The service contract industry, long rife with consumer scams, is trying to clean up its act. One of the results of this effort is legislation signed into law by Missouri Governor Jay Nixon. It includes important consumer-protection language drafted by the Service Contract Industry Council (SCIC) in conjunction with the Missouri attorney general. The law is designed to prevent companies from using deceptive or unethical marketing practices to sell motor vehicle service contracts, which are commonly known as “extended warranties.” The new law takes effect Jan. 1, 2012, and could be the model for similar legislation in other states.
“The SCIC worked closely with Missouri Attorney General Chris Koster to investigate and address misleading marketing practices of select St. Louis-based companies, including US Fidelis,” says Timothy J. Meenan, executive director of the SCIC. “At the urging of the SCIC, specific language in the bill prohibits individuals or companies from engaging in false, deceptive or misleading conduct with respect to a motor vehicle extended service contract program and authorizes restitution to any victims.”
The bill clearly specifies consumers’ right to a refund if they cancel a motor vehicle service contract. The SCIC model language also requires consumers to receive a copy of the terms and conditions of a contract prior to sale. In addition, the SCIC worked extensively with Assistant Attorney General Doug Ommen to create a new licensing framework for businesses and individuals selling motor vehicle service contracts. With Missouri becoming a hotbed for deceptive direct-mail and telemarketing campaigns, the new licensing provisions allow Missouri regulators to actively monitor the sale of service contracts to consumers from the state to ensure businesses and individuals are complying with all applicable law and, if not, that appropriate action be taken.
