House File 2714 - Introduced HOUSE FILE 2714 BY COMMITTEE ON COMMERCE (SUCCESSOR TO HSB 517) A BILL FOR An Act relating to licensing of service companies, motor 1 vehicle service contracts, and residential service 2 contracts, and providing civil penalties. 3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 4 TLSB 5468HV (5) 91 nls/ko

H.F. 2714 Section 1. Section 523C.1, Code 2026, is amended by adding 1 the following new subsections: 2 NEW SUBSECTION . 1A. “Communicating in a verifiable 3 manner” means communication by in-person delivery, first 4 class mail, email, or, if there is an auditable record of the 5 communication, by telephone or software application on an 6 electronic device. 7 NEW SUBSECTION . 1B. “Gross consideration” means the total 8 value of a service contract without deducting any expenses or 9 costs. 10 NEW SUBSECTION . 6A. “Person” means an individual or a 11 business entity. 12 NEW SUBSECTION . 12A. “Service contract holder” means the 13 original purchaser of a service contract or the successor in 14 interest or transferee entitled to services under the service 15 contract. 16 NEW SUBSECTION . 12B. “Substitute part” means a part that is 17 not issued by the original part manufacturer, including but not 18 limited to a remanufactured part, an aftermarket part, and a 19 part obtained from a salvage yard. 20 NEW SUBSECTION . 12C. “Support services” means a person that 21 provides services that support, or a person that works under 22 the direction of, a licensed service company in connection with 23 the issuance, offer for sale, sale, or administration of a 24 service contract in this state, including but not limited to a 25 person that provides marketing, administrative, or technical 26 support to a service company. 27 Sec. 2. Section 523C.1, subsection 4, Code 2026, is amended 28 to read as follows: 29 4. “Motor vehicle” means any vehicle that is self-propelled 30 vehicle and subject to registration under chapter 321 . 31 Sec. 3. Section 523C.1, subsection 10, Code 2026, is amended 32 to read as follows: 33 10. “Residential service contract” means a contract or 34 agreement between a residential customer and a service company 35 -1- LSB 5468HV (5) 91 nls/ko 1/ 22

H.F. 2714 which undertakes, for a predetermined fee and for any period 1 of time, to service, maintain, repair, replace, or indemnify 2 expenses for all or any part of the operational or structural 3 components, appliances, or electrical, mechanical, plumbing, 4 heating, cooling, or air-conditioning systems of residential 5 property in the state which fails due to normal wear or tear or 6 inherent defect . “Residential service contract” also includes 7 a contract which provides for the service, repair, replacement, 8 or maintenance of property for , or damage resulting from power 9 surges, roof leakage, and or accidental damage. 10 Sec. 4. Section 523C.2, Code 2026, is amended by striking 11 the section and inserting in lieu thereof the following: 12 523C.2 License required. 13 1. A person shall not, directly or indirectly, issue, 14 offer for sale, or sell, a motor vehicle service contract or 15 residential service contract in this state unless the person 16 is licensed under this chapter. 17 2. This chapter shall not apply to any person that provides 18 support services. A service company that utilizes support 19 services shall ensure the support services’ compliance with the 20 issuance, offer for sale, or sale of a service contract under 21 this chapter. 22 3. A service company shall maintain a license for the 23 duration of time that the service company is contractually 24 obligated to a service contract holder under the terms of a 25 service contract, unless otherwise ordered by the commissioner 26 after a hearing conducted pursuant to chapter 17A. 27 4. A service company shall report to the commissioner 28 within thirty calendar days any material change to the 29 information submitted by the service company in the service 30 company’s initial license application, or license renewal 31 application, including a change in the service company’s 32 contact information, ownership, officers or directors directly 33 responsible for the provider’s service contract business, 34 or any other change that substantially affects the service 35 -2- LSB 5468HV (5) 91 nls/ko 2/ 22

