Mo. Rev. Stat. § 385.206 — MO Code / Chapter 385 / Section 385.206
385.206 Sale of contracts, prohibited acts--dealers not to be used as fronting ...
Status: in_force

*385.206. Sale of contracts, prohibited acts--dealers not to be used as fronting companies--required contract contents--violations, penalty. — 1. It is unlawful for any person in or from this state to sell, offer, negotiate, or solicit a motor vehicle extended service contract with a consumer, other than the following:

(1) A motor vehicle dealer licensed under sections 301.550 to 301.573 , along with its authorized employees offering the service contract in connection with the sale of either a motor vehicle or vehicle maintenance or repair services;

(2) A manufacturer of motor vehicles, as defined in section 301.010 , along with its authorized employees;

(3) A federally insured depository institution, along with its authorized employees;

(4) A lender licensed and defined under sections 367.100 to 367.215 , along with its authorized employees;

(5) A provider registered with the director and having demonstrated financial responsibility as required in section 385.202 , along with its subsidiaries and affiliated entities, and authorized employees of the provider, subsidiary, or affiliated entity;

(6) A business entity producer or individual producer licensed under section 385.207 ;

(7) Authorized employees of an administrator under contract to effect coverage, collect provider fees, and settle claims on behalf of a registered provider, if the administrator is licensed as a business entity producer under section 385.207 ; or

(8) A vehicle owner transferring an existing motor vehicle extended service contract to a subsequent owner of the same vehicle.

2. No administrator or provider shall use a dealer as a fronting company, and no dealer shall act as a fronting company. For purposes of this subsection, "fronting company" means a dealer that authorizes a third-party administrator or provider to use its name or business to evade or circumvent the provisions of subsection 1 of this section.

3. Motor vehicle extended service contracts issued, sold, or offered in this state shall be written in clear, understandable language, and the entire contract shall be printed or typed in easy-to-read type and conspicuously disclose the requirements in this section, as applicable.

4. Motor vehicle extended service contracts insured under a reimbursement insurance policy under subsection 3 of section 385.202 shall contain a statement in substantially the following form: "Obligations of the provider under this service contract are guaranteed under a service contract reimbursement insurance policy. If the provider fails to pay or provide service on a claim within sixty days after proof of loss has been filed, the contract holder is entitled to make a claim directly against the insurance company." A claim against the provider also shall include a claim for return of the unearned provider fee. The motor vehicle extended service contract also shall state conspicuously the name and address of the insurer.

5. Motor vehicle extended service contracts not insured under a reimbursement insurance policy pursuant to subsection 3 of section 385.202 shall contain a statement in substantially the following form: "Obligations of the provider under this service contract are backed only by the full faith and credit of the provider (issuer) and are not guaranteed under a service contract reimbursement insurance policy." A claim against the provider also shall include a claim for return of the unearned provider fee. The motor vehicle extended service contract also shall state conspicuously the name and address of the provider.

6. Motor vehicle extended service contracts shall identify any administrator, the provider obligated to perform the service under the contract, the motor vehicle extended service contract seller, and the service contract holder to the extent that the name and address of the service contract holder has been furnished by the service contract holder.

7. Motor vehicle extended service contracts shall state conspicuously the total purchase price and the terms under which the motor vehicle extended service contract is sold. The purchase price is not required to be preprinted on the motor vehicle extended service contract and may be negotiated at the time of sale with the service contract holder.

8. If prior approval of repair work is required, the motor vehicle extended service contracts shall state conspicuously the procedure for obtaining prior approval and for making a claim, including a toll-free telephone number for claim service and a procedure for obtaining emergency repairs performed outside of normal business hours.

9. Motor vehicle extended service contracts shall state conspicuously the existence of any deductible amount.

10. Motor vehicle extended service contracts shall specify the merchandise and services to be provided and any limitations, exceptions, and exclusions.

11. Motor vehicle extended service contracts shall state the conditions upon which the use of nonoriginal manufacturer's parts or parts of a like kind and quality or substitute service may be allowed. Conditions stated shall comply with applicable state and federal laws.

12. Motor vehicle extended service contracts shall state any terms, restrictions, or conditions governing the transferability of the motor vehicle extended service contract.

13. Motor vehicle extended service contracts shall state that subsequent to the required free look period specified in subsection 14 of this section, a service contract holder may cancel the contract at any time and the provider shall refund to, or credit to the account of, the contract holder one hundred percent of the unearned pro rata provider fee, less any claims paid. A reasonable administrative fee may be surcharged by the provider in an amount not to exceed fifty dollars. All terms, restrictions, or conditions governing termination of the service contract by the service contract holder shall be stated. The provider of the motor vehicle extended service contract shall mail a written notice to the contract holder within forty-five days of the date of termination. The written notice required by this subsection may be included with any other correspondence required by this section. Refunds may be effectuated through a provider or a person that is permitted to sell motor vehicle extended service contracts under subsection 1 of this section.

14. Motor vehicle extended service contracts shall contain a free look period that requires every provider to permit the service contract holder to return the contract to the provider within at least twenty business days of the mailing date of the motor vehicle extended service contract or the contract date if the service contract is executed and delivered at the time of sale or within a longer time period permitted under the contract. If no claim has been made under the contract and the contract is returned, the contract is void and the provider shall refund to, or credit to the account of, the contract holder the full purchase price of the contract. A ten percent penalty of the amount outstanding per month shall be added to a refund that is not paid within forty-five days of return of the contract to the provider. If a claim has been made under the contract during the free look period and the contract is returned, the provider shall refund to, or credit to the account of, the contract holder the full purchase price less any claims that have been paid. The applicable free-look time periods on service contracts shall apply only to the original service contract purchaser. Refunds may be effectuated through a provider or a person that is permitted to sell motor vehicle extended service contracts under subsection 1 of this section.

15. Motor vehicle extended service contracts shall set forth all of the obligations and duties of the service contract holder, such as the duty to protect against any further damage and the requirement for certain service and maintenance.

16. Motor vehicle extended service contracts shall state clearly whether or not the service contract provides for or excludes consequential damages or preexisting conditions.

17. The contract requirements of subsections 3 to 16 of this section shall apply to motor vehicle extended service contracts made with consumers in this state. A violation of subsections 3 to 16 of this section is a level two violation under section 374.049 .

18. A violation of subsection 1 or 2 of this section is a level three violation under section 374.049 .

(L. 2007 H.B. 221, A.L. 2011 S.B. 132, A.L. 2016 H.B. 1976) *Effective 10-14-16, see § 21.250. H.B. 1976 was vetoed July 1, 2016. The veto was overridden on September 14, 2016.