Text: SSB02147                          Text: SSB02149
Text: SSB02100 - SSB02199               Text: SSB Index
Bills and Amendments: General Index     Bill History: General Index



Senate Study Bill 2148

Bill Text

PAG LIN
  1  1    Section 1.  Section 321I.3, subsection 2, Code 1997, is
  1  2 amended to read as follows:
  1  3    2.  In addition to any other required filings, a true and
  1  4 correct copy of the service contract and the provider's
  1  5 reimbursement insurance policy, the consent to service of
  1  6 process on the commissioner, and such other information as the
  1  7 commissioner requires, shall be filed annually no later than
  1  8 the first day of August.  If the first day of August falls on
  1  9 a weekend or a holiday, the date for filing shall be the next
  1 10 business day.  In addition to the annual filing, the provider
  1 11 shall promptly file copies of any amended documents, if
  1 12 material amendments have been made in the materials on file
  1 13 with the division.  If an annual filing is made after the
  1 14 first of August and sales have occurred during the period when
  1 15 the provider was in noncompliance with this section, the
  1 16 division shall assess an additional filing fee that is two
  1 17 times the amount normally required for an annual filing.  A
  1 18 fee shall not be charged for interim filings made to keep the
  1 19 materials filed with the division current and accurate.  The
  1 20 annual filing shall be accompanied by a filing fee determined
  1 21 by the commissioner which shall be sufficient to defray the
  1 22 costs of administering this chapter.
  1 23    Sec. 2.  Section 321I.4, Code 1997, is amended to read as
  1 24 follows:
  1 25    321I.4  DISCLOSURE TO PROVIDER.
  1 26    1.  A motor vehicle service contract reimbursement
  1 27 insurance policy shall not be issued, sold, or offered for
  1 28 sale in this state unless the reimbursement insurance policy
  1 29 conspicuously states that the issuer of the policy shall pay
  1 30 on behalf of the provider all sums which the provider is
  1 31 legally obligated to pay for failure to perform according to
  1 32 the provider's contractual obligations under the motor vehicle
  1 33 service contracts issued or sold by the provider.
  1 34    2.  The provider shall comply with chapter 555A with
  1 35 respect to all contracts that are subject to regulation under
  2  1 this chapter.  A failure to comply is subject to the remedies
  2  2 and penalties provided in that chapter.
  2  3    Sec. 3.  Section 321I.5, subsection 2, paragraph f, Code
  2  4 1997, is amended to read as follows:
  2  5    f.  Clearly and conspicuously states the existence, terms,
  2  6 and conditions of a deductible amount, if any.
  2  7    Sec. 4.  Section 321I.6, Code 1997, is amended to read as
  2  8 follows:
  2  9    321I.6  COMMISSIONER MAY PROHIBIT CERTAIN SALES –
  2 10 INJUNCTION.
  2 11    The commissioner shall, upon giving a ten-day notice to a
  2 12 motor vehicle service contract provider, issue an order
  2 13 instructing the provider to cease and desist from selling or
  2 14 offering for sale motor vehicle service contracts if the
  2 15 commissioner determines that the provider has failed to comply
  2 16 with a provision of this chapter.  Upon the failure of a motor
  2 17 vehicle service contract provider to obey a cease and desist
  2 18 order issued by the commissioner, the commissioner may give
  2 19 notice in writing of the failure to the attorney general, who
  2 20 shall immediately commence an action against the provider to
  2 21 enjoin the provider from selling or offering for sale motor
  2 22 vehicle service contracts until the provider complies with the
  2 23 provisions of this chapter and the district court may issue
  2 24 the injunction.
  2 25    Sec. 5.  Section 321I.11, subsection 1, paragraph g, Code
  2 26 1997, is amended to read as follows:
  2 27    g.  A motor vehicle service contract provider shall not
  2 28 make, publish, disseminate, circulate, or place before the
  2 29 public, or cause, directly or indirectly, to be made,
  2 30 published, disseminated, circulated, or placed before the
  2 31 public in a newspaper, magazine, or other publication, or in
  2 32 the form of a notice, circular, pamphlet, letter, or poster,
  2 33 or over a radio or television station, or in any other way, an
  2 34 advertisement, announcement, or statement containing an
  2 35 assertion, representation, or statement with respect to the
  3  1 motor vehicle service contract industry or with respect to a
  3  2 motor vehicle service contract provider which is untrue,
  3  3 deceptive, or misleading.  It is deceptive or misleading to
  3  4 use any combination of words, symbols, or physical materials
  3  5 which by their content, phraseology, shape, color, or other
  3  6 characteristics are so similar to a combination of words,
  3  7 symbols, or physical materials used by a manufacturer or of
  3  8 such a nature that the use would tend to mislead a person into
  3  9 believing that the solicitation is in some manner connected
  3 10 with the manufacturer, unless actually authorized or issued by
  3 11 the manufacturer.
