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ACT No. 374
Regular Session, 2010
HOUSE BILL NO. 452
BY REPRESENTATIVE ARNOLD
AN ACT1
To amend and reenact R.S. 6:969.6(23) and (29), 969.35(A)(2), 969.42, the heading of Part2
VIII of Chapter 10-B of Title 6 of the Louisiana Revised Statutes of 1950, and3
969.51 and to enact R.S. 6:969.6(34) and (35), 969.52, 969.53, and 969.54, relative4
to the Louisiana Motor Vehicle Sales Finance Act; to provide for changes in5
definitions; to provide for new definitions; to provide for debt waiver or debt6
forgiveness agreements; to provide for requirements of GAP coverage; to provide7
for liability, disclosures, or cancellations regarding debt waiver or debt forgiveness8
agreements; and to provide for related matters.9
Be it enacted by the Legislature of Louisiana:10
Section 1. R.S. 6:969.6(23) and (29), 969.35(A)(2), 969.42, the heading of Part VIII11
of Chapter 10-B of Title 6 of the Louisiana Revised Statutes of 1950, and 969.51 are hereby12
amended and reenacted and R.S. 6:969.6(34) and (35), 969.52, 969.53, and 969.54 are13
hereby enacted to read as follows: 14
§969.6. Definitions15
As used in this Chapter:16
* * *17
(23)(a) "Motor vehicle" means any new or used transportation device,18
including automobiles, motorcycles, trucks, and other vehicles that are operated over19
the public highways and the streets of this state, but does not include traction20
engines, boat trailers, road rollers, implements of husbandry, and other agricultural21
vehicles. A manufactured home is deemed to be a "motor vehicle" for purposes of22
this Chapter only if it is anticipated at the time of the transaction that the23
manufactured home will not be immobilized pursuant to R.S. 9:1149.4.24 ENROLLEDHB NO. 452
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(b) "Motor vehicle" for purposes of GAP coverage means self-propelled or1
towed vehicles designed for personal use, including but not limited to automobiles,2
trucks, motorcycles, recreational vehicles, all-terrain vehicles, snowmobiles,3
campers, boats, personal watercraft, and motorcycle, boat, camper, and personal4
watercraft trailers.5
* * *6
(29) "Salesman" or "agent" means any person employed by an administrator7
licensed by the commission whose duties include the sale of a debt waiver or debt8
forgiveness agreement on behalf of the administrator to a licensee of the9
commission.10
* * *11
(34) "Free-look period" means the period of time from the effective date of12
the debt waiver or debt forgiveness agreement until the date the consumer may13
cancel the contract with a full refund. This period of time shall not be less than thirty14
days.15
(35) "Insurer" means an insurance company licensed, registered, or16
otherwise authorized to do business under the insurance laws of this state.17
* * *18
§969.35. Authority to make consumer loans; assignees; authority to issue debt19
waiver or debt forgiveness agreements20
A.21
* * *22
(2) Unless a person has first obtained a license from the commission, or is23
a supervised financial organization, he shall not engage in business as an24
administrator or as a salesman or agent involving the making of consumer loans or25
the origination of a consumer credit sale subject to this Chapter debt waiver or debt26
forgiveness agreements.27
* * *28 ENROLLEDHB NO. 452
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§969.42. Venue for litigation or arbitration; choice of law1
A. A provision contained in any document relating to a motor vehicle credit2
transaction or debt waiver or debt forgiveness agreement that was entered into in the3
state of Louisiana requiring that litigation or arbitration be conducted outside of this4
state is void and unenforceable.5
B. Except as to a supervised financial organization, a provision contained in6
any document relating to a motor vehicle credit transaction or debt waiver or debt7
forgiveness agreement that was entered into in the state of Louisiana that seeks to8
apply any law other than Louisiana law to a dispute between the parties to such9
transaction is void and unenforceable.10
* * *11
PART VIII. UNIFORM RETAIL INSTALLMENT SALES CONTRACT 12
GAP COVERAGE13
§969.51. Uniform retail installment sales contract GAP coverage; requirements14
A. The legislature finds that it is beneficial to extenders of credit, consumers,15
and new and used motor vehicle dealers to have uniform documents that can be used16
in the sale and financing of new and used motor vehicles. Uniform retail installment17
sales contracts benefit both parties to a contract by making transactions more18