H.F. 2714 company’s operations in the state. 1 5. A service company shall report to the commissioner any 2 administrative action taken against the service company related 3 to the service company’s service contract business in another 4 jurisdiction within thirty calendar days of final disposition 5 of the administrative action. The report must include a copy 6 of the order, consent to the order, and other relevant legal 7 documents. 8 6. Within thirty calendar days of the initial pretrial 9 hearing date, a service company shall report to the 10 commissioner a criminal prosecution in any jurisdiction of an 11 owner with more than a ten percent ownership stake, an officer, 12 or a director directly responsible for the service contract 13 business of the service company, for an offense involving 14 dishonesty or a false statement including but not limited 15 to fraud, theft, misappropriation of funds, falsification 16 of documents, deceptive acts or practices, or other related 17 offenses. The report must include a copy of the initial 18 complaint filed, the order resulting from the hearing, and any 19 other relevant legal documents. 20 7. A residential service contract and a motor vehicle 21 service contract shall not be considered insurance. 22 Sec. 5. Section 523C.3, Code 2026, is amended by striking 23 the section and inserting in lieu thereof the following: 24 523C.3 Application for license. 25 1. Application for a license as a service company shall 26 be filed with the commissioner on a form approved by the 27 commissioner and must include all of the following information: 28 a. The name and principal address of the applicant. 29 b. The state of incorporation of the applicant. 30 c. The name and address of the applicant’s registered agent 31 for service of process in Iowa. 32 d. The legal name of all of the following: 33 (1) Each owner of the service company that has a greater 34 than ten percent ownership stake in the service company. 35 -3- LSB 5468HV (5) 91 nls/ko 3/ 22

H.F. 2714 (2) Each officer of the service company. 1 (3) Each director directly responsible for the business of 2 the service company. 3 e. Evidence that the applicant has obtained any necessary 4 authority from the secretary of state to transact business in 5 this state. An applicant whose home state is not this state 6 shall provide a certification, dated not more than thirty 7 calendar days after the date of submission of an application, 8 from the applicant’s home state that certifies the applicant is 9 in good standing in the applicant’s home state. 10 f. Evidence of compliance with section 523C.5. 11 g. A copy of each motor vehicle service contract form to be 12 used, issued, or offered for sale in this state by the service 13 company. 14 h. A copy of each residential service contract form to be 15 used, issued, or offered for sale in this state by the service 16 company. 17 i. A national association of insurance commissioners’ 18 biographical affidavit and the verification of the biographical 19 affidavit for the chief executive officer and chief financial 20 officer of the service company, or for the individuals in 21 the equivalent positions. The service company shall use a 22 third-party vendor from a list of vendors approved by the 23 commissioner to verify the biographical affidavits. The 24 service company shall pay all costs associated with the 25 required verifications. 26 j. A list of any disciplinary actions taken against the 27 service company, or any of the service company’s owners who 28 have an ownership stake in the service company of more than 29 ten percent, officers, or directors directly responsible for 30 the provider’s service contract business, in the immediately 31 preceding five consecutive years by a regulatory agency or 32 state attorney general in any jurisdiction. 33 2. The application must be accompanied by a license fee in 34 the amount of five hundred dollars. 35 -4- LSB 5468HV (5) 91 nls/ko 4/ 22

H.F. 2714 3. If the application for a service company license contains 1 the information under subsection 1, is accompanied by the 2 fees under subsection 2, includes any additional information 3 requested by the commissioner to verify the information in 4 the application, and the commissioner has not denied the 5 application pursuant to section 523C.9, the commissioner shall 6 issue the license to the applicant. 7 4. Fees collected under this section shall be deposited 8 into the service company oversight fund as provided in section 9 523C.24. 10 Sec. 6. Section 523C.4, Code 2026, is amended by striking 11 the section and inserting in lieu thereof the following: 12 523C.4 License expiration and renewal. 13 1. A license issued under this chapter shall be valid for a 14 period of one year and shall be renewed annually on or before 15 August 31. A licensee must apply for renewal at least ninety 16 calendar days prior to the license expiration date. A license 17 that is not renewed prior to the expiration date shall be 18 deemed expired. 19 2. An application for license renewal must include the 20 information required for an initial license as described in 21 section 523C.3, subsection 1, paragraphs “a” through “f” , 22 and a list of each service contract form the service company 23 continues to use, offer for sale, or issue in the state, 24 including the service contract form name, number, and the date 25 the form was last revised. 26 3. The license renewal application must be accompanied by 27 all of the following: 28 a. A license renewal fee in the amount of two hundred 29 dollars. 30 b. A fee in the amount of three percent of the aggregate 31 amount of payments the service company received for the sale or 32 issuance of residential service contracts in this state, less 33 any refunds issued, during the immediately preceding calendar 34 year, provided that such fee must be no greater than fifty 35 -5- LSB 5468HV (5) 91 nls/ko 5/ 22