  3 12    Sec. 6.  Section 321I.12, subsection 1, paragraph a, Code
  3 13 1997, is amended by adding the following new subparagraph:
  3 14    NEW SUBPARAGRAPH.  (4)  Copies of all materials relating to
  3 15 claims which have been denied.
  3 16    Sec. 7.  Section 523A.1, subsection 1, unnumbered paragraph
  3 17 4, Code 1997, is amended to read as follows:
  3 18    This section does not apply to payments for merchandise de-
  3 19 livered to the purchaser.  Except for caskets and other types
  3 20 of inner burial containers or concrete burial vaults sold
  3 21 after July 1, 1995, delivery Delivery includes storage in a
  3 22 warehouse under the control of the seller or any other
  3 23 warehouse or storage facility approved by the commissioner
  3 24 when a receipt of ownership in the name of the purchaser is
  3 25 delivered to the purchaser, the merchandise is insured against
  3 26 loss, the merchandise is protected against damage, title has
  3 27 been transferred to the purchaser, the merchandise is
  3 28 appropriately identified and described in a manner that it can
  3 29 be distinguished from other similar items of merchandise, the
  3 30 method of storage allows for visual audits of the merchandise,
  3 31 and the annual reporting requirements of section 523A.2,
  3 32 subsection 1, are satisfied.  Concrete burial vaults and
  3 33 caskets sold after July 1, 1995, shall not be delivered in
  3 34 lieu of trusting.  The commissioner may prohibit delivery in
  3 35 lieu of trusting with regard to additional types of inner
  4  1 burial containers and merchandise or establish standards for
  4  2 the approval of storage facilities, pursuant to rules adopted
  4  3 for that purpose.
  4  4    Sec. 8.  Section 523A.5, subsection 2, Code 1997, is
  4  5 amended by adding the following new paragraphs:
  4  6    NEW PARAGRAPH.  d.  "Human remains" means the body of a
  4  7 deceased individual that is in any stage of decomposition or
  4  8 has been cremated.
  4  9    NEW PARAGRAPH.  e.  "Inner burial container" means a
  4 10 container in which human remains are placed for burial or
  4 11 entombment and, if only one container is used for purposes of
  4 12 burial or entombment, includes a container designed to serve
  4 13 the same function as merchandise commonly known as burial
  4 14 vaults, urn vaults, grave boxes, grave liners, and lawn
  4 15 crypts.
  4 16    Sec. 9.  Section 523A.8, subsection 1, paragraph j, Code
  4 17 1997, is amended to read as follows:
  4 18    j.  Include an explanation of regulatory oversight by the
  4 19 insurance division in twelve point bold type, in substantially
  4 20 the following language:
  4 21    THIS CONTRACT MUST BE REPORTED TO THE IOWA INSURANCE
  4 22 DIVISION BY THE FIRST DAY OF MARCH OF THE FOLLOWING YEAR IS
  4 23 SUBJECT TO RULES ADMINISTERED BY THE IOWA INSURANCE DIVISION.
  4 24 YOU MAY CALL THE INSURANCE DIVISION AT (INSERT TELEPHONE
  4 25 NUMBER) TO CONFIRM THAT YOUR CONTRACT HAS BEEN REPORTED.
  4 26 WRITTEN INQUIRIES OR COMPLAINTS SHOULD BE MAILED TO THE
  4 27 FOLLOWING ADDRESS:  IOWA SECURITIES BUREAU, (INSERT ADDRESS).
  4 28    Sec. 10.  Section 523A.14, Code 1997, is amended to read as
  4 29 follows:
  4 30    523A.14  INJUNCTIONS.
  4 31    The attorney general or the commissioner may apply to the
  4 32 district court in any county of the state for an injunction to
  4 33 restrain a person subject to this chapter and any agents,
  4 34 employees, or associates of the person from engaging in
  4 35 conduct or practices deemed contrary to the public interest.
  5  1 In any proceeding for an injunction, the attorney general or
  5  2 the commissioner may apply to the court for the issuance of a
  5  3 subpoena to require the appearance of a defendant and the
  5  4 defendant's agents and any documents, books, and records
  5  5 germane to the hearing upon the petition for an injunction.
  5  6 Upon proof of any of the offenses described in the petition
  5  7 for injunction the court may grant the injunction.  The
  5  8 attorney general or the commissioner shall not be required to
  5  9 post a bond.
  5 10    Sec. 11.  Section 523B.1, subsection 3, paragraph a,
  5 11 unnumbered paragraph 1, Code 1997, is amended to read as
  5 12 follows:
  5 13    "Business opportunity" means a contract or agreement,
  5 14 between a seller and purchaser, express or implied, orally or
  5 15 in writing, at an initial investment exceeding five hundred
  5 16 dollars, where the parties agree that the seller or a person
  5 17 recommended by the seller is to provide to the purchaser any
  5 18 products, equipment, supplies, materials, or services for the
  5 19 purpose of enabling the purchaser to start a business, and the
  5 20 seller represents, directly or indirectly, orally or in
  5 21 writing, any of the following:
  5 22    Sec. 12.  Section 523B.1, subsection 3, paragraph b, Code
  5 23 1997, is amended by striking the paragraph.
