House File 2756 - Introduced HOUSE FILE 2756 BY COMMITTEE ON WAYS AND MEANS (SUCCESSOR TO HF 2714) (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 5468HZ (3) 91 nls/ko

H.F. 2756 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 5468HZ (3) 91 nls/ko 1/ 22

H.F. 2756 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 33 directly responsible for the service company’s service contract 34 business, or any other change that substantially affects the 35 -2- LSB 5468HZ (3) 91 nls/ko 2/ 22

H.F. 2756 service company’s operations in the state. 1 5. A service company shall report to the commissioner any 2 final disposition of an administrative action taken against 3 the service company related to the service company’s service 4 contract business in another jurisdiction within thirty 5 calendar days of final disposition of the administrative 6 action. The report must include a copy of the order, consent 7 to the order, and other relevant legal 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 5468HZ (3) 91 nls/ko 3/ 22

H.F. 2756 (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 for the chief executive officer and 19 chief financial officer of the service company, or for the 20 individuals in equivalent positions. 21 j. A list of any disciplinary actions taken against the 22 service company, or any of the service company’s owners who 23 have an ownership stake in the service company of more than 24 ten percent, officers, or directors directly responsible for 25 the provider’s service contract business, in the immediately 26 preceding five consecutive years by a regulatory agency or 27 state attorney general in any jurisdiction. 28 2. The application must be accompanied by a license fee in 29 the amount of five hundred dollars. 30 3. If the application for a service company license contains 31 the information under subsection 1, is accompanied by the 32 fees under subsection 2, includes any additional information 33 requested by the commissioner to verify the information in 34 the application, and the commissioner has not denied the 35 -4- LSB 5468HZ (3) 91 nls/ko 4/ 22

H.F. 2756 application pursuant to section 523C.9, the commissioner shall 1 issue the license to the applicant. 2 4. Fees collected under this section shall be deposited 3 into the service company oversight fund as provided in section 4 523C.24. 5 Sec. 6. Section 523C.4, Code 2026, is amended by striking 6 the section and inserting in lieu thereof the following: 7 523C.4 License expiration and renewal. 8 1. A license issued under this chapter shall be valid for a 9 period of one year and shall be renewed annually on or before 10 August 31. A licensee must apply for renewal at least ninety 11 calendar days prior to the license expiration date. A license 12 that is not renewed prior to the expiration date may be deemed 13 expired. 14 2. An application for license renewal must include the 15 information required for an initial license as described in 16 section 523C.3, subsection 1, paragraphs “a” through “f” , 17 and a list of each service contract form the service company 18 continues to use, offer for sale, or issue in the state, 19 including the service contract form name, number, and the date 20 the form was last revised. 21 3. The license renewal application must be accompanied by 22 all of the following: 23 a. A license renewal fee in the amount of two hundred 24 dollars. 25 b. A fee in the amount of three percent of the aggregate 26 amount of payments the service company received for the sale or 27 issuance of residential service contracts in this state, less 28 any refunds issued, during the immediately preceding calendar 29 year, provided that such fee must be no greater than fifty 30 thousand dollars. 31 c. In a format prescribed by the commissioner, information 32 regarding service contracts in this state for the service 33 company in the immediately preceding calendar year itemized as 34 follows: 35 -5- LSB 5468HZ (3) 91 nls/ko 5/ 22

H.F. 2756 (1) The number of motor vehicle service contracts issued. 1 (2) The number of residential service contracts issued. 2 (3) The number of motor vehicle service contracts canceled. 3 (4) The number of residential service contracts canceled. 4 (5) The number of motor vehicle service contracts that 5 expired. 6 (6) The number of residential service contracts that 7 expired. 8 (7) The number of motor vehicle service contracts in effect 9 on December 31 of the immediately preceding calendar year. 10 (8) The number of residential service contracts in effect on 11 December 31 of the immediately preceding calendar year. 12 (9) The total dollar amount of motor vehicle service 13 contract fees received by the service company. 14 (10) The total dollar amount of residential service 15 contract fees received by the service company. 16 4. If the license renewal application complies with this 17 section, includes any additional information requested by the 18 commissioner to verify the information in the application, and 19 the commissioner has not refused to renew the license pursuant 20 to section 523C.9, the commissioner shall renew the license. 21 If the commissioner refuses renewal of a license pursuant to 22 section 523C.9, the refusal shall be in writing setting forth 23 the grounds for the refusal. 24 5. If a service company submits a license renewal 25 application after the license has expired, the service company 26 shall pay a reinstatement fee of eight hundred dollars, and the 27 applicable fees pursuant to subsection 3. 28 6. A service company whose license has expired shall not 29 offer, extend, or renew a service contract until the service 30 company’s license has been renewed or the service company has 31 been issued a new license. 32 Sec. 7. Section 523C.7, Code 2026, is amended by striking 33 the section and inserting in lieu thereof the following: 34 523C.7 Disclosure to service contract holders —— contract 35 -6- LSB 5468HZ (3) 91 nls/ko 6/ 22

H.F. 2756 form —— required provisions. 1 1. A service contract shall not be issued, sold, or offered 2 for sale in this state unless the service company does all of 3 the following: 4 a. Provides a receipt for the purchase of the service 5 contract to the service contract holder. 6 b. Provides a complete sample copy of the service contract 7 to the consumer prior to purchase. A service company may 8 comply with this paragraph by providing the consumer with a 9 complete electronic sample copy of the service contract, or 10 directing the consumer to a complete sample copy of the service 11 contract on an internet site. 12 c. Provides a fully executed paper or electronic copy of 13 the service contract to the service contract holder within ten 14 business days of the date the service contract holder purchased 15 the service contract. A paper copy of the executed service 16 contract shall be provided to the service contract holder upon 17 request of the service contract holder at the expense of the 18 service company. 19 2. A service contract issued, sold, or offered for sale in 20 the state must comply with all of the following, as applicable: 21 a. A service contract must be written in clear, 22 understandable language in at least eight point type. 23 b. (1) A service contract insured under a reimbursement 24 insurance policy as provided in section 523C.5, subsection 1, 25 must include a statement in substantially the following form: 26 Obligations of the service company under this service contract 27 are guaranteed under a reimbursement insurance policy. If the 28 service company fails to pay or provide service on a claim 29 within sixty days after proof of loss has been filed with 30 the service company, the service contract holder is entitled 31 to make a claim directly against the reimbursement insurance 32 policy. 33 (2) A service contract insured under a reimbursement 34 insurance policy must conspicuously state the name and address 35 -7- LSB 5468HZ (3) 91 nls/ko 7/ 22

H.F. 2756 of the issuer of the reimbursement insurance policy for that 1 service contract. A claim against a reimbursement insurance 2 policy must also include a claim for return of any refund due 3 in accordance with paragraphs “m” and “n” . 4 c. A service contract not insured under a reimbursement 5 insurance policy must contain a statement in substantially the 6 following form: 7 Obligations of the service company under this service contract 8 are backed by the full faith and credit of the service company 9 and are not guaranteed under a reimbursement insurance policy. 10 d. A service contract must state the name and address of 11 the service company obligated to perform services under the 12 contract, and must conspicuously identify the service company, 13 any third-party administrator, and the service contract holder 14 to the extent that the name and address of the service contract 15 holder has been furnished. The identities of such parties 16 shall not be required to be printed on the contract in advance 17 and may be added to the contract at the time of sale. 18 e. A service contract must clearly state the total purchase 19 price of the service contract and the terms under which the 20 service contract is sold. The total purchase price shall not 21 be required to be printed on the contract in advance and may be 22 added to the contract at the time of sale. 23 f. If prior approval of repair work is required, a service 24 contract must conspicuously describe the procedure for 25 obtaining prior approval and for making a claim, including a 26 toll-free telephone number for claim service, and the procedure 27 for obtaining emergency repairs performed outside of normal 28 business hours. 29 g. A service contract must clearly state any waiting period 30 applicable to coverage under the service contract. 31 h. A service contract must clearly state the existence of 32 any deductible amount. 33 i. A service contract must specify the merchandise or 34 services, or both, to be provided and any limitations, 35 -8- LSB 5468HZ (3) 91 nls/ko 8/ 22