H.F. 2714 thousand dollars. 1 c. In a format prescribed by the commissioner, information 2 regarding service contracts in this state for the service 3 company in the immediately preceding calendar year itemized as 4 follows: 5 (1) The number of motor vehicle service contracts issued. 6 (2) The number of residential service contracts issued. 7 (3) The number of motor vehicle service contracts canceled. 8 (4) The number of residential service contracts canceled. 9 (5) The number of motor vehicle service contracts that 10 expired. 11 (6) The number of residential service contracts that 12 expired. 13 (7) The number of motor vehicle service contracts in effect 14 on December 31 of the immediately preceding calendar year. 15 (8) The number of residential service contracts in effect on 16 December 31 of the immediately preceding calendar year. 17 (9) The total dollar amount of motor vehicle service 18 contract fees received by the service company. 19 (10) The total dollar amount of residential service 20 contract fees received by the service company. 21 4. If the license renewal application complies with this 22 section, includes any additional information requested by the 23 commissioner to verify the information in the application, and 24 the commissioner has not refused to renew the license pursuant 25 to section 523C.9, the commissioner shall renew the license. 26 If the commissioner refuses renewal of a license pursuant to 27 section 523C.9, the refusal shall be in writing setting forth 28 the grounds for the refusal. 29 5. If a service company submits a license renewal 30 application after the license has expired, the service company 31 shall pay a reinstatement fee of eight hundred dollars, and the 32 applicable fees pursuant to subsection 3. 33 6. A service company whose license has expired shall not 34 offer, extend, or renew a service contract until the service 35 -6- LSB 5468HV (5) 91 nls/ko 6/ 22

H.F. 2714 company’s license has been renewed or the service company has 1 been issued a new license. 2 Sec. 7. Section 523C.7, Code 2026, is amended by striking 3 the section and inserting in lieu thereof the following: 4 523C.7 Disclosure to service contract holders —— contract 5 form —— required provisions. 6 1. A service contract shall not be issued, sold, or offered 7 for sale in this state unless the service company does all of 8 the following: 9 a. Provides a receipt for the purchase of the service 10 contract to the service contract holder. 11 b. Provides a complete sample copy of the service contract 12 to the consumer prior to purchase. A service company may 13 comply with this paragraph by providing the consumer with a 14 complete electronic sample copy of the service contract, or 15 directing the consumer to a complete sample copy of the service 16 contract on an internet site. 17 c. Provides a fully executed paper or electronic copy of 18 the service contract to the service contract holder within ten 19 business days of the date the service contract holder purchased 20 the service contract. A paper copy of the executed service 21 contract shall be provided to the service contract holder upon 22 request of the service contract holder at the expense of the 23 service company. 24 2. A service contract issued, sold, or offered for sale in 25 the state must comply with all of the following, as applicable: 26 a. A service contract must be written in clear, 27 understandable language in at least eight point type. 28 b. (1) A service contract insured under a reimbursement 29 insurance policy as provided in section 523C.5, subsection 1, 30 must include a statement in substantially the following form: 31 Obligations of the service company under this service contract 32 are guaranteed under a reimbursement insurance policy. If the 33 service company fails to pay or provide service on a claim 34 within sixty days after proof of loss has been filed with 35 -7- LSB 5468HV (5) 91 nls/ko 7/ 22

