Bill Text: OR HB2391 | 2013 | Regular Session | Introduced
Bill Title: Relating to guaranteed asset protection waivers.
Spectrum: Partisan Bill (Democrat 2-0)
Status: (Failed) 2013-07-08 - In committee upon adjournment. [HB2391 Detail]
Download: Oregon-2013-HB2391-Introduced.html
77th OREGON LEGISLATIVE ASSEMBLY--2013 Regular Session
NOTE: Matter within { + braces and plus signs + } in an
amended section is new. Matter within { - braces and minus
signs - } is existing law to be omitted. New sections are within
{ + braces and plus signs + } .
LC 991
House Bill 2391
Sponsored by Representatives CLEM, MATTHEWS (Presession filed.)
SUMMARY
The following summary is not prepared by the sponsors of the
measure and is not a part of the body thereof subject to
consideration by the Legislative Assembly. It is an editor's
brief statement of the essential features of the measure as
introduced.
Establishes conditions under which person may sell guaranteed
asset protection waivers in connection with sale or lease of
motor vehicle. Specifies conditions under which purchaser may
cancel or creditor may terminate guaranteed asset protection
waiver. Provides that guaranteed asset protection waiver is not
insurance and is not subject to provisions of Insurance Code.
Provides that person that sells guaranteed asset protection
waiver may insure waiver for losses and expenses incurred in
performing obligations under terms of guaranteed asset protection
waiver. Specifies requirements for insurance.
Provides that violation of provisions of Act is unlawful
practice that is subject to enforcement under Unlawful Trade
Practices Act.
A BILL FOR AN ACT
Relating to guaranteed asset protection waivers; creating new
provisions; and amending ORS 646.607.
Be It Enacted by the People of the State of Oregon:
SECTION 1. { + As used in sections 1 to 7 of this 2013 Act:
(1) 'Borrower' means an individual who, in connection with
purchasing or leasing a motor vehicle, incurs an obligation to
pay money to a creditor under terms and conditions that are
specified in a finance agreement.
(2) 'Creditor' means:
(a) A person that:
(A) Permits another person to defer or to pay in installments
an amount due for a purchase or lease of a motor vehicle; or
(B) Otherwise extends credit to another person for purchasing
or leasing a motor vehicle; or
(b) An assignee of a person described in paragraph (a) of this
subsection.
(3) 'Evaluation period' means a period of time after the date
on which a borrower purchases a guaranteed asset protection
waiver in which the borrower may cancel the guaranteed asset
protection waiver and receive a full or partial refund of the
purchase price.
(4) 'Finance agreement' means a contract or other agreement
that is evidence of a borrower's obligation to pay money to a
creditor and that specifies the terms and conditions under which
the borrower must repay the obligation.
(5) 'Guaranteed asset protection waiver' means a contractual
provision of or an addendum to a finance agreement for a purchase
or lease of a motor vehicle under the terms of which a creditor
agrees to waive the creditor's right to collect all or part of an
amount due from a borrower under the terms of the finance
agreement or to release a borrower from an obligation to pay the
creditor an amount due under a finance agreement if the motor
vehicle:
(a) Suffers physical damage that is equivalent to a total loss;
or
(b) Is stolen and is not recovered.
(6) 'Insurer' means a domestic insurer, as defined in ORS
731.082.
(7) 'Motor vehicle' means a motor vehicle, as defined in ORS
801.360, that is sold or leased in this state.
(8) 'Reimbursement insurance policy' means an insurance policy
under the terms of which an insurer reimburses a creditor for
losses the creditor experiences and expenses the creditor incurs
in performing the creditor's obligations under the terms of a
guaranteed asset protection waiver. + }
SECTION 2. { + (1) A guaranteed asset protection waiver is not
insurance and is not subject to the provisions of the Insurance
Code. A person, other than an insurer, that sells a guaranteed
asset protection waiver in compliance with sections 1 to 7 of
this 2013 Act does not become subject to the Insurance Code by
reason of the sale.
(2) Sections 1 to 7 of this 2013 Act do not apply to:
(a) An insurance policy that an insurer offers under the
provisions of the Insurance Code; or
(b) A debt cancellation contract or debt suspension agreement,
both as defined in 12 C.F.R. 37.2, as in effect on the effective
date of this 2013 Act.
