, a sale pending 379 approval, or a retail installment sale, including a transaction 380 or contract which is governed by the Motor Vehicle Retail Sales 381 Finance Act of Florida. 382 (6)(5)Lease transaction means a presentation made to the 383 retail lessee concerning the motor vehicle, including a sales 384 presentation or a document presented to the retail lessee, 385 resulting in the execution of a lease agreement. 386 (7)(6)Motor vehicle means a motor vehicle of the type 387 and kind required to be registered and titled under chapters 319 388 and 320, excluding a recreational vehicle, moped, motorcycle 389 powered by a motor with a displacement of 50 cubic centimeters 390 or less, or a mobile home. 391 (8)(7)Retail lessee means an individual who executes a 392 lease agreement for a motor vehicle from a retail lessor 393 primarily for personal, family, or household purposes. 394 (9)(8)Retail lessor means a person who regularly engages 395 in the business of selling or leasing motor vehicles and who 396 offers or arranges a lease agreement for a motor vehicle. The 397 term includes an agent or affiliate who acts on behalf of the 398 retail lessor and excludes any assignee of the lease agreement. 399 Section 10.Section 521.007, Florida Statutes, is created 400 to read: 401 521.007Excess wear and use waiver. 402 (1)A retail lessee may contract with a retail lessor for 403 an excess wear and use waiver in connection with a lease 404 agreement. 405 (2)The terms of the related motor vehicle lease may not be 406 conditioned upon the consumers payment for any excess wear and 407 use waiver. However, excess wear and use waivers may be 408 discounted or given at no charge in connection with the purchase 409 of other noncredit-related goods. 410 (3)A lease agreement that includes an excess wear and use 411 waiver must disclose all of the following: 412 (a)The total charge for the excess wear and use waiver. 413 (b)Any exclusions or limitations on the amount of excess 414 wear and use which may be waived under the excess wear and use 415 waiver. 416 (c)The terms, restrictions, or conditions governing 417 cancellation of the excess wear and use waiver before the 418 termination or expiration of the excess wear and use waiver, 419 which may include an administrative fee of not more than $75. 420 (4)An excess wear and use waiver is not insurance for 421 purposes of the Florida Insurance Code. 422 Section 11.This act shall take effect October 1, 2024.