  5 24    Sec. 13.  Section 523B.2, subsection 4, Code 1997, is
  5 25 amended to read as follows:
  5 26    4.  EFFECTIVE DATE.  A registration automatically becomes
  5 27 effective upon the expiration of the tenth fifteenth full
  5 28 business day after the complete filing is received by the
  5 29 administrator, provided that no order has been issued or
  5 30 proceeding is pending under subsection 10.  The administrator
  5 31 may by order waive or reduce the time period prior to
  5 32 effectiveness, provided that a complete filing has been made.
  5 33 The administrator may by order defer the effective date until
  5 34 the expiration of the tenth fifteenth full business day after
  5 35 the filing of an amendment with the administrator.
  6  1    Sec. 14.  Section 523B.2, subsection 8, paragraph c,
  6  2 subparagraph (13), Code 1997, is amended to read as follows:
  6  3    (13)  The business opportunity seller that is required to
  6  4 secure secures a bond pursuant to section 523B.4 subsection 10
  6  5 shall include in the disclosure document the following
  6  6 statement:  "As required by the state of Iowa, the seller has
  6  7 secured a bond issued by [insert name and address of surety
  6  8 company], a surety company, authorized to do business in this
  6  9 state.  Before signing a contract or agreement to purchase
  6 10 this business opportunity, you should check with the surety
  6 11 company to determine the bond's current status."
  6 12    Sec. 15.  Section 523B.2, subsection 10, paragraph a, Code
  6 13 1997, is amended by adding the following new subparagraph:
  6 14    NEW SUBPARAGRAPH.  (9)  The seller does not have a minimum
  6 15 net worth of twenty-five thousand dollars, as determined in
  6 16 accordance with generally accepted accounting principles.  A
  6 17 seller may submit a surety bond in lieu of the net worth
  6 18 requirement.  The administrator may by rule or order increase
  6 19 the amount of the net worth or bond for the protection of
  6 20 purchasers and may require the seller to file reports of all
  6 21 sales in this state to determine the appropriate amount of the
  6 22 net worth requirement.  The surety bond shall be for the
  6 23 period of the registration, issued by a surety company
  6 24 authorized to do business in this state and for the benefit of
  6 25 any purchaser.
  6 26    Sec. 16.  Section 523B.3, subsection 1, Code 1997, is
  6 27 amended to read as follows:
  6 28    1.  TYPES OF EXEMPTIONS.  The following business
  6 29 opportunities are exempt from the requirements of section
  6 30 523B.2:
  6 31    a.  The offer or sale of a business opportunity if the
  6 32 purchaser is a bank, savings and loan association, trust
  6 33 company, insurance company, credit union, or investment
  6 34 company as defined by the federal Investment Company Act of
  6 35 1940, a pension or profit-sharing trust, or other financial
  7  1 institution or institutional buyer, or a dealer broker-dealer
  7  2 registered pursuant to chapter 502, whether the purchaser is
  7  3 acting for itself or in a fiduciary capacity.
  7  4    b.  An offer or sale of a business opportunity to an
  7  5 ongoing business where the seller will provide products,
  7  6 equipment, supplies, or services which are substantially
  7  7 similar to the products, equipment, supplies, or services sold
  7  8 by the purchaser in connection with the purchaser's ongoing
  7  9 business.
  7 10    c.  An offer or sale of a business opportunity where the
  7 11 initial investment is less than five hundred dollars.
  7 12    d.  An offer or sale of an ongoing business operated by the
  7 13 seller which is to be sold in its entirety.
  7 14    e.  An offer or sale of a business opportunity by an
  7 15 executor, administrator, sheriff, receiver, trustee in
  7 16 bankruptcy, guardian, or conservator, or a judicial offer or
  7 17 sale of a business opportunity.
  7 18    b. f.  The offer or sale of a business opportunity which is
  7 19 defined as a franchise under section 523B.1, subsection 4,
  7 20 provided that the seller delivers to each purchaser at the
  7 21 earlier of the first personal meeting between the seller and
  7 22 the purchaser, or ten business days prior to the earlier of
  7 23 the execution by a purchaser of a contract or agreement
  7 24 imposing a binding legal obligation on the purchaser or the
  7 25 payment by a purchaser of any consideration in connection with
  7 26 the offer or sale of the business opportunity, one of the
  7 27 following disclosure documents:
  7 28    (1)  A uniform franchise-offering circular prepared in
  7 29 accordance with the guidelines adopted by the North American
  7 30 securities administrators association, inc., as amended
  7 31 through September 21, 1983.
  7 32    (2)  A disclosure document prepared pursuant to the federal
  7 33 trade commission rule entitled "Disclosure requirements and
  7 34 prohibitions concerning franchising and business opportunity
  7 35 ventures", 16 C.F.R. } 436 (1979).
