2017 Oregon Revised Statutes
Volume : 14 - Trade Practices, Labor and Employment
Chapter 646A - Trade Regulation
Section 646A.765 - Penalties.

GUARANTEED ASSET PROTECTION WAIVERS

Note: Sections 1 to 8 and 11, chapter 523, Oregon Laws 2015, provide:

Sec. 1. Definitions. As used in sections 1 to 7 of this 2015 Act:

(1) "Borrower" means an individual who enters into a finance agreement that is secured by a motor vehicle or who, in connection with purchasing or leasing a motor vehicle, incurs an obligation to pay money to a creditor under terms and conditions that are specified in a finance agreement.

(2) "Creditor" means:

(a) A person that:

(A) Permits another person to defer or to pay in installments an amount due under a finance agreement that is secured by a motor vehicle; or

(B) Otherwise extends credit to another person under a finance agreement that is entered into in connection with purchasing or leasing a motor vehicle; or

(b) An assignee of a person described in paragraph (a) of this subsection.

(3) "Evaluation period" means a period of at least 30 days after the date on which a borrower purchases a guaranteed asset protection waiver during which, if the borrower did not receive a benefit from the guaranteed asset protection waiver, the borrower may cancel the guaranteed asset protection waiver and receive a full refund of the purchase price.

(4) "Finance agreement" means a contract or other agreement that is evidence of a borrower’s obligation to pay money to a creditor and that specifies the terms and conditions under which the borrower must repay the obligation.

(5) "Guaranteed asset protection waiver" means a contractual provision of or an addendum to a finance agreement that is secured by a motor vehicle under the terms of which a creditor agrees to waive the creditor’s right to collect all or part of an amount due from a borrower under the terms of the finance agreement or to release a borrower from an obligation to pay the creditor an amount due under a finance agreement if the motor vehicle:

(a) Suffers physical damage that is equivalent to a total loss; or

(b) Is stolen and is not recovered.

(6) "Insurer" means an insurer that is licensed, registered or otherwise authorized to transact insurance in this state.

(7) "Motor vehicle" means a self-propelled or towed vehicle that is designed for personal or commercial use, such as an automobile, truck, motorcycle, recreational vehicle, all-terrain vehicle, snowmobile, camper, boat, personal watercraft or a trailer for a motorcycle, boat, camper or personal watercraft.

(8) "Reimbursement insurance policy" means an insurance policy under the terms of which an insurer reimburses a creditor for an amount the creditor must waive under a guaranteed asset protection waiver. [2015 c.523 §1]

Sec. 2. Applicability of Insurance Code; statement of costs; exemptions. (1)(a) A guaranteed asset protection waiver is not insurance and is not subject to the provisions of the Insurance Code. A person, other than an insurer, that sells a guaranteed asset protection waiver in compliance with sections 1 to 7, chapter 523, Oregon Laws 2015, does not become subject to the Insurance Code by reason of the sale.

(b) Notwithstanding any other provision of law, any cost for a guaranteed asset protection waiver into which a borrower enters, whether in compliance with the Truth in Lending Act, 15 U.S.C. 1601 et seq., and regulations promulgated under the Truth in Lending Act, or not, must be stated separately in the finance agreement and is not a finance charge or interest.

(2) Sections 1 to 7, chapter 523, Oregon Laws 2015, do not apply to:

(a) An insurance policy that an insurer offers under the provisions of the Insurance Code;

(b) A debt cancellation contract or debt suspension agreement offered in compliance with 12 C.F.R. 37.2 or 12 C.F.R. part 721, both as in effect on January 1, 2016;

(c) A state bank, as defined in ORS 706.008, or a credit union, as defined in ORS 723.008; or

(d)(A) An addendum to a finance agreement that is sold or assigned to a licensee, as defined in ORS 725.010, and that is secured by a motor vehicle, under the terms of which a creditor agrees to waive the creditor’s right to collect all or part of an amount due from a borrower under the terms of the finance agreement or to release the borrower from an obligation to pay the creditor an amount due under the finance agreement if the motor vehicle:

(i) Suffers physical damage that is equivalent to a total loss; or

(ii) Is stolen and not recovered.