H.F. 2714 the service company, the service contract holder is entitled 1 to make a claim directly against the reimbursement insurance 2 policy. 3 (2) A service contract insured under a reimbursement 4 insurance policy must conspicuously state the name and address 5 of the issuer of the reimbursement insurance policy for that 6 service contract. A claim against a reimbursement insurance 7 policy must also include a claim for return of any refund due 8 in accordance with paragraphs “m” and “n” . 9 c. A service contract not insured under a reimbursement 10 insurance policy must contain a statement in substantially the 11 following form: 12 Obligations of the service company under this service contract 13 are backed by the full faith and credit of the service company 14 and are not guaranteed under a reimbursement insurance policy. 15 d. A service contract must state the name and address of 16 the service company obligated to perform services under the 17 contract, and must conspicuously identify the service company, 18 any third-party administrator, and the service contract holder 19 to the extent that the name and address of the service contract 20 holder has been furnished. The identities of such parties 21 shall not be required to be printed on the contract in advance 22 and may be added to the contract at the time of sale. 23 e. A service contract must clearly state the total purchase 24 price of the service contract and the terms under which the 25 service contract is sold. The total purchase price shall not 26 be required to be printed on the contract in advance and may be 27 added to the contract at the time of sale. 28 f. If prior approval of repair work is required, a service 29 contract must conspicuously describe the procedure for 30 obtaining prior approval and for making a claim, including a 31 toll-free telephone number for claim service, and the procedure 32 for obtaining emergency repairs performed outside of normal 33 business hours. 34 g. A service contract must clearly state any waiting period 35 -8- LSB 5468HV (5) 91 nls/ko 8/ 22

H.F. 2714 applicable to coverage under the service contract. 1 h. A service contract must clearly state the existence of 2 any deductible amount. 3 i. A service contract must specify the merchandise or 4 services, or both, to be provided and any limitations, 5 exceptions, or exclusions. 6 j. A service contract must clearly state the conditions on 7 which the use of substitute parts or services will be allowed. 8 Such conditions must comply with applicable state and federal 9 laws. 10 k. A service contract must clearly state any terms, 11 restrictions, or conditions governing the transferability of 12 the service contract. 13 l. A service contract must clearly state the instructions 14 for cancellation of the service contract by the service 15 contract holder. Cancellation instructions must include the 16 phone number, email address, or mailing address necessary for 17 the cancellation of the service contract. A service company 18 shall accept cancellation of a service contract from a service 19 contract holder by email or by the method utilized by the 20 service company to enter into the service contract with the 21 service contract holder. 22 m. A service contract must clearly state the terms and 23 conditions governing the cancellation of the contract prior 24 to the termination or expiration date of the contract by the 25 service company or the service contract holder. If the service 26 company cancels the contract, the service company shall mail a 27 written notice of termination to the service contract holder at 28 least fifteen calendar days before the date of the termination. 29 Prior notice of cancellation by the service company shall not 30 be required if the reason for cancellation is nonpayment of the 31 purchase price, a material misrepresentation by the service 32 contract holder to the service company or the support services 33 for the service company, or a substantial breach of duty by the 34 service contract holder relating to the covered product or use 35 -9- LSB 5468HV (5) 91 nls/ko 9/ 22

H.F. 2714 of the covered product. The notice of cancellation must state 1 the effective date of the cancellation and the reason for the 2 cancellation. If a service contract is canceled by the service 3 company for any reason other than nonpayment of the purchase 4 price, the service company shall refund the service contract 5 holder in an amount equal to one hundred percent of the 6 unearned purchase price paid, calculated on a pro rata basis 7 based upon elapsed time or mileage, less any claims paid. The 8 service company may also charge a reasonable administrative fee 9 in an amount no greater than ten percent of the total purchase 10 price. A ten percent penalty shall be added to the refund each 11 month if the refund is not paid to the service contract holder 12 within thirty calendar days. 13 n. (1) A service contract must permit the original service 14 contract holder who purchased the contract to cancel the 15 service contract within at least thirty calendar days of the 16 effective date of the service contract, provided no claims 17 have been paid under the service contract, or within a longer 18 period of time as permitted under the service contract. If 19 a claim has not been paid under the service contract prior 20 to cancellation by the service contract holder, the service 21 contract is void and the full purchase price of the service 22 contract shall be refunded to the service contract holder. A 23 ten percent penalty shall be added to the refund each month if 24 the refund is not paid to the service contract holder within 25 thirty calendar days, unless the service contract holder fails 26 to provide the information required by the service contract to 27 complete the cancellation. 28 (2) If the service contract holder cancels the service 29 contract in violation of subparagraph (1), the service company 30 shall refund the service contract holder an amount equal to one 31 hundred percent of the unearned purchase price paid, calculated 32 on a pro rata basis based upon elapsed time or mileage, 33 less any claims paid. The service company may also charge a 34 reasonable administrative fee in an amount no greater than ten 35 -10- LSB 5468HV (5) 91 nls/ko 10/ 22

