GAP AND VVPA AGREEMENT CHANGES.

View NCGA Bill Details2021
Senate Bill 425 (Public) Filed Wednesday, March 31, 2021
AN ACT TO MAKE CHANGES TO THE STATUTES GOVERNING GUARANTEED ASSET PROTECTION WAIVERS AND TO CREATE AN ARTICLE GOVERNING VEHICLE VALUE PROTECTION AGREEMENTS.
Intro. by Woodard, Perry, Johnson.

Status: Re-ref Com On Rules, Calendar, and Operations of the House (House action) (Aug 31 2021)
S 425

Bill Summaries:

  • Summary date: May 10 2021 - More information

    Senate committee substitute amends the 2nd edition as follows.

    Revises the definition of a vehicle value protection agreement under GS 66-471, applicable to new Article 48, as enacted, to no longer provide for obsolescence as an example of an event that would trigger the provision of a benefit provided for pursuant to contractual agreement. 


  • Summary date: May 6 2021 - More information

    Senate committee substitute amends the 1st edition as follows.

    Adds to the amended definition of a guaranteed asset protection waiver set forth in GS 66-440, applicable to Article 46, to explicitly provide that the term does not include a vehicle value protection agreement as defined in new GS 66-471(10).

    Revises the definition of a vehicle value protection agreement under GS 66-471, applicable to new Article 48, as enacted, to provide for the occurrence of a less than total physical damage loss as an example of an event that would trigger the provision of a benefit provided for pursuant to contractual agreement (no longer specifically providing for the occurrences of loss, theft, or damage as examples). More specifically excludes a guaranteed asset protection waiver as defined by GS 66-440(5), as amended, rather than debt waivers, from the term. 


  • Summary date: Mar 31 2021 - More information

    Revises the definition of a guaranteed asset protection waiver set forth in GS 66-440, applicable to Article 46. Adds that the term can alternatively mean a contractual agreement in which a creditor agrees, with or without a separate charge, to cancel or waive all or part of amounts that may become due under a borrower's lease agreement as a result of excessive wear and use of a vehicle. Requires that this agreement is part of or an addendum to the lease agreement; authorizes excess wear and use waivers can cancel or waive amounts due for excess mileage. Specifies that the existing meaning of the term regarding cancellation or waiver of all or part of amounts due on a borrower's finance agreement in the event of a total physical damage loss or unrecovered theft of the vehicle applies with or without a separate charge for the agreement. Allows these agreements to provide a benefit that waives an amount or provides a borrower with a credit towards the purchase of a replacement vehicle, with or without a separate charge.

    Makes clarifications to the miscellaneous provisions of GS Chapter 66-446. Deems the cost of a guaranteed asset protection waiver sold in compliance with Article 46 to be an authorized charge that can be financed under GS Chapter 25A, which governs retail installment sales, and not a part of the finance charge or interest thereunder. 

    Enacts Article 48, Vehicle Value Protection Agreements, to GS Chapter 66. Establishes the purpose of the Article and sets forth 10 defined terms. Authorizes vehicle value protection agreements (VVPAs) which comply with the Article to be offered, sold, or given to consumers. Defines VVPAs to include a contractual agreement that provides a benefit towards either the reduction of some or all of the contract holder's current finance agreement deficiency balance, or towards the purchase or lease of a replacement motor vehicle or purchase of motor vehicle services, upon an adverse event to the motor vehicle, which can also include related agreements; excludes debt waivers. Allows providers to use a third-party administrator or other designee to administer a VVPA.

    Requires VVPA holders to be given or provided access to a copy of the agreement. Deems charges or financed amounts for a VVPA an authorized charge, required to be separately stated and not considered a finance charge or interest. Requires providers to have a reimbursement insurance policy by an issuing insurer that meets the specified criteria, or maintain a $100 million net worth or stockholder's equity, with supporting documentation as specified. Bars any further financial security requirements for VVPAs. Bars conditioning extension of credit, terms of credit, or terms of related motor vehicle sales or leases upon the consumer's payment for or financing of any charge for a VVPA. Authorizes VVPAs to be given at a discount or at no charge with the purchase of other noncredit-related goods or services. Requires disclosure of the right to a full refund upon cancelation during the free-look period, as defined and required to be at least 30 days, so long as no benefit has been provided. Provides procedure for VVPA cancellation by the provider. Authorizes the provider to charge an administrative fee of up to $75.

    Lists eight required disclosures that must be contained in VVPAs, including cancellation rights, parameters, and procedures. Exempts commercial transactions from the required disclosures regarding cancellation after the free-look period and conditioning credit extensions or terms or related motor vehicle sales or leases upon the purchase of the VVPA.

    Authorizes the Attorney General to enforce the Article and to protect VVPA consumers. Grants authority to take the following enforcement actions, subject to proper notice and hearing requirements. Authorizes the AG to order noncompliant individuals or entities to cease and desist, and impose a penalty of up to $500 per violations, capping the aggregate for similar violations at $10,000, as specified. 

    Clarifies that VVPAs are not insurance and are exempt from insurance regulations under GS Chapter 58, including VVPAs issued prior to or after the Article's enactment; extends the exemption to persons engaged in the business of VVAPs. 

    Includes a severability clause. 

    Applies to agreements entered into on or after January 1, 2022.


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