  8  1    For the purposes of this paragraph, a personal meeting
  8  2 means a face-to-face meeting between the purchaser and the
  8  3 seller or their representatives, which is held for the purpose
  8  4 of discussing the offer or sale of a business opportunity.
  8  5 The administrator may by rule adopt any amendment to the
  8  6 uniform franchise-offering circular that has been adopted by
  8  7 the North American securities administrators association,
  8  8 inc., or any amendment to the disclosure document prepared
  8  9 pursuant to the federal trade commission rule entitled
  8 10 "Disclosure requirements and prohibitions concerning
  8 11 franchising and business opportunity ventures", 16 C.F.R. }
  8 12 436 (1979), that has been adopted by the federal trade
  8 13 commission.
  8 14    c.  The offer or sale of a business opportunity for which
  8 15 the cash payment made by a purchaser does not exceed five
  8 16 hundred dollars and the payment is made for the not-for-profit
  8 17 sale of sales demonstration equipment, material, or samples,
  8 18 or the payment is made for product inventory sold to the
  8 19 purchaser at a bona fide wholesale price.
  8 20    g.  An offer or sale of a business opportunity which
  8 21 involves a marketing plan made in conjunction with the
  8 22 licensing of a federally registered trademark or federally
  8 23 registered service mark provided that the seller has a minimum
  8 24 net worth of one million dollars as determined on the basis of
  8 25 the seller's most recent audited financial statement prepared
  8 26 within thirteen months of the first offer in this state.  Net
  8 27 worth may be determined on a consolidated basis if the seller
  8 28 is at least eighty percent owned by one person and that person
  8 29 expressly guarantees the obligations of the seller with regard
  8 30 to the offer or sale of a business opportunity claimed to be
  8 31 exempt under this paragraph.
  8 32    d.  The offer or sale of a business opportunity which the
  8 33 administrator exempts by order or a class of business oppor-
  8 34 tunities which the administrator exempts by rule upon the
  8 35 finding that the exemption would not be contrary to public
  9  1 interest and that registration would not be necessary or ap-
  9  2 propriate for the protection of purchasers.
  9  3    Sec. 17.  Section 523B.3, subsection 2, paragraph a, Code
  9  4 1997, is amended to read as follows:
  9  5    a.  The If the public interest of the protection of
  9  6 purchasers so requires, the administrator may by order deny or
  9  7 revoke an exemption specified in this section with respect to
  9  8 a particular offering of one or more business opportunities.
  9  9 An order shall not be entered without appropriate prior notice
  9 10 to all interested parties, opportunity for hearing, and
  9 11 written findings of fact and conclusions of law.
  9 12    Sec. 18.  Section 523B.7, subsection 1, paragraph a, Code
  9 13 1997, is amended to read as follows:
  9 14    1.  a.  A person who violates section 523B.4 or section
  9 15 523B.2, subsection 1, 8, or 9, is liable to the purchaser in
  9 16 an action for rescission of the agreement, or for recovery of
  9 17 all money or other valuable consideration paid for the
  9 18 business opportunity, and for actual damages together with
  9 19 interest as determined pursuant to section 668.13 from the
  9 20 date of sale, reasonable attorney's fees, and court costs.
  9 21    Sec. 19.  Section 523B.8, subsection 4, Code 1997, is
  9 22 amended to read as follows:
  9 23    4.  a.  If it appears to the administrator that a person
  9 24 has engaged, is engaged, or is about to engage in any act or
  9 25 practice constituting a violation of this chapter, or of a
  9 26 rule or order adopted or issued under this chapter, the
  9 27 administrator may take either or both of the following
  9 28 actions:
  9 29    a.  Notify the attorney general who shall bring an action
  9 30 in the district court to enjoin the acts or practices
  9 31 constituting the violation and to enforce compliance with this
  9 32 chapter or any rule or order adopted or issued pursuant to
  9 33 this chapter.  Upon a proper showing a permanent or temporary
  9 34 injunction shall be granted and a receiver or conservator may
  9 35 be appointed for the defendant or the defendant's assets.
 10  1    b.  Bring an action in district court.  Upon proper showing
 10  2 by the administrator, the court may enter an order of
 10  3 rescission, restitution, or disgorgement, as well as
 10  4 prejudgment and postjudgment interest, directed at any person
 10  5 who has engaged in an act constituting a violation of this
 10  6 chapter.
 10  7    b.  The administrator, in bringing an action under
 10  8 paragraph "a", shall not be required to post bond.
 10  9    Sec. 20.  Section 523B.11, subsection 1, Code 1997, is
 10 10 amended to read as follows:
 10 11    1.  A seller who willfully violates section 523B.4, section
 10 12 523B.2, subsection 1, 8, or 9, or section 523B.12, subsection
 10 13 2, who willfully violates a rule under this chapter, who
 10 14 willfully violates an order of which the person has notice, or
 10 15 who violates section 523B.12, subsection 1, knowing that the
 10 16 statement made was false or misleading in any material
 10 17 respect, upon conviction, is guilty of a class "D" felony.