H.F. 2714 percent of the total purchase price. A ten percent penalty 1 shall be added to a refund each month if the refund is not paid 2 to the service contract holder within thirty calendar days of 3 the service contract cancellation request, unless the service 4 contract holder fails to provide the information required in 5 the service contract to complete the cancellation. 6 o. A service contract must set forth all obligations and 7 duties of the service contract holder, including but not 8 limited to the duty to protect against any further damage, and 9 the obligation to follow an owner’s manual and to perform, or 10 have performed, all required service or maintenance. 11 p. A service contract must clearly state if the contract 12 covers or excludes consequential damages and preexisting 13 conditions, if applicable. A service contract may, but is not 14 required to, cover damage resulting from rust, corrosion, or 15 damage caused by a part or system not covered under the service 16 contract. 17 q. A service contract must clearly state the service call 18 fee, if any, charged to the service contract holder. 19 r. A service contract must state the name and address of 20 the commissioner, the current toll-free telephone number of the 21 division, and a statement that a consumer may file a complaint 22 with the division, including by filing a complaint on the 23 division’s internet site. 24 s. A service contract must state that if the claim covered 25 under a residential service contract relates to the total loss 26 of heating, cooling, plumbing, or refrigeration, or substantial 27 loss of electrical service, and the claim being made by the 28 service contract holder is essential to the health and safety 29 of the service contract holder or, if applicable, the service 30 contract holder’s family, the service company shall ensure all 31 of the following: 32 (1) Repair or replacement of the essential good commences 33 within forty-eight hours after the report of the claim, and is 34 completed as soon as reasonably practicable. 35 -11- LSB 5468HV (5) 91 nls/ko 11/ 22

H.F. 2714 (2) Notice is provided to the service contract holder if a 1 repair cannot practicably be completed within three calendar 2 days after the report of the claim. The service company shall 3 provide a status report to the service contract holder by 4 communicating in a verifiable manner as soon as practicable, 5 but no later than three calendar days after the date of the 6 report of the claim. The status report must include all of the 7 following: 8 (a) A list of all required repairs, replacements, or 9 services and the estimated cost to the service contract holder. 10 (b) The primary reason the required repair, replacement, or 11 service will take longer than three calendar days, including 12 the status of all parts required for the repair, replacement, 13 or service. 14 (c) The current estimated length of time to complete the 15 repair, replacement, or service. 16 (d) The telephone number of the service company in the 17 event the service contract holder or the commissioner wants 18 to make an inquiry concerning the claim, and a commitment by 19 the service company to respond to an inquiry no later than one 20 business day after the date the inquiry is received. 21 (e) A statement that if the service contract holder is not 22 satisfied with the manner in which the service company handles 23 the claim under the terms of a service contract, the service 24 contract holder may file a complaint with the division on the 25 division’s internet site. 26 Sec. 8. NEW SECTION . 523C.8 Service contract forms —— fees. 27 1. A service company shall file with the division an 28 accurate copy of each service contract form prior to using the 29 service contract form for the sale of a service contract in 30 this state. 31 2. At the time of filing a new or modified motor vehicle 32 service contract form with the division a service company shall 33 pay a fee in the amount of thirty-five dollars for a new or 34 modified motor vehicle service contract form filed with the 35 -12- LSB 5468HV (5) 91 nls/ko 12/ 22