(3) Section 3 of this 2013 Act does not apply to a person that
sells a guaranteed asset protection waiver, or to the guaranteed
asset protection waiver that the person sells or offers to sell,
in connection with a finance agreement for sale or lease of a
motor vehicle to a person other than an individual who purchases
or leases a motor vehicle for personal, family or household
purposes. + }
SECTION 3. { + A person may not sell a guaranteed asset
protection waiver unless, at the time of the sale:
(1) The person discloses, in writing and in plain and easily
understandable language:
(a) The name, address, telephone number and other contact
information of:
(A) The person that sells the guaranteed asset protection
waiver;
(B) The creditor, if different; and
(C) Any other person that is a party to or has duties,
responsibilities or other obligations in connection with the
guaranteed asset protection waiver.
(b) The price and total cost to the borrower of the guaranteed
asset protection waiver. Costs to the borrower that the person
discloses in compliance with the federal Truth in Lending Act,
15. U.S.C. 1601 et seq., and regulations promulgated under that
Act, must be separately stated and are not a finance charge or
interest within the meaning of the federal Act.
(c) The terms and conditions of the guaranteed asset protection
waiver, including, but not limited to:
(A) Conditions under which the creditor will waive all or a
portion of the obligation remaining under a finance agreement;
(B) Conditions under which the creditor may decline to waive
all or a portion of the obligation remaining under a finance
agreement; and
(C) Whether the borrower must pay the entire sum of the
purchase price for the guaranteed asset protection waiver or may
pay the purchase price in installments.
(d) The identity, location and contact information for the
person to which the borrower must submit a claim for benefits
under the guaranteed asset protection waiver and the procedure
the borrower must follow to submit the claim.
(e) Conditions under which the borrower may cancel the
guaranteed asset protection waiver and the procedure the borrower
must follow to cancel, both during the evaluation period and
after the evaluation period expires, if the terms of the
guaranteed asset protection waiver permit cancellation after the
evaluation period expires.
(f) The formula or methodology that will apply to calculating
the amount of any refund the borrower will receive if:
(A) The borrower cancels the guaranteed asset protection
waiver, either during or after the evaluation period; or
(B) The finance agreement is terminated early.
(2) The guaranteed asset protection waiver provides that the
borrower may cancel the guaranteed asset protection waiver during
the evaluation period for a full refund of the purchase price if
the borrower did not receive any benefits or, if the borrower did
receive benefits, for a full or partial refund in accordance with
the terms of the guaranteed asset protection waiver.
(3) The person states clearly, and the terms of the guaranteed
asset protection waiver provide in writing, that purchasing a
guaranteed asset protection waiver is not required in order to
obtain credit or complete the purchase or lease of a motor
vehicle and does not affect the terms and conditions of credit
that a borrower obtains from a creditor. + }
SECTION 4. { + (1)(a) A guaranteed asset protection waiver may
provide that a borrower may cancel the guaranteed asset
protection waiver after the evaluation period expires or that the
guaranteed asset protection waiver expires if the finance
agreement terminates early. If the guaranteed asset protection
waiver permits a borrower to cancel as provided in this
subsection, the borrower is entitled to a partial refund of the
purchase price unless the terms of the guaranteed asset
protection waiver explicitly provide otherwise.
(b) Unless the terms of the guaranteed asset protection waiver
provide otherwise, the amount due a borrower that cancels the
guaranteed asset protection waiver is the amount of the purchase
price for the guaranteed asset protection waiver multiplied by
the number of days that remain unused under the guaranteed asset
protection waiver after the borrower's cancellation, divided by
the total number of days in a period that begins on the date when
the guaranteed asset protection waiver first became effective and
ends on the date on which the guaranteed asset protection waiver
would have expired if the borrower had not canceled.
(c) Unless the terms of the guaranteed asset protection waiver
provide otherwise, a borrower shall apply in writing to the
creditor or the person identified in the disclosure under section
3 (1)(a) of this 2013 Act for a refund of all or a portion of the
purchase price of a guaranteed asset protection waiver within 90
days after the borrower cancels the guaranteed asset protection
waiver.
(2) The terms of the guaranteed asset protection waiver may
provide that if the borrower defaults on the obligation set forth
in the finance agreement, if the creditor repossesses the motor
vehicle that secures the obligation or if the finance agreement
terminates for a reason other than the borrower's satisfaction of
the obligation set forth in the finance agreement, any refund due
as a consequence of the cancellation or termination may be:
(a) Paid directly to the creditor; or
(b) Applied to any outstanding balance on the obligation set
forth in the finance agreement, unless the borrower has paid the
obligation in full.
