SSB 3066 (LSB 5405XC (3) 91)

SENATE FILE _____ 

BY  (PROPOSED COMMITTEE ON COMMERCE BILL BY CHAIRPERSON BOUSSELOT)

A BILL FOR

An Act relating to certain sales of auto club memberships and vehicle warranties.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 536.13, Code 2026, is amended by adding the following new subsection:
   NEW SUBSECTION.  5A.  After a licensee has approved a loan to a borrower, the licensee may offer the borrower the option to purchase an auto club membership or vehicle warranty. If the licensee offers a borrower the option to purchase an auto club membership or vehicle warranty, all of the following shall apply:
   a.  The licensee shall inform the borrower, in a written document initialed by the borrower, that the purchase of an auto club membership or vehicle warranty is optional and failure to purchase an auto club membership or vehicle warranty will not affect the receipt of the loan by the borrower.
   b.  If the borrower chooses to purchase an auto club membership or vehicle warranty the licensee shall permit the borrower either to pay the cost of the auto club membership or vehicle warranty with funds that are not the proceeds of the loan, or to include the cost in the loan the borrower obtains from the licensee.
   c.  A licensee shall permit a borrower to cancel an auto club membership or vehicle warranty and to receive a full refund of the purchase price at any time within thirty calendar days following the date of purchase from the licensee if the borrower has not used any service provided through the auto club membership or vehicle warranty.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
   This bill relates to certain sales of auto club memberships and vehicle warranties.
   Under the bill, a licensed loan officer (licensee) may, after approving a loan to a borrower, offer the borrower the option to purchase an auto club membership (membership) or vehicle warranty (warranty). If the licensee offers the option to purchase a membership or warranty, the licensee shall: inform the borrower, in a written document initialed by the borrower, that the purchase of a membership or warranty is optional and will not affect the receipt of the loan by the borrower; if the borrower chooses to purchase a membership or warranty, permit the borrower either to pay for the cost with funds that are not the proceeds of the loan, or to include the cost in the total amount financed by the loan the borrower obtains from the licensee; and permit the borrower to cancel the membership or warranty and receive a full refund of the purchase price at any time within 30 days following the date of purchase if the borrower has not used the membership or warranty.