H.F. 2714 division. 1 3. Notwithstanding section 523C.7, a service company may 2 continue to use a service contract form that is noncompliant 3 with this chapter until January 1, 2028, provided no changes 4 are made to the service contract form and the service contract 5 form was filed with the division before July 1, 2026. 6 Sec. 9. Section 523C.9, Code 2026, is amended by striking 7 the section and inserting in lieu thereof the following: 8 523C.9 License denial, nonrenewal, suspension, or revocation. 9 1. The commissioner may, at the commissioner’s discretion 10 and without advance notice or hearing, immediately suspend a 11 service company’s license if the commissioner finds that any of 12 the following are true: 13 a. The service company is insolvent or impaired. 14 b. A proceeding for receivership, conservatorship, 15 rehabilitation, or other delinquency proceeding regarding the 16 service company has been commenced in any state. 17 c. The financial condition or business practices of the 18 service company otherwise pose an imminent threat to the public 19 health, safety, or welfare of the residents of this state. 20 2. The commissioner may suspend or revoke the license of, 21 deny an application for a license from, or refuse to renew the 22 license of, a service company, or may levy a civil penalty as 23 provided in section 523C.13 against a service company, for any 24 of the following reasons: 25 a. The service company violated this chapter, a lawful 26 order, regulation, or subpoena issued by the commissioner or a 27 regulatory authority of another state. 28 b. The service company failed to pay a final judgment 29 rendered against the service company in this state within sixty 30 calendar days after the date the judgment became final. 31 c. The service company, without just cause, refused 32 to perform, or negligently or incompetently performed, a 33 service required to be performed under the service company’s 34 service contracts and the refusal, or negligent or incompetent 35 -13- LSB 5468HV (5) 91 nls/ko 13/ 22

H.F. 2714 performance, has occurred with such frequency as determined by 1 the commissioner, as to indicate the general business practices 2 of the service company. 3 d. The service company violated section 523C.13. 4 e. The service company failed to demonstrate financial 5 responsibility pursuant to section 523C.5, if applicable. 6 f. The service company failed to maintain a corporate 7 certificate of good standing pursuant to section 523C.3, 8 subsection 1. 9 g. The service company provided incorrect, misleading, 10 incomplete, or materially untrue information in the service 11 company’s license application. 12 h. The service company obtained or attempted to obtain a 13 license through misrepresentation or fraud. 14 i. The service company improperly withheld, misappropriated, 15 or converted any money or property received in the course of 16 business as a service company. 17 j. The service company intentionally misrepresented the 18 terms of an actual or proposed service contract. 19 k. Within the immediately preceding ten consecutive years, 20 an owner who has an ownership stake in the service company 21 of more than ten percent, an officer, or a director directly 22 responsible for the business of the service company has been 23 convicted of a criminal offense involving any aspect of a 24 business involving securities, commodities, investments, 25 franchises, insurance, banking, or finance. 26 l. An owner who has an ownership stake in the service 27 company of more than ten percent, an officer, or a director 28 directly responsible for the business of the service company 29 has been convicted of a criminal offense involving dishonesty 30 or a false statement, including but not limited to fraud, 31 theft, misappropriation of funds, falsification of documents, 32 deceptive acts or practices, or other related offenses. 33 m. The service company admitted to committing, or was found 34 to have committed, any unfair trade practice or fraud. 35 -14- LSB 5468HV (5) 91 nls/ko 14/ 22

H.F. 2714 n. The service company used fraudulent, coercive, 1 or dishonest practices, or demonstrated incompetence, 2 untrustworthiness, or financial irresponsibility, in conducting 3 business in this state or any other state. 4 o. The service company had a service company license or its 5 equivalent, denied, suspended, or revoked in any other state, 6 province, district, or territory. 7 p. The service company failed, or refused, to cooperate in 8 an investigation conducted by the commissioner of insurance. 9 q. The commissioner has found the service company to be 10 incompetent, untrustworthy, financially irresponsible, or not 11 of good personal or business reputation. 12 r. The service company has refused to be examined or to 13 produce the service company’s accounts, records, or files for 14 examination, or any individual responsible for the conduct 15 of the affairs of the service company has refused to provide 16 information with respect to the service company’s affairs or 17 has refused to perform any other legal obligation as to an 18 examination. 19 s. The service company has engaged, directly or indirectly, 20 in an unfair method of competition or unfair or deceptive act 21 or practice. 22 3. If the commissioner suspends or revokes the license of, 23 denies the application for licensure of, or refuses to renew 24 the license of, a service company pursuant to this section, the 25 commissioner shall notify the service company in writing and 26 provide the reason for the suspension, revocation, denial, or 27 nonrenewal. The licensee or applicant may request a hearing 28 on the suspension, revocation, nonrenewal, or denial, and a 29 hearing shall be conducted according to chapter 17A. 30 Sec. 10. Section 523C.13, Code 2026, is amended by striking 31 the section and inserting in lieu thereof the following: 32 523C.13 Prohibited acts or practices —— penalty —— violations 33 —— contracts voided. 34 1. A service company, or the service company’s support 35 -15- LSB 5468HV (5) 91 nls/ko 15/ 22

H.F. 2714 services, that offers service contracts for sale in this state 1 shall not, directly or indirectly, represent in any manner, 2 whether by written solicitation or telemarketing, a false, 3 deceptive, or misleading statement with respect to any of the 4 following: 5 a. The service company’s affiliation with a motor vehicle 6 manufacturer or importer. 7 b. The validity or expiration of a warranty. 8 c. A motor vehicle service contract holder’s coverage 9 under a motor vehicle service contract, including statements 10 suggesting that the service contract holder must purchase a 11 new service contract in order to maintain coverage under the 12 existing service contract or warranty. 13 d. Descriptions of the service contract as a “policy”. 14 2. A licensed service company which offers service 15 contracts for sale in this state shall not, directly or 16 indirectly, do any of the following: 17 a. Fail to complete, or fail to ensure the completion of, a 18 repair, maintenance, replacement, service, or indemnification 19 of expenses associated with a covered claim within a reasonable 20 period of time. 21 b. Create or use any advertising that does not include the 22 name of the licensed service company or direct consumers to an 23 internet site where the name of the licensed service company 24 can be found. 25 c. Use any method of marketing that may induce the purchase 26 of a service contract through force, fear, or threats, whether 27 explicit or implied. 28 d. Create or use any service contract marketing materials 29 that contain incorrect or misleading information. 30 e. Use, offer for sale, or issue in this state a service 31 contract form that has not been submitted as part of a license 32 application pursuant to section 523C.3, as part of a license 33 application renewal pursuant to section 523C.4, or submitted 34 to the division during the service company’s current license 35 -16- LSB 5468HV (5) 91 nls/ko 16/ 22

H.F. 2714 period. 1 3. The commissioner may adopt rules pursuant to 2 chapter 17A that regulate service contracts to prohibit 3 misrepresentation, false advertising, defamation, boycotts, 4 coercion, intimidation, false statements and entries, and 5 unfair discrimination or practices. 6 4. After a hearing, if the commissioner finds that a person 7 violated this chapter or a rule adopted under this chapter, 8 the commissioner may order the person to cease and desist from 9 the violation and may order the person to pay a civil penalty 10 of not more than one thousand dollars for each violation, not 11 to exceed an aggregate of ten thousand dollars, unless the 12 person knew or reasonably should have known the person was in 13 violation of this chapter, in which case the civil penalty 14 shall be no more than five thousand dollars for each violation, 15 not to exceed an aggregate of fifty thousand dollars in any 16 one consecutive six-month period. If the commissioner finds a 17 violation of this chapter was directed, encouraged, condoned, 18 ignored, or ratified by the employer of such person or by a 19 service company, the commissioner shall assess a penalty to the 20 employer or service company. Any civil penalties collected 21 under this subsection shall be deposited as provided in section 22 505.7. 23 5. A violation of this chapter constitutes an unlawful 24 practice pursuant to section 714.16. 25 6. A service contract issued or sold in this state by a 26 service company that was not licensed as a service company at 27 the time the service contract was issued or sold shall be void 28 and unenforceable. 29 Sec. 11. Section 523C.22, Code 2026, is amended to read as 30 follows: 31 523C.22 Claim procedures. 32 A licensed service company shall promptly provide a 33 reasonable written explanation to the service contract holder, 34 describing explaining the reasons for denying a claim or for 35 -17- LSB 5468HV (5) 91 nls/ko 17/ 22