understandable. Debt waiver or debt forgiveness agreements may be offered, sold,19
or provided to consumers in this state in compliance with this Chapter.20
B. The commission shall create a uniform retail installment sales contract for21
motor vehicle credit transactions subject to this Chapter. The commission shall22
promulgate the contract and any rules for use of the form in accordance with the23
Administrative Procedure Act no later than January 1, 2007. When creating the24
form, the commission shall incorporate all consumer notice and disclosure25
requirements provided for in state and federal law. Debt waiver or debt forgiveness26
agreements shall be sold for a single premium.27
C. Use of the uniform retail installment sales contract by a lender or seller28
shall constitute prima facie evidence of compliance with consumer notice and29
disclosure requirements of state and federal law. Notwithstanding any other30 ENROLLEDHB NO. 452
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provision of law to the contrary, any cost to a consumer for a debt waiver or debt1
forgiveness agreement entered into in compliance with The Truth in Lending Act,2
15 U.S.C. 1601 et seq., and its implementing regulations, as they may be amended3
from time to time, shall be separately stated and shall not be considered a finance4
charge or interest.5
D. A seller shall insure its debt waiver or debt forgiveness agreement's6
obligations under a contractual liability or other insurance policy issued by an7
insurer. A lender, other than a seller, may insure its debt waiver or debt forgiveness8
agreement’s obligations under a contractual liability policy or other such policy9
issued by an insurer. Any such insurance policy may be directly obtained by a10
lender, seller, or may be procured by an administrator to cover a lender’s or seller’s11
obligations; however, sellers that are lessors on motor vehicles shall not be required12
to insure obligations related to debt waiver or debt forgiveness agreements on such13
leased vehicles.14
E. The debt waiver or debt forgiveness agreement remains a part of the15
contract upon the assignment, sale, or transfer of such contract by the seller or16
lender.17
F. Neither the extension of credit, the term of credit, nor the term of the18
related motor vehicle sale or lease may be conditioned upon the purchase of a debt19
waiver or debt forgiveness agreement.20
G. Any seller or lender that offers a debt waiver or debt forgiveness21
agreement shall report the sale of, and forward funds received on, all such waivers22
to the designated party, if any, as prescribed in any applicable administrative services23
agreement, contractual liability policy, other insurance policy, or other specified24
program documents.25
§969.52. Liability; contractual or insurance policies26
A. Contractual liability or other insurance policies insuring debt waiver or27
debt forgiveness agreements shall state the obligation of the insurer to reimburse or28
pay to the creditor any sums the lender is legally obligated to waive under the debt29 ENROLLEDHB NO. 452
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waiver or debt forgiveness agreement issued by the seller or lender and purchased1
or held by the consumer.2
B. Coverage under a contractual liability or other insurance policy insuring3
a debt waiver or debt forgiveness agreement shall also cover any subsequent assignee4
upon the assignment, sale, or transfer of the contract.5
C. Coverage under a contractual liability or other insurance policy insuring6
a debt waiver or debt forgiveness agreement shall remain in effect unless cancelled7
or terminated in compliance with applicable insurance laws of this state.8
D. The cancellation or termination of a contractual liability or other9
insurance policy shall not reduce the insurer's responsibility for debt waiver or debt10
forgiveness agreements issued by the seller or lender prior to the date of cancellation11
or termination and for which premium has been received by the insurer.12
§969.53. Cancellation13
A. Debt waiver or debt forgiveness agreements may be cancelled. Debt14
waiver or debt forgiveness agreements shall provide that if a consumer cancels a15
waiver within the "free-look period", the consumer shall be entitled to a full refund16
of the purchase price, so long as no benefits have been provided; or in the event17
benefits have been provided, the consumer may receive a full or partial refund18
pursuant to the terms of the waiver.19
B. In the event of a consumer cancellation of the debt waiver or debt20
