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Missouri Gov. Signs Service Contract Law

July 12, 2011

JEFFERSON CITY, Mo.Legislation signed into law on July 7 by Missouri Governor Jay Nixon will target auto service contract businesses engaging in deceptive practices to sell extended service contract warranties.

“This is a troubled industry that has too many illegitimate players that have given the industry a bad name,” said Chris Koster, Missouri attorney general.

Senate Bill SB132, sponsored by Sen. Scott Rupp and co-authored by Koster’s Task Force on the Motor Vehicle Service Contract Industry, is set to take effect Jan. 1, 2011. It will require sellers of vehicle service contracts to provide a copy of the proposed contract to a consumer before a sale if the consumer requests to see it. It also will allow for a “free-look” period that allows a purchaser to cancel the contract within at least 20 business days after purchasing.

Service contract sellers also must provide full refunds minus any claims paid for cancellation, become licensed, and not use the word “warranty” when referring to the protection. Sellers also can’t falsely represent themselves as being affiliated with a manufacturer or dealer, or represent they have knowledge that a consumer’s warranty is expiring.

The Missouri Attorney General’s office has maintained 12 lawsuits against auto service contract telemarketers in the last year for the type of business practices addressed in the law. In addition, Koster’s office obtained criminal indictments in June against Darain Atkinson and his brother Cory Atkinson, who owned and operated U.S. Fidelis. The brothers were recently indicted on felony charges, including unlawful merchandising practices, stealing and insurance fraud.

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