H.F. 2714 the offer of a compromise settlement, based on all relevant 1 facts or legal requirements and referring to applicable 2 provisions of the service contract legal and factual basis for 3 the denial of a claim or an offer of a compromise settlement . 4 The written explanation must provide instructions to the 5 service contract holder on the process for an appeal, second 6 review, arbitration, or similar provisions included in the 7 contract, as well as information on how to file a complaint 8 with the division, including the internet site on which to 9 locate the division’s complaint form. 10 Sec. 12. Section 523C.23, subsection 1, paragraph b, Code 11 2026, is amended by adding the following new subparagraphs: 12 NEW SUBPARAGRAPH . (4) During an investigation or 13 proceeding conducted under this chapter, the commissioner or 14 any designee of the commissioner may administer oaths and 15 affirmations, subpoena witnesses, compel witnesses’ attendance, 16 take evidence, and require the production of any records 17 which the commissioner deems relevant or material to the 18 investigation or proceeding. 19 NEW SUBPARAGRAPH . (5) Conduct an investigation of a 20 suspected violation of this chapter and enforce the provisions 21 of, and impose any penalty or remedy authorized by, this 22 chapter against any person who is under investigation for, or 23 charged with, a violation of this chapter even if the person’s 24 license has been surrendered or has lapsed by operation of law. 25 Sec. 13. Section 523C.23, subsection 1, paragraph c, Code 26 2026, is amended by striking the paragraph. 27 Sec. 14. Section 523C.23, subsection 3, Code 2026, is 28 amended by striking the subsection. 29 Sec. 15. NEW SECTION . 523C.25 Confidentiality. 30 1. Notwithstanding chapter 22, the commissioner shall 31 maintain the confidentiality of information submitted to the 32 division or obtained by the division in the course of an 33 investigation, examination, or inquiry pursuant to this chapter 34 or the commissioner’s licensing authority, including all notes, 35 -18- LSB 5468HV (5) 91 nls/ko 18/ 22

H.F. 2714 work papers, or other documents. Information obtained by 1 the commissioner in the course of investigating a complaint 2 or inquiry may, at the discretion of the commissioner, be 3 provided to the service company that is the subject of the 4 complaint or inquiry and the consumer who filed the complaint 5 or inquiry, without waiving the confidentiality afforded to 6 the commissioner or to any other person by this section. The 7 commissioner may disclose or release information that is 8 otherwise confidential under this subsection in the course of 9 an administrative or judicial proceeding. 10 2. Notwithstanding subsection 1, if the commissioner 11 determines that it is necessary in the public interest, the 12 commissioner may share information submitted to the division 13 or obtained by the division in the course of an investigation, 14 examination, or inquiry pursuant to this chapter with other 15 regulatory authorities or government agencies. 16 3. Notwithstanding subsection 1, if the commissioner 17 determines that it is necessary in the public interest, the 18 commissioner may publish service company-related data or 19 information submitted to the division or obtained by the 20 division in the course of an investigation, examination, or 21 inquiry pursuant to this chapter. Such information may be 22 redacted so that neither personally identifiable information 23 nor service company identifiable information is made available. 24 4. Notwithstanding subsection 1, the commissioner may 25 publish on the division’s internet site the name, physical 26 address, telephone number, and license status of any service 27 company submitted to the division or obtained by the division 28 in the course of an investigation, examination, or inquiry 29 pursuant to this chapter. 30 Sec. 16. Section 714.16, subsection 2, Code 2026, is amended 31 by adding the following new paragraph: 32 NEW PARAGRAPH . t. It is an unlawful practice for a person 33 to violate chapter 523C. 34 EXPLANATION 35 -19- LSB 5468HV (5) 91 nls/ko 19/ 22