forgiveness agreement or early termination of the contract, after the agreement has21
been in effect beyond the "free-look period", the consumer is entitled to a refund of22
any unearned portion of the purchase price of the waiver on terms no less favorable23
to the consumer than the method of refund commonly known as the "Rule of 78s"24
or the "sum of digits" refund method. In order to receive a refund, the consumer, in25
accordance with any applicable terms of the waiver, shall provide a written request26
to the lender, administrator, or other party.27
C. If the cancellation of a debt waiver or debt forgiveness agreement occurs28
as a result of a default under the contract or the repossession of the motor vehicle29
associated with the contract, or any other termination of the contract, any refund due30 ENROLLEDHB NO. 452
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may be paid directly to the lender or administrator and applied as set forth in1
Subsection D of this Section.2
D. Any cancellation refund under the provisions of this Section may be3
applied by the lender as a reduction of the amount owed under the contract, unless4
the consumer can show that the contract has been paid in full.5
E. No consumer shall be charged a cancellation fee.6
§969.54. Disclosures7
Debt waiver or debt forgiveness agreements shall disclose, as applicable, in8
writing and in clear, understandable language that is easy to read, the following:9
(1) The name and address of the initial lender and the consumer at the time10
of sale and the identity and address of any administrator if different from the lender.11
(2) The purchase price and the terms of the debt waiver or debt forgiveness12
agreement, including without limitation, the requirements for protection, conditions,13
or exclusions with the debt waiver or debt forgiveness agreement.14
(3) A clear statement in the debt waiver or debt forgiveness agreement given15
to the consumer that by its acceptance as an amendment to the contract upon16
assignment, the lender agrees to waive the consumer's liability for the difference17
between the amount owed, excluding past due amounts, payment extensions,18
insurance, prior unrepaired damage for which the consumer has been paid by an19
insurer, or other charges, under the consumer's contract and the amount paid by the20
consumer's primary insurer after a vehicle is deemed a total loss from a peril covered21
by the consumer's primary insurance company or if there is no primary insurance on22
the date of loss, the actual cash value of the motor vehicle at the time of loss as23
determined by an established value guide.24
(4) That the consumer may cancel the debt waiver or debt forgiveness25
agreement within a "free-look period" as specified in the waiver, and shall be entitled26
to a full refund of the purchase price, so long as no benefits have been provided; or27
in the event benefits have been provided, the consumer may receive a full or partial28
refund of the premium paid pursuant to the terms of the waiver.29 ENROLLEDHB NO. 452
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(5) The procedure the consumer shall follow, if any, to obtain debt waiver1
or debt forgiveness agreement benefits under the terms and conditions of the waiver,2
including a telephone number and address where the consumer may apply for waiver3
benefits.4
(6) That in order to receive any refund due in the event of a debt waiver or5
debt forgiveness agreements's cancellation of the debt waiver or debt forgiveness6
agreements or early termination of the contract after the "free-look period" of the7
debt waiver or debt forgiveness waiver, the consumer, in accordance with terms of8
the waiver, shall provide a written request to cancel to the lender, administrator, or9
such other party, within ninety days of the occurrence of the event terminating the10
contract.11
(7) Any refund of the unearned purchase price of the debt waiver or debt12
forgiveness agreement due, in the event of cancellation of the debt waiver or debt13
forgiveness agreement or early termination of the contract, shall be on terms no less14
favorable to the consumer than the method of refund commonly known as the "Rule15
of 78s" or the "sum of digits" refund method.16
(8) That neither the extension of credit, the terms of the credit, nor the terms17
of the related motor vehicle sale or lease, may be conditioned upon the purchase of18
the debt waiver or debt forgiveness agreements.19
SPEAKER OF THE HOUSE OF REPRESENTATI VES
PRESIDENT OF THE SENATE
GOVERNOR OF THE STATE OF LOUISIANA
APPROVED: