2015 Kentucky Revised Statutes CHAPTER 367 - CONSUMER PROTECTION 367.906 Form and amount of surety bonds -- Exemptions from bonding requirement -- Effect of change in membership, ownership.
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367.906
Form and amount of surety bonds -- Exemptions from bonding
requirement -- Effect of change in membership, ownership.
(1)
(2)
(3)
(4)
(5)
(6)
The surety bond required by KRS 367.905(1)(b) shall be in favor of the Attorney
General's Division of Consumer Protection and shall be held for compensation to
any member who suffers loss of money paid due to the insolvency of the health spa,
cessation of operation of the health spa, or failure of the health spa to open for
business within ninety (90) days from the sale of the first contract.
The bond shall be in a form prescribed by the Attorney General's Division of
Consumer Protection and shall be issued by a company authorized to transact
business in the Commonwealth of Kentucky.
The amount of the bond shall be computed as follows:
Number of
unexpired contracts
Amount of bond
150 or fewer
$10,000
151 to 300
$25,000
301 or more
$50,000
The Attorney General's Division of Consumer Protection shall exempt a spa from
the bonding requirement if all of its unexpired contracts and present membership
plans meet the following criteria:
(a) No initiation fee, or similar nonrecurring fee, is charged at or near the
beginning of the contract term or renewal period, and
(b) At no time is any member charged for use of facilities or services more than
thirty-one (31) days in advance.
If, because of an increase in membership or change in membership plans, a spa is
required to file a bond or increase the amount of its bond, it shall notify the
Attorney General's Division of Consumer Protection in writing at least thirty (30)
days prior to the expected change. No contract in excess of the limits stated in
subsection (3) of this section or not in compliance with subsection (4) of this
section shall be sold until a new bond in the required amount has been provided.
A change in ownership shall not release, cancel or terminate liability under any
bond previously filed unless the Attorney General's Consumer Protection Division
agrees in writing to the release, cancellation or termination because the new owner
has filed a new bond for the benefit of the previous owner's members, or because
the former owner has paid the required refunds to its members.
Effective: July 15, 1988
History: Created 1988 Ky. Acts ch. 367, sec. 1, effective July 15, 1988.
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