H.F. 2756 exceptions, or exclusions. 1 j. A service contract must clearly state the conditions on 2 which the use of substitute parts or services will be allowed. 3 Such conditions must comply with applicable state and federal 4 laws. 5 k. A service contract must clearly state any terms, 6 restrictions, or conditions governing the transferability of 7 the service contract. 8 l. A service contract must clearly state the instructions 9 for cancellation of the service contract by the service 10 contract holder. Cancellation instructions must include the 11 phone number, email address, or mailing address necessary for 12 the cancellation of the service contract. A service company 13 shall accept cancellation of a service contract from a service 14 contract holder by one or more of the following methods: 15 (1) Telephone. 16 (2) Email. 17 (3) The method utilized by the service company to enter into 18 the service contract with the service contract holder. 19 m. A service contract must clearly state the terms and 20 conditions governing the cancellation of the contract prior 21 to the termination or expiration date of the contract by the 22 service company or the service contract holder. If the service 23 company cancels the contract, the service company shall mail a 24 written notice of termination to the service contract holder at 25 least fifteen calendar days before the date of the termination. 26 Prior notice of cancellation by the service company shall not 27 be required if the reason for cancellation is nonpayment of the 28 purchase price, a material misrepresentation by the service 29 contract holder to the service company or the support services 30 for the service company, or a substantial breach of duty by the 31 service contract holder relating to the covered product or use 32 of the covered product. The notice of cancellation must state 33 the effective date of the cancellation and the reason for the 34 cancellation. If a service contract is canceled by the service 35 -9- LSB 5468HZ (3) 91 nls/ko 9/ 22

H.F. 2756 company for any reason other than nonpayment of the purchase 1 price, the service company shall refund the service contract 2 holder in an amount equal to one hundred percent of the 3 unearned purchase price paid, calculated on a pro rata basis 4 based upon elapsed time or mileage, less any claims paid. The 5 service company may also charge a reasonable administrative fee 6 in an amount no greater than ten percent of the total purchase 7 price. A penalty of ten percent of the original dollar amount 8 of the refund shall be added to the refund each month if the 9 refund is not paid to the service contract holder within thirty 10 calendar days. 11 n. (1) A service contract must permit the original service 12 contract holder who purchased the contract to cancel the 13 service contract within at least thirty calendar days of the 14 effective date of the service contract, provided no claims 15 have been paid under the service contract, or within a longer 16 period of time as permitted under the service contract. If 17 a claim has not been paid under the service contract prior 18 to cancellation by the service contract holder, the service 19 contract is void and the full purchase price of the service 20 contract shall be refunded to the service contract holder. A 21 penalty of ten percent of the original dollar amount of the 22 refund shall be added to the refund each month if the refund is 23 not paid to the service contract holder within thirty calendar 24 days, unless the service contract holder fails to provide the 25 information required by the service contract to complete the 26 cancellation. 27 (2) If the service contract holder cancels the service 28 contract in violation of subparagraph (1), the service company 29 shall refund the service contract holder an amount equal to one 30 hundred percent of the unearned purchase price paid, calculated 31 on a pro rata basis based upon elapsed time or mileage, 32 less any claims paid. The service company may also charge a 33 reasonable administrative fee in an amount no greater than ten 34 percent of the total purchase price. A penalty of ten percent 35 -10- LSB 5468HZ (3) 91 nls/ko 10/ 22

H.F. 2756 of the original dollar amount of the refund shall be added to 1 a refund each month if the refund is not paid to the service 2 contract holder within thirty calendar days of the service 3 contract cancellation request, unless the service contract 4 holder fails to provide the information required in the service 5 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 26 loss of heating, cooling, or plumbing, or substantial loss of 27 electrical service, and the claim being made by the service 28 contract holder is essential to the health and safety of the 29 service contract holder or, if applicable, the service contract 30 holder’s family, the service company shall ensure all of the 31 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 5468HZ (3) 91 nls/ko 11/ 22

H.F. 2756 (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 if known. 11 (b) The primary reason the required repair, replacement, or 12 service will take longer than three calendar days, including 13 the status of all parts required for the repair, replacement, 14 or service. 15 (c) The current estimated length of time to complete the 16 repair, replacement, or service. 17 (d) The telephone number of the service company in the 18 event the service contract holder or the commissioner wants 19 to make an inquiry concerning the claim, and a commitment by 20 the service company to respond to an inquiry no later than one 21 business day after the date the inquiry is received. 22 Sec. 8. NEW SECTION . 523C.8 Service contract forms —— fees. 23 1. A service company shall file with the division an 24 accurate copy of each service contract form prior to using the 25 service contract form for the sale of a service contract in 26 this state. 27 2. At the time of filing a new or modified motor vehicle 28 service contract form with the division a service company 29 shall pay a fee in the amount of thirty-five dollars for a new 30 or modified motor vehicle service contract form filed with 31 the division. If a service company files a modified motor 32 vehicle service contract form, and the only modification to the 33 motor vehicle service contract form is information required 34 by section 523C.7, subsection 2, paragraph “r” , the service 35 -12- LSB 5468HZ (3) 91 nls/ko 12/ 22

H.F. 2756 company shall not be required to pay a fee for filing the 1 modified motor vehicle service contract form. 2 3. Notwithstanding section 523C.7, a service company may 3 continue to use a service contract form that is noncompliant 4 with this chapter until January 1, 2028, provided no changes 5 are made to the service contract form and the service contract 6 form was filed with the division before January 1, 2027. 7 Sec. 9. Section 523C.9, Code 2026, is amended by striking 8 the section and inserting in lieu thereof the following: 9 523C.9 License denial, nonrenewal, suspension, or revocation. 10 1. The commissioner may, at the commissioner’s discretion 11 and without advance notice or hearing, immediately suspend a 12 service company’s license if the commissioner finds that any of 13 the following are true: 14 a. The service company is insolvent or impaired. 15 b. A proceeding for receivership, conservatorship, 16 rehabilitation, or other delinquency proceeding regarding the 17 service company has been commenced in any state. 18 c. The financial condition or business practices of the 19 service company otherwise pose an imminent threat to the public 20 health, safety, or welfare of the residents of this state. 21 2. The commissioner may suspend or revoke the license of, 22 deny an application for a license from, or refuse to renew the 23 license of, a service company, or may levy a civil penalty as 24 provided in section 523C.13 against a service company, for any 25 of the following reasons: 26 a. The service company violated this chapter, a lawful 27 order, regulation, or subpoena issued by the commissioner or a 28 regulatory authority of another state. 29 b. The service company failed to pay a final judgment 30 rendered against the service company in this state within sixty 31 calendar days after the date the judgment became final. 32 c. The service company, without just cause, refused 33 to perform, or negligently or incompetently performed, a 34 service required to be performed under the service company’s 35 -13- LSB 5468HZ (3) 91 nls/ko 13/ 22