(3) Unless canceled as provided in this section, a guaranteed
asset protection waiver remains in effect as part of the finance
agreement for the term set forth in the guaranteed asset
protection waiver even if the finance agreement is sold, assigned
or otherwise transferred. + }
SECTION 5. { + (1)(a) A creditor other than a person that
sells a guaranteed asset protection waiver in connection with a
retail sale of a motor vehicle may insure a guaranteed asset
protection waiver with a reimbursement insurance policy.
(b) A person that sells a guaranteed asset protection waiver in
connection with a retail sale of a motor vehicle shall insure the
guaranteed asset protection waiver with a reimbursement insurance
policy that meets the requirements set forth in subsection (2) of
this section.
(c) A person that leases a motor vehicle does not need to
insure a guaranteed asset protection waiver the person sells in
connection with the lease.
(2) A reimbursement insurance policy for a guaranteed asset
protection waiver must state:
(a) The terms of the obligation the insurer has to reimburse
the creditor for amounts the creditor loses or expenses the
creditor incurs in performing the creditor's obligations under
the terms of the guaranteed asset protection waiver;
(b) That the insurer's obligation to reimburse the creditor
extends to the creditor's assignee or any person to which the
creditor sells or transfers the finance agreement or the
guaranteed asset protection waiver that the reimbursement
insurance policy covers;
(c) That the reimbursement insurance policy remains in effect
until the creditor, the creditor's assignee or the person to
which the creditor sold or transferred the finance agreement or
the guaranteed asset protection waiver cancels or terminates the
reimbursement insurance policy in accordance with applicable
provisions of the Insurance Code; and
(d) That a cancellation of the reimbursement insurance policy
does not affect an insurer's obligation under the reimbursement
insurance policy for guaranteed asset protection waivers that the
insured sold, and for which the insurer received premium
payments, before the date on which the reimbursement insurance
policy was canceled.
(3) A person that sells a guaranteed asset protection waiver in
connection with a sale or lease of a motor vehicle shall report
to any insurer that has issued a reimbursement insurance policy
to the person the number of guaranteed asset protection waiver
sales and any other details the insurer requires under the terms
of the reimbursement insurance policy and shall timely forward to
the insurer all funds due under the terms of the reimbursement
insurance policy. + }
SECTION 6. { + A person that is subject to sections 1 to 7 of
this 2013 Act shall act in a fiduciary capacity with respect to
funds the person receives or holds for the benefit of another
person. + }
SECTION 7. { + A violation of sections 1 to 7 of this 2013 Act
is an unlawful practice under ORS 646.607 that is subject to
enforcement under ORS 646.632. + }
SECTION 8. ORS 646.607 is amended to read:
646.607. A person engages in an unlawful practice when in the
course of the person's business, vocation or occupation the
person:
(1) Employs any unconscionable tactic in connection with
{ - the sale, rental or other disposition - } { + selling,
renting or otherwise disposing + } of real estate, goods or
services, or { - collection or enforcement of - } { +
collecting or enforcing + } an obligation;
(2) Fails to deliver all or any portion of real estate, goods
or services as promised, and upon request of the customer, fails
to refund { - any - } money { - that has been received - }
{ + the person received + } from the customer { - that was
for the purchase of - } { + to purchase + } the undelivered
real estate, goods or services and that { - is not retained
by - } the seller { - pursuant to - } { + does not retain
under + } any right, claim or defense asserted in good faith.
This subsection does not create a warranty obligation and does
not apply to a dispute over the quality of real estate, goods or
services delivered to a customer;
(3) Violates ORS 401.965 (2);
(4) Violates a provision of ORS 646A.725 to 646A.750;
(5) Violates ORS 646A.530; { - or - }
(6) Employs a collection practice that is unlawful under ORS
646.639 { - . - } { + ; or
(7) Violates a provision of sections 1 to 7 of this 2013
Act. + }
SECTION 9. { + Sections 1 to 7 of this 2013 Act and the
amendments to ORS 646.607 by section 8 of this 2013 Act apply to
guaranteed asset protection waivers that are sold or offered for
sale on or after the effective date of this 2013 Act. + }
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