(B) The addendum to the finance agreement described in subparagraph (A) of this paragraph is not insurance and is not subject to the provisions of the Insurance Code. [2015 c.523 §2; 2017 c.451 §1]

Sec. 3. Required disclosures; cancellation provisions; effect on motor vehicle purchaser’s credit. A person may not sell a guaranteed asset protection waiver in connection with a sale of a motor vehicle that is used for personal, family or household purposes unless, at the time of the sale:

(1) The person discloses, in writing and in plain and easily understandable language:

(a) The name, address and other contact information for:

(A) The person that sells the guaranteed asset protection waiver;

(B) The creditor, if different; and

(C) Any other person that is a party to or has duties, responsibilities or other obligations under the terms of the guaranteed asset protection waiver.

(b) The purchase price of the guaranteed asset protection waiver.

(c) The terms and conditions of the guaranteed asset protection waiver, including but not limited to:

(A) Conditions under which the creditor will waive or decline to waive all or a portion of the obligation that remains under a finance agreement;

(B) The methodology for determining the amount the creditor will waive; and

(C) The length of the evaluation period.

(d) The identity, location and contact information for the person to which the borrower must submit a claim for benefits or a refund under the guaranteed asset protection waiver and the procedure the borrower must follow to submit the claim.

(e) Conditions under which the borrower may cancel the guaranteed asset protection waiver and the procedure the borrower must follow to cancel, both during the evaluation period and after the evaluation period expires, if the terms of the guaranteed asset protection waiver permit cancellation after the evaluation period expires.

(f) The formula or methodology that will apply to calculating the amount of any refund available under the terms and conditions of the guaranteed asset protection waiver if:

(A) The borrower cancels the guaranteed asset protection waiver during the evaluation period or, if permitted under the terms and conditions of the guaranteed asset protection waiver, after the evaluation period expires; or

(B) The finance agreement is terminated early.

(2) The guaranteed asset protection waiver provides that the borrower may cancel the guaranteed asset protection waiver during the evaluation period for a full refund of the purchase price if the borrower did not receive any benefits.

(3) The creditor states clearly, and the terms of the guaranteed asset protection waiver provide in writing, that purchasing a guaranteed asset protection waiver is not required in order to obtain credit or complete a purchase or lease of a motor vehicle and does not affect the terms and conditions of credit that a borrower obtains from a creditor. [2015 c.523 §3]

Sec. 4. Determination of amount of waiver; waivers that are required and waivers that are not required. (1) A guaranteed asset protection waiver must determine the amount that a creditor waives under the terms of the guaranteed asset protection waiver in accordance with the following methods:

(a) If primary motor vehicle insurance or third party liability insurance covers the amount of a total loss of the motor vehicle, the creditor shall waive the difference between:

(A) The primary insurer’s or the third party’s determination of the motor vehicle’s actual cash value as of the date of the total loss; and

(B) The amount the borrower owes under the finance agreement.

(b) If primary motor vehicle insurance or third party liability insurance does not cover a total loss of the motor vehicle, if an insurer that issued the primary motor vehicle insurance or the third party liability insurance is insolvent or if the primary motor vehicle insurance or third party liability insurance have stated values or limits that are less than the actual cash value of the insured motor vehicle, the creditor shall waive the difference between:

(A) The value of the motor vehicle immediately before the loss or theft of the motor vehicle, as shown in a published and generally available regional or national guide to motor vehicle values or from the best available equivalent information, as specified in the guaranteed asset protection waiver; and

(B) The amount the borrower owes under the finance agreement.

(2)(a) A guaranteed asset protection waiver need not require a creditor to waive:

(A) A motor vehicle insurance policy deductible;

(B) Delinquent, missed or deferred payments;

(C) Late fees or charges;

(D) Unearned finance charges, interest or lease charges;

(E) Unearned rental payments;

(F) Taxes;

(G) Refundable items that include, but are not limited to:

(i) Charges associated with service contracts;

(ii) Prepaid taxes and fees; or

(iii) Credit insurance; or

(H) Other similar items that the guaranteed asset protection waiver specifies.

(b) A guaranteed asset protection waiver may specify limits on the amount a creditor must waive based on a loan to value ratio, a maximum term, a maximum waiver amount or other limits.

(3) A guaranteed asset protection waiver may require a creditor to waive all or a portion of a motor vehicle insurance policy deductible. [2015 c.523 §4]

Sec. 5. Cancellation and expiration; refunds; effect of sale, assignment or transfer. (1)(a) A guaranteed asset protection waiver may provide that a borrower may cancel the guaranteed asset protection waiver after the evaluation period expires or that the guaranteed asset protection waiver expires if the finance agreement terminates early. If the guaranteed asset protection waiver permits a borrower to cancel as provided in this subsection and the borrower did not receive a benefit, the borrower is entitled to a pro rata refund of the unearned portion of the purchase price.

(b) A borrower shall apply in writing to the person identified in the guaranteed asset protection waiver for a refund of all or a portion of the purchase price of the guaranteed asset protection waiver within 90 days after cancellation if the borrower cancels the guaranteed asset protection waiver. If the guaranteed asset protection waiver is canceled as a result of the termination of the finance agreement, then any cancellation refund shall be provided without requiring the borrower to apply or submit a claim for the refund.

(2) The terms of the guaranteed asset protection waiver may provide that if the borrower financed the purchase of the guaranteed asset protection waiver and cancels the guaranteed asset protection waiver, if the borrower defaults on the obligation set forth in the finance agreement, if the creditor repossesses the motor vehicle that secures the obligation or if the finance agreement terminates for a reason other than the borrower’s satisfaction of the obligation set forth in the finance agreement, any refund due as a consequence of the termination may be:

(a) Paid directly to the creditor; or

(b) Applied to any outstanding balance on the obligation set forth in the finance agreement, unless the borrower has paid the obligation in full. If the borrower has paid the obligation in full, the creditor shall pay to the borrower the refund.

(3) Unless canceled as provided in this section, a guaranteed asset protection waiver remains in effect as part of the finance agreement for the term set forth in the guaranteed asset protection waiver even if the finance agreement is sold, assigned or otherwise transferred. [2015 c.523 §5]

Sec. 6. Reimbursement insurance policies for guaranteed asset protection waivers. (1)(a) A creditor other than a person that sells a guaranteed asset protection waiver in connection with a retail sale of a motor vehicle may insure a guaranteed asset protection waiver with a reimbursement insurance policy.

(b) A person that sells a guaranteed asset protection waiver in connection with a retail sale of a motor vehicle shall insure the guaranteed asset protection waiver with a reimbursement insurance policy that meets the requirements set forth in subsection (2) of this section.

(c) A lessor that leases a motor vehicle does not need to insure a guaranteed asset protection waiver that the lessor sells in connection with the lease.

(2) A reimbursement insurance policy for a guaranteed asset protection waiver must state:

(a) The terms of the obligation the insurer has to reimburse the creditor for amounts the creditor must waive under the terms of the guaranteed asset protection waiver;

(b) That the insurer’s obligation to reimburse the creditor extends to the creditor’s assignee or any person to which the creditor sells or transfers the finance agreement or the guaranteed asset protection waiver that the reimbursement insurance policy covers;

(c) That the reimbursement insurance policy remains in effect until canceled in accordance with applicable provisions of the Insurance Code; and

(d) That a cancellation of the reimbursement insurance policy does not affect an insurer’s obligation under the reimbursement insurance policy for guaranteed asset protection waivers that the insured sold, and for which the insurer received premium payments, before the date on which the reimbursement insurance policy was canceled.

(3) A person that sells a guaranteed asset protection waiver in connection with a sale or lease of a motor vehicle shall report to any insurer that has issued a reimbursement insurance policy to the person the number of guaranteed asset protection waiver sales and any other details the insurer requires under the terms of the reimbursement insurance policy and shall timely forward to the insurer all funds due under the terms of the reimbursement insurance policy. [2015 c.523 §6]

Sec. 7. Fiduciary responsibilities. (1) A person that is subject to sections 1 to 7 of this 2015 Act shall act in a fiduciary capacity with respect to funds the person receives or holds for the benefit of another person.

(2) A person that sells a guaranteed asset protection waiver in connection with a retail sale of a motor vehicle may not:

(a) Charge more for the guaranteed asset protection waiver than five percent of the amount the borrower finances under a finance agreement; or

(b) Vary the benefits, terms, conditions or price of the guaranteed asset protection waiver on account of a borrower’s race, sex, sexual orientation, income or education. [2015 c.523 §7]

Sec. 8. Unlawful practices. A violation of a provision of sections 1 to 7 of this 2015 Act is an unlawful practice under ORS 646.608. [2015 c.523 §8]

Sec. 11. Sunset. Sections 1 to 8 of this 2015 Act are repealed on January 2, 2020. [2015 c.523 §11]