H.F. 2756 service contracts and the refusal, or negligent or incompetent 1 performance, has occurred with such frequency as determined by 2 the commissioner, as to indicate the general business practices 3 of the service company. 4 d. The service company violated section 523C.13. 5 e. The service company failed to demonstrate financial 6 responsibility pursuant to section 523C.5, if applicable. 7 f. The service company failed to maintain a corporate 8 certificate of good standing pursuant to section 523C.3, 9 subsection 1. 10 g. The service company provided incorrect, misleading, 11 incomplete, or materially untrue information in the service 12 company’s license application. 13 h. The service company obtained or attempted to obtain a 14 license through misrepresentation or fraud. 15 i. The service company improperly withheld, misappropriated, 16 or converted any money or property received in the course of 17 business as a service company. 18 j. The service company intentionally misrepresented the 19 terms of an actual or proposed service contract. 20 k. Within the immediately preceding ten consecutive years, 21 an owner who has an ownership stake in the service company 22 of more than ten percent, an officer, or a director directly 23 responsible for the business of the service company has been 24 convicted of a criminal offense involving any aspect of a 25 business involving securities, commodities, investments, 26 franchises, insurance, banking, or finance. 27 l. An owner who has an ownership stake in the service 28 company of more than ten percent, an officer, or a director 29 directly responsible for the business of the service company 30 has been convicted of a criminal offense involving dishonesty 31 or a false statement, including but not limited to fraud, 32 theft, misappropriation of funds, falsification of documents, 33 deceptive acts or practices, or other related offenses. 34 m. The service company admitted to committing, or was found 35 -14- LSB 5468HZ (3) 91 nls/ko 14/ 22

H.F. 2756 to have committed, any unfair trade practice or fraud. 1 n. The service company used fraudulent, coercive, 2 or dishonest practices, or demonstrated incompetence, 3 untrustworthiness, or financial irresponsibility, in conducting 4 business in this state or any other state. 5 o. The service company had a service company license or its 6 equivalent, denied, suspended, or revoked in any other state, 7 province, district, or territory. 8 p. The service company failed, or refused, to cooperate in 9 an investigation conducted by the commissioner of insurance. 10 q. The commissioner has found the service company to be 11 incompetent, untrustworthy, financially irresponsible, or not 12 of good personal or business reputation. 13 r. The service company has refused to be examined or to 14 produce the service company’s accounts, records, or files for 15 examination, or any individual responsible for the conduct 16 of the affairs of the service company has refused to provide 17 information with respect to the service company’s affairs or 18 has refused to perform any other legal obligation as to an 19 examination. 20 s. The service company has engaged, directly or indirectly, 21 in an unfair method of competition or unfair or deceptive act 22 or practice. 23 3. If the commissioner suspends or revokes the license of, 24 denies the application for licensure of, or refuses to renew 25 the license of, a service company pursuant to this section, the 26 commissioner shall notify the service company in writing and 27 provide the reason for the suspension, revocation, denial, or 28 nonrenewal. The licensee or applicant may request a hearing 29 on the suspension, revocation, nonrenewal, or denial, and a 30 hearing shall be conducted according to chapter 17A. 31 Sec. 10. Section 523C.13, Code 2026, is amended by striking 32 the section and inserting in lieu thereof the following: 33 523C.13 Prohibited acts or practices —— penalty —— violations 34 —— contracts voided. 35 -15- LSB 5468HZ (3) 91 nls/ko 15/ 22

H.F. 2756 1. A service company, or the service company’s support 1 services, that offers service contracts for sale in this state 2 shall not, directly or indirectly, represent in any manner, 3 whether by written solicitation or telemarketing, a false, 4 deceptive, or misleading statement with respect to any of the 5 following: 6 a. The service company’s affiliation with a motor vehicle 7 manufacturer or importer. 8 b. The validity or expiration of a warranty. 9 c. A motor vehicle service contract holder’s coverage 10 under a motor vehicle service contract, including statements 11 suggesting that the service contract holder must purchase a 12 new service contract in order to maintain coverage under the 13 existing service contract or warranty. 14 d. Descriptions of the service contract as a “policy”. 15 2. A licensed service company which offers service 16 contracts for sale in this state shall not, directly or 17 indirectly, do any of the following: 18 a. Fail to attempt, in good faith, to effectuate the prompt, 19 fair, and equitable resolution of a claim made under a service 20 contract. 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 5468HZ (3) 91 nls/ko 16/ 22