 10 18 Each of the acts specified constitutes a separate offense and
 10 19 a prosecution or conviction for any one of such offenses does
 10 20 not bar prosecution or conviction for any other offense.
 10 21    Sec. 21.  Section 523B.12, Code 1997, is amended by adding
 10 22 the following new subsection:
 10 23    NEW SUBSECTION.  4.  MISREPRESENTATIONS, OMISSIONS, AND
 10 24 MISLEADING CONDUCT.  It is unlawful for a business opportunity
 10 25 seller to do any of the following:
 10 26    a.  Misrepresent, by failure to disclose or otherwise, the
 10 27 known required total investment for such business opportunity.
 10 28    b.  Misrepresent or fail to disclose efforts to sell or
 10 29 establish more business opportunities than it is reasonable to
 10 30 expect the market or market area for the particular business
 10 31 opportunity to sustain.
 10 32    c.  Misrepresent the quantity or the quality of the
 10 33 products to be sold or distributed through the business
 10 34 opportunity.
 10 35    d.  Misrepresent the training and management assistance
 11  1 available to the business opportunity purchaser.
 11  2    e.  Misrepresent the amount of profits, net or gross, which
 11  3 the business opportunity purchaser can expect from the
 11  4 operation of the business opportunity.
 11  5    f.  Misrepresent, by failure to disclose or otherwise, the
 11  6 termination, transfer, or renewal provision of a business
 11  7 opportunity agreement.
 11  8    g.  Falsely claim or imply that a primary marketer or
 11  9 trademark of products or services sponsors or participates
 11 10 directly or indirectly in the business opportunity.
 11 11    h.  Assign a so-called exclusive territory encompassing the
 11 12 same area to more than one business opportunity purchaser.
 11 13    i.  Provide vending locations for which written
 11 14 authorizations have not been granted by the property owners or
 11 15 lessees.
 11 16    j.  Provide merchandise, machines, or displays of a brand
 11 17 or kind substantially different from or inferior to those
 11 18 promised by the business opportunity seller.
 11 19    k.  Fail to provide the purchaser a written contract.
 11 20    l.  Misrepresent the ability of a person or entity
 11 21 providing services to provide locations or assist the
 11 22 purchaser in finding locations expected to have a positive
 11 23 impact on the success of the business opportunity.
 11 24    m.  Misrepresent or omit to state a material fact or create
 11 25 a false or misleading impression in the sale of a business
 11 26 opportunity.
 11 27    Sec. 22.  Section 523C.7, Code 1997, is amended by adding
 11 28 the following new subsection:
 11 29    NEW SUBSECTION.  5.  A residential service contract shall
 11 30 comply with chapter 555A.  A failure to comply is subject to
 11 31 the remedies and penalties provided in that chapter.
 11 32    Sec. 23.  Section 523E.8, subsection 1, paragraph j, Code
 11 33 1997, is amended to read as follows:
 11 34    j.  Include an explanation of regulatory oversight by the
 11 35 insurance division in twelve point bold type, in substantially
 12  1 the following language:
 12  2    THIS CONTRACT MUST BE REPORTED TO THE IOWA INSURANCE
 12  3 DIVISION BY THE FIRST DAY OF MARCH OF THE FOLLOWING YEAR IS
 12  4 SUBJECT TO REGULATIONS ADMINISTERED BY THE IOWA INSURANCE
 12  5 DIVISION.  YOU MAY CALL THE INSURANCE DIVISION AT (INSERT
 12  6 TELEPHONE NUMBER) TO CONFIRM THAT YOUR CONTRACT HAS BEEN
 12  7 REPORTED.  WRITTEN INQUIRIES OR COMPLAINTS SHOULD BE MAILED TO
 12  8 THE FOLLOWING ADDRESS:  IOWA SECURITIES BUREAU (INSERT
 12  9 ADDRESS).
 12 10    Sec. 24.  Section 523E.14, Code 1997, is amended to read as
 12 11 follows:
 12 12    523E.14  INJUNCTIONS.
 12 13    The attorney general or the commissioner may apply to the
 12 14 district court in any county of the state for an injunction to
 12 15 restrain a person subject to this chapter and any agents,
 12 16 employees, or associates of the person from engaging in
 12 17 conduct or practices deemed contrary to the public interest.
 12 18 In any proceeding for an injunction, the attorney general or
 12 19 the commissioner may apply to the court for the issuance of a
 12 20 subpoena to require the appearance of a defendant and the
 12 21 defendant's agents and any documents, books, and records
 12 22 germane to the hearing upon the petition for an injunction.
 12 23 Upon proof of any of the offenses described in the petition
 12 24 for injunction the court may grant the injunction.  The
 12 25 attorney general or the commissioner shall not be required to
 12 26 post a bond.
 12 27    Sec. 25.  Section 523I.6, subsection 1, paragraph e, Code
 12 28 1997, is amended to read as follows:
 12 29    e.  The nonexclusive preneed and at-need sale of monuments,
 12 30 memorials, markers, burial vaults, urns, flower vases, floral
 12 31 arrangements, and other the following:
 12 32    (1)  Monuments.
 12 33    (2)  Memorials.
 12 34    (3)  Markers.
 12 35    (4)  Installation of monuments, memorials, or markers.
 13  1    (5)  Burial vaults.
 13  2    (6)  Urns.
 13  3    (7)  Flower vases.
 13  4    (8)  Floral arrangements.
 13  5    (9)  Other similar merchandise for use within the cemetery.
 13  6    Sec. 26.  Section 566A.1, subsection 1, Code 1997, is
 13  7 amended to read as follows:
 13  8    1.  A corporation or other form of organization engaging in
 13  9 the business of the ownership, maintenance, or operation of a
 13 10 cemetery, which provides lots or other interment space for the
 13 11 remains of human bodies, is subject to this chapter.  However,
 13 12 a religious cemetery is subject only to subsection 2, and
 13 13 sections 566A.2A and 566A.2B.  A cemetery with average retail
 13 14 sales equal to or less than five thousand dollars for the
 13 15 previous three calendar years is exempt from section 566A.2C.
 13 16 Political subdivisions of the state which are counties are
 13 17 exempt from this chapter.  Political subdivisions of the state
 13 18 other than counties are subject only to sections 566A.1A,
 13 19 566A.2A, 566A.2B, and 566A.2D.
 13 20    Sec. 27.  Section 566A.1A, subsection 2, Code 1997, is
 13 21 amended to read as follows:
 13 22    2.  "Cemetery" means a cemetery, mausoleum, columbarium, or
 13 23 other space held for the purpose of burial, scattering,
 13 24 entombment, or inurnment of human remains and where such space
 13 25 is offered for sale to the public.
 13 26    Sec. 28.  Section 566A.2C, subsection 2, Code 1997, is
 13 27 amended to read as follows:
 13 28    2.  The commissioner shall permit the filing of a unified
 13 29 annual report in the event of commonly owned or affiliated
 13 30 cemeteries.  A political subdivision subject to this section
 13 31 may commingle perpetual care funds for purposes of investment
 13 32 and administration and may file a single report, if each
 13 33 cemetery is appropriately identified and separate records are
 13 34 maintained for each cemetery.
 13 35    Sec. 29.  Section 566A.2C, Code 1997, is amended by adding
 14  1 the following new subsection:
 14  2    NEW SUBSECTION.  5.  This section does not apply to a
 14  3 cemetery with average retail sales equal to or less than five
 14  4 thousand dollars for the previous three calendar years.
 14  5    Sec. 30.  Section 566A.3, unnumbered paragraph 3, Code
 14  6 1997, is amended to read as follows:
 14  7    The initial perpetual care fund established for any
 14  8 cemetery shall remain in an irrevocable trust fund until such
 14  9 time as this fund has reached fifty one hundred thousand
 14 10 dollars, when it the initial twenty-five thousand dollar
 14 11 deposit may be withdrawn at the rate of one thousand dollars
 14 12 from the original twenty-five thousand dollars for each
 14 13 additional three thousand dollars added to the fund, until all
 14 14 of the twenty-five thousand dollars has been withdrawn.  An
 14 15 affidavit shall be filed with the commissioner providing prior
 14 16 notice of the withdrawal and attesting that the money has not
 14 17 previously been withdrawn.  Except as approved by the
 14 18 commissioner upon sufficient proof that the money has not
 14 19 previously been withdrawn, the withdrawal must take place
 14 20 within one year after the fund reaches one hundred thousand
 14 21 dollars.
 14 22    Sec. 31.  Section 566A.12, subsection 4, paragraph b, Code
 14 23 1997, is amended to read as follows:
 14 24    b.  The commissioner or the attorney general may apply to
 14 25 the district court in any county of the state for a
 14 26 receivership.  Upon proof of any of the grounds for a
 14 27 receivership described in this section the court may grant a
 14 28 receivership.
 14 29    Sec. 32.  Section 566A.12, subsection 5, Code 1997, is
 14 30 amended to read as follows:
 14 31    5.  INJUNCTIONS.  The commissioner or the attorney general
 14 32 may apply to the district court for an injunction to restrain
 14 33 any cemetery subject to this chapter and any agents,
 14 34 employees, trustees, or associates of the cemetery from
 14 35 engaging in conduct or practices deemed a violation of this
 15  1 chapter or rules adopted pursuant to this chapter.  Upon proof
 15  2 of any violation of this chapter described in the petition for
 15  3 injunction, the court may grant the injunction.  The
 15  4 commissioner or the attorney general shall not be required to
 15  5 post a bond.  Failure to obey a court order under this
 15  6 subsection constitutes contempt of court.
 15  7    Sec. 33.  Section 523B.4, Code 1997, is repealed.  
 15  8                           EXPLANATION
 15  9    This bill relates to entities and subject matter under the
 15 10 regulatory authority of the regulated industries unit of the
 15 11 insurance division.  Specifically, the bill amends provisions
 15 12 relating to business opportunities, cemeteries and cemetery
 15 13 merchandise, preneed funeral merchandise and services, motor
 15 14 vehicle service contracts, and residential service contracts.
 15 15    Code section 321I.3 is amended to provide that a person in
 15 16 the business of selling motor vehicle service contracts must
 15 17 promptly file copies of amended documents used by such person
 15 18 with the insurance division.  The bill provides that the
 15 19 division is to assess an additional filing fee twice the
 15 20 amount normally associated with an annual filing if the annual
 15 21 filing occurs after August 1 and sales of such service
 15 22 contracts have occurred after August 1 and prior to the filing
 15 23 of the annual statement.
 15 24    Code section 321I.4 is amended to provide that motor
 15 25 vehicle service contracts are subject to the provisions of
 15 26 Code chapter 555A, relating to door-to-door sales.
 15 27    Code section 321I.5 is amended to provide that motor
 15 28 vehicle service contracts must clearly state the terms and
 15 29 conditions of a deductible amount, if one exists.
 15 30    Code section 321I.6 is amended and eliminates the 10-day
 15 31 notice requirement which currently must be given prior to an
 15 32 order being issued by the insurance commissioner instructing
 15 33 the service contract provider to cease selling such contracts.
 15 34    Code section 321I.11 is amended to provide that it is
 15 35 deceptive or misleading to use any combination of words,
 16  1 symbols, or physical materials which are so similar to such
 16  2 combinations used by a manufacturer or which tend to mislead a
 16  3 person into believing that the solicitation is in some manner
 16  4 connected with the manufacturer, unless such use is authorized
 16  5 by the manufacturer.
 16  6    Code section 321I.12 is amended to require a motor vehicle
 16  7 service contract provider to include copies of all materials
 16  8 relating to denied claims in the provider's records.
 16  9    Code section 523A.1 provides that the trusting requirements
 16 10 established in that section do not apply to payments for
 16 11 merchandise delivered to the purchaser.  The section is
 16 12 amended to prohibit delivery in lieu of trusting with respect
 16 13 to concrete burial vaults and caskets sold after July 1, 1995.
 16 14 The bill provides that the commissioner may also prohibit
 16 15 delivery in lieu of trusting with respect to additional types
 16 16 of inner burial containers and merchandise, or may establish
 16 17 standards for the approval of storage facilities for such
 16 18 containers and merchandise.  Currently, except for caskets and
 16 19 other types of inner burial containers or concrete burial
 16 20 vaults sold after July 1, 1995, delivery includes storage in a
 16 21 warehouse under the control of the seller or any other
 16 22 warehouse approved by the commissioner when a receipt of
 16 23 ownership naming the purchaser is delivered to the purchaser,
 16 24 the merchandise is insured and protected against damage, title
 16 25 has been transferred to the purchaser, the merchandise is
 16 26 appropriately identified and distinguishable from any other
 16 27 similar items, and the annual reporting requirements are
 16 28 satisfied.
 16 29    Code section 523A.5 is amended to add definitions for the
 16 30 terms "human remains" and "inner burial container".
 16 31    Code section 523A.8 is amended by changing language which
 16 32 must be included in a funeral merchandise or funeral services
 16 33 agreement.  Currently the language provides that the contract
 16 34 (agreement) must be reported to the insurance division by the
 16 35 first day of March of the following year and that the
 17  1 individual purchasing such merchandise or services may call
 17  2 the insurance division to confirm that the contract has been
 17  3 reported.  The language is amended by striking the reporting
 17  4 language and inserting language that the contract is subject
 17  5 to rules administered by the insurance division.  The bill
 17  6 also strikes the specific reason for calling the insurance
 17  7 division (to confirm the contract has been reported) but
 17  8 leaves the general language indicating that the individual may
 17  9 call the division.
 17 10    Code section 523A.14 is amended to provide that neither the
 17 11 attorney general nor the commissioner are required to post
 17 12 bond when seeking an injunction to restrain a person from
 17 13 engaging in conduct deemed contrary to the public interest
 17 14 with respect to the selling of funeral services or
 17 15 merchandise.
 17 16    Code section 523B.1 is amended by eliminating the $500
 17 17 minimum initial investment for purposes of defining what is a
 17 18 business opportunity and by striking language excluding
 17 19 certain offers from the definition of a business opportunity.
 17 20    Code section 523B.2 is amended by increasing the time
 17 21 period after which a business opportunity registration becomes
 17 22 automatically effective from 10 to 15 days (the effectiveness
 17 23 of registration amendments may also be deferred for 15 days),
 17 24 and by providing that the administrator (insurance
 17 25 commissioner) may issue an order denying effectiveness to, or
 17 26 suspending or revoking the effectiveness of, a registration if
 17 27 the administrator finds that the seller does not have a
 17 28 minimum net worth of $25,000.  The bill provides that the
 17 29 business opportunity seller may submit a surety bond in lieu
 17 30 of the net worth requirement.
 17 31    Code section 523B.3 is amended by striking language which
 17 32 exempts from the registration requirements of Code chapter
 17 33 523B, an offer or sale of a business opportunity for which the
 17 34 cash payment made by a purchaser does not exceed $500 and the
 17 35 payment is made for the not-for-profit sale of sales
 18  1 demonstration equipment, material, or samples, or the payment
 18  2 is made for product inventory sold to the purchaser at a bona
 18  3 fide wholesale price.  The bill establishes several other
 18  4 categories of offers or sales of business opportunities which
 18  5 are exempt from the registration requirements.  These include
 18  6 the offer or sale of a business opportunity to an ongoing
 18  7 business, where the initial investment is less than $500, to
 18  8 an ongoing business operated by the seller which is to be sold
 18  9 in its entirety, or by an executor, administrator, sheriff,
 18 10 receiver, trustee in bankruptcy, guardian, or conservator, or
 18 11 a judicial offer or sale.  The bill also provides that the
 18 12 administrator (insurance commissioner) may deny or revoke an
 18 13 exemption from the registration requirement with respect to a
 18 14 particular offering if the public interest or the protection
 18 15 of purchasers requires such action.
 18 16    Code section 523B.8 is amended to permit the administrator
 18 17 (insurance commissioner) to directly bring an action to enjoin
 18 18 acts or practices, rather than notifying the attorney general
 18 19 who would then bring the action.
 18 20    Code section 523B.12(4) is created and identifies acts
 18 21 which are deemed to be misrepresentations, omissions, and
 18 22 misleading conduct associated with business opportunities.
 18 23 The bill provides that such acts are unlawful.
 18 24    Code section 523C.7 is amended and provides that
 18 25 residential service contracts are to comply with Code chapter
 18 26 555A, relating to door-to-door sales.
 18 27    Code section 523E.8 is amended by changing language which
 18 28 must be included in a cemetery merchandise agreement.
 18 29 Currently the language provides that the contract (agreement)
 18 30 must be reported to the insurance division by the first day of
 18 31 March of the following year and that the individual purchasing
 18 32 such merchandise may call the insurance division to confirm
 18 33 that the contract has been reported.  The language is amended
 18 34 by striking the reporting language and inserting language that
 18 35 the contract is subject to rules administered by the insurance
 19  1 division.  The bill also strikes the specific reason for
 19  2 calling the insurance division (to confirm the contract has
 19  3 been reported) but leaves the general language indicating that
 19  4 the individual may call the division.
 19  5    Code section 523E.14 is amended to provide that neither the
 19  6 attorney general nor the commissioner are required to post
 19  7 bond when seeking an injunction to restrain a person from
 19  8 engaging in conduct deemed contrary to the public interest
 19  9 with respect to the selling of cemetery merchandise.
 19 10    Code section 523I.6 is amended to provide that a cemetery,
 19 11 within the boundaries of the cemetery lands, may offer the
 19 12 nonexclusive preneed and at-need sale of the installation of
 19 13 monuments, memorials, or markers.
 19 14    Code section 566A.1 is amended by striking language
 19 15 exempting nonperpetual care cemeteries with average retail
 19 16 sales of less than $5,000 from the annual reporting
 19 17 requirements.  This language is reenacted in Code section
 19 18 566A.2C.
 19 19    Code section 566A.1A is amended to include the scattering
 19 20 of human remains in the definition of "cemetery".
 19 21    Code section 566A.2C is amended by striking language which
 19 22 permits a political subdivision to commingle perpetual care
 19 23 funds for purposes of investment and administration, if each
 19 24 cemetery is appropriately identified and separate records are
 19 25 maintained for each cemetery.
 19 26    Code section 566A.3 is amended by increasing the amount
 19 27 which a perpetual care cemetery must deposit in an irrevocable
 19 28 trust fund from $50,000 to $100,000 prior to being able to
 19 29 withdraw the initial $25,000 which must be deposited before
 19 30 the perpetual care cemetery can commence doing business.  The
 19 31 withdrawal must be made within one year after the fund reaches
 19 32 $100,000 unless otherwise approved by the insurance
 19 33 commissioner.
 19 34    Code section 566A.12 is amended to provide that the
 19 35 insurance commissioner may apply to the district court for a
 20  1 receivership with respect to a perpetual care cemetery.  The
 20  2 Code section is also amended to permit the insurance
 20  3 commissioner to apply to the district court for an injunction
 20  4 to restrain a perpetual care cemetery from engaging in conduct
 20  5 or practices deemed to be in violation of Code chapter 566A.
 20  6 The bill provides that neither the insurance commissioner nor
 20  7 the attorney general are required to post a bond when seeking
 20  8 such injunction.
 20  9    Code section 523B.4 is repealed.   This section requires
 20 10 that a seller, in connection with an offer or sale of a
 20 11 business opportunity, must have at all times a minimum net
 20 12 worth of $25,000 or obtain a surety bond.  
 20 13 LSB 3306DP 77
 20 14 mj/cf/24
     

Text: SSB02147                          Text: SSB02149
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