THE SERVICE CONTRACT MODEL ACT

Since its inception in 1988, the Service Contract Industry Council (SCIC) has worked actively on behalf of the service contract industry to implement protections for consumers and foster high standards of integrity among industry providers.

Among its greatest achievement in this area, the SCIC was instrumental in the development of model legislation, “The Service Contract Model Act,” to regulate the industry with fair and consistent regulations at the state level nationwide. The SCIC successfully has promoted and continues to promote the Model Act, which offers state legislators a set of provisions to mandate licensing and strict financial requirements for service contract providers.

As a result of the SCIC’s lobbying efforts, the substantial majority of state legislatures have adopted the Model Act in some form to regulate providers of automotive, home and/or consumer service contracts.

Notably, state laws based on the Model Act provided unprecedented consumer protection during the closure in 2008-9 of hundreds of automotive dealerships across the country, as well as the national consumer electronics giant and national retailer Circuit City in 2009. Hundreds of thousands of consumers experienced no disruption to the product protection benefits provided by their service contracts due in part to the SCIC’s efforts in enacting the Model Act across the country. Click here to view Model Act.

RECENT LEGISLATIVE ACTIVITY

June 2010: The Service Contract Industry Council announces its participation with the Missouri Attorney General’s Auto Service Contract Task Force investigating automotive service contract scams by select St. Louis-based marketers and providers. The SCIC backs efforts to hold accountable unscrupulous marketing firms and providers who attempt to lure consumers into buying substandard warranties via deceptive, illegal and/or unethical means, including robo-calling, and eliminate such practices.

SCIC representatives are appeared before the task force this month to discuss what the SCIC views as the root of the problems that occurred in Missouri and to present solutions to the state’s Department of Insurance and Attorney General.

June 2010: Members of the Service Contract Industry Council approve updates and amendments to The Model Act, particularly as it pertains to the motor vehicle service contract (extended warranty) industry. The enhancements strengthen the model legislation with more direct language and broader prohibitions against deceptive marketing practices.

Efforts to update regulations and implement new ones on a state-by-state basis, as well as educate consumers on existing protections plus buying and usage tips, define the SCIC’s key continuous initiatives and raison d’etre.