H.F. 2756 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 section or section 523C.7 constitutes 24 an unlawful 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 written 33 explanation to the service contract holder, describing the 34 reasons for denying a claim or for the offer of a compromise 35 -17- LSB 5468HZ (3) 91 nls/ko 17/ 22

H.F. 2756 settlement, based on all relevant facts or legal requirements 1 and referring to applicable provisions of the service contract. 2 The written explanation must include the process for filing a 3 complaint with the division, including the division’s internet 4 site for accessing the complaint form. 5 Sec. 12. Section 523C.23, subsection 1, paragraph b, Code 6 2026, is amended by adding the following new subparagraphs: 7 NEW SUBPARAGRAPH . (4) During an investigation or 8 proceeding conducted under this chapter, the commissioner or 9 any designee of the commissioner may administer oaths and 10 affirmations, subpoena witnesses, compel witnesses’ attendance, 11 take evidence, and require the production of any records 12 which the commissioner deems relevant or material to the 13 investigation or proceeding. 14 NEW SUBPARAGRAPH . (5) Conduct an investigation of a 15 suspected violation of this chapter and enforce the provisions 16 of, and impose any penalty or remedy authorized by, this 17 chapter against any person who is under investigation for, or 18 charged with, a violation of this chapter even if the person’s 19 license has been surrendered or has lapsed by operation of law. 20 Sec. 13. Section 523C.23, subsection 1, paragraph c, Code 21 2026, is amended by striking the paragraph. 22 Sec. 14. Section 523C.23, subsection 3, Code 2026, is 23 amended by striking the subsection. 24 Sec. 15. NEW SECTION . 523C.25 Confidentiality. 25 1. Notwithstanding chapter 22, the commissioner shall 26 maintain the confidentiality of information submitted to the 27 division or obtained by the division in the course of an 28 investigation, examination, or inquiry pursuant to this chapter 29 or the commissioner’s licensing authority, including all notes, 30 work papers, or other documents. Information obtained by 31 the commissioner in the course of investigating a complaint 32 or inquiry may, at the discretion of the commissioner, be 33 provided to the service company that is the subject of the 34 complaint or inquiry and the consumer who filed the complaint 35 -18- LSB 5468HZ (3) 91 nls/ko 18/ 22

H.F. 2756 or inquiry, without waiving the confidentiality afforded to 1 the commissioner or to any other person by this section. The 2 commissioner may disclose or release information that is 3 otherwise confidential under this subsection in the course of 4 an administrative or judicial proceeding. 5 2. Notwithstanding subsection 1, if the commissioner 6 determines that it is necessary in the public interest, the 7 commissioner may share information submitted to the division 8 or obtained by the division in the course of an investigation, 9 examination, or inquiry pursuant to this chapter with other 10 regulatory authorities or government agencies. 11 3. Notwithstanding subsection 1, if the commissioner 12 determines that it is necessary in the public interest, the 13 commissioner may publish service company-related data or 14 information submitted to the division or obtained by the 15 division in the course of an investigation, examination, or 16 inquiry pursuant to this chapter. Such information may be 17 redacted so that neither personally identifiable information 18 nor service company identifiable information is made available. 19 4. Notwithstanding subsection 1, the commissioner may 20 publish on the division’s internet site the name, physical 21 address, telephone number, and license status of any service 22 company submitted to the division or obtained by the division 23 in the course of an investigation, examination, or inquiry 24 pursuant to this chapter. 25 Sec. 16. Section 714.16, subsection 2, Code 2026, is amended 26 by adding the following new paragraph: 27 NEW PARAGRAPH . t. It is an unlawful practice for a person 28 to violate section 523C.7 or 523C.13. 29 Sec. 17. EFFECTIVE DATE. This Act takes effect January 1, 30 2027. 31 EXPLANATION 32 The inclusion of this explanation does not constitute agreement with 33 the explanation’s substance by the members of the general assembly. 34 This bill relates to the licensing of service companies, 35 -19- LSB 5468HZ (3) 91 nls/ko 19/ 22