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Missouri law toughens oversight of extended service contracts

Missouri Gov. Jay Nixon on Thursday signed into law legislation aimed at toughening oversight of the extended service contract business. As of Jan. 1, the state will enforce a host of consumer protection measures, including mandatory licensing of telemarketers and other companies that sell extended service contracts.

The companies also will be required to refrain from fraudulent business practices, provide timely refunds and allow customers a more realistic “free look” period at contract fine print.

The law stems in part from the bankruptcy of US Fidelis, an extended service contract marketer based in Wentzville, Mo., that generated a flood of consumer complaints to the Missouri attorney general’s office.

Between US Fidelis and other spinoff companies, Missouri became a hotbed for service contract scams, said Attorney General Chris Koster, who sued several of the companies.

The Service Contract Industry Council, a Florida-based trade group that represents service contract providers including automakers and captive finance companies, worked with Missouri officials to draft the new requirements. The SCIC’s members primarily sell through dealerships and supported the reform measures.

“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,” said Timothy Meenan, the council’s executive director.

The council has worked with state legislators across the country on reform. So far, council officials say, 36 states have adopted the council’s recommended language in some form.

Jim Henry contributed to this report

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While this won’t solve the problem, it should set a precedent for any would-be scammer. Now, if only they’d do something about the H2o to HHO converter salesmen and their like

I dunno. Missouri doesn’t have fraud laws or an insurance commission already? They don’t have holdback requirements to make sure that money is there to pay claims? I think there must have been a reason why these folks settled in Missouri and Florida, and I’m not sure this law makes much difference except provide cover for those that allowed it to happen.