Vehicle Protection Product Warrantors Penalties and Sanctions

 

Vehicle Protection Product Warrantors (VPP)

Texas Occupations Code, Chapter 2306

16 Texas Administration Code, Chapter 71

Class A:

1st Violation, Reprimand to $1,000

2nd Violation, $500 to $2,000

3rd Violation, $1,000 to $4,000 per day not corrected and/or 6-month probated suspension to 1-year full suspension.

  • Sold, offered, or issued a product warranty and did not provide a receipt for purchase or a copy of warranty at the time of sale; and a copy of the warranty or receipt within 10 days from the date of purchase - 2306.201(b), 2306.201(c), 71.70(d)
  • Sold, offered, or administered a warranty that failed to state, when required: “Obligations of the warrantor under this vehicle protection product are insured under a reimbursement insurance policy” - 2306.205(b)
  • Sold, offered, or administered a vehicle protection product warranty that failed to state the name and address of the insurer in the vehicle protection product warranty - 2306.205(c)
  • Sold, offered, or administered a vehicle protection product warranty that failed to state that if a covered service is not provided by the warrantor within 60 days of proof of loss, the consumer may apply for reimbursement directly to the reimbursement insurance company - 2306.205(c)
  • Sold, offered, or administered a warranty not insured under a reimbursement insurance policy, and the warranty failed to state: “Obligations of the warrantor under this vehicle protection product are backed by the full faith and credit of the warrantor” - 2306.205(d)
  • Failed to report change in registrant information to the Department within 30 days of the change - 2306.205(e), 71.70(b)
  • Warrantor used a name that included the word “casualty,” “surety,” “insurance,” or “mutual” or any other word descriptive of the casualty, insurance, or surety business - 2306.207(a)(1)
  • Warrantor used a name deceptively similar to the name or description of an insurance or surety business or to the name of another warrantor - 2306.207(a)(2)
  • Failed to include Department contact information on warranty or warranty contract - 71.70(a)

Class B:

1st Violation, $500 to $3,000 and/or up to 6-month probated suspension

2nd Violation, $1,500 to $5,000 plus 1-year probated suspension to 1-year full suspension

3rd Violation, $3,000 to $5,000 per day not corrected plus 1-year full suspension up to revocation

  • Operated as a warrantor without a registration or performed work with an expired registration - 2306.151(a), 71.20(a)
  • Failed to maintain accurate books, accounts, and other records regarding Vehicle Protection Product transactions, specifically:
  • Failed to keep a copy of the warranty for each unique form of vehicle protection product sold - 2306.204(a)(1)
  • Failed to keep the name and address of each consumer - 2306.204(a)(2)
  • Failed to keep a list of the locations where the warrantor’s vehicle protection products are marketed, sold, or offered for sale - 2306.204(a)(3)
  • Failed to keep files that contain at least the dates and descriptions of payments to consumers related to the vehicle protection product - 2306.204(a)(4)
  • Failed to retain all records until at least the first anniversary of the expiration date of the obligations under the vehicle protection product warranty - 2306.204(d)
  • Failed to maintain the warrantor’s records until the date the warrantor provides the department with proof satisfactory to the department that the warrantor has discharged all obligations to consumers after a warrantor discontinues business - 2306.204(e)
  • Failed to mail written notice of cancellation more than 5 days prior to the effective date of the cancellation - 2306.206(b)
  • Failed to state effective date and reason for the cancellation in notice - 2306.206(b)
  • Failed to promptly provide all financial statements and information requested in writing to the Executive Director or his designate - 71.22(c)

Class C:

1st Violation, $1,000 to $5,000 and/or 1-year probated suspension up to revocation

2nd Violation, $2000 to $5,000 plus 1-year probated suspension to revocation

3rd Violation, $3,500 to $5,000 per day not corrected plus 1-year full suspension up to revocation

  • Failed to indemnify a seller who paid or was obligated to pay a consumer - 2306.201(d)
  • Failed to comply with financial security requirements - 2306.202(a)
  • Marketed, sold, offered, issued, made, proposed, or administered a vehicle protection product warranty that was not written, printed, or typed, in clear, understandable, and easy to read language - 2306.205(a)
  • Marketed, sold, offered, issued, made, proposed, or administered a vehicle protection product warranty that failed to identify any administrator, the product seller, and the consumer. - 2306.205(f)
  • Marketed, sold, offered, issued, made, proposed, or administered a vehicle protection product warranty that failed to state the product’s purchase price, or the warrantor’s suggested purchase price and the terms under which the product is sold - 2306.205(g)
  • Marketed, sold, offered, issued, made, proposed, or administered a vehicle protection product warranty that failed to:
  • Specify the products and services to be provided and any limitations, exceptions, or exclusions - 2306.205(h)(1)
  • Specify any restrictions governing the transferability of the vehicle protection product - 2306.205(h)(2)
  • State the duties of the consumer, including any duty to protect against any further damage and any requirement to follow the warranty’s instructions - 2306.205(h)(3)
  • State the name, mailing address, and telephone number of the department - 2306.205(h)(4)
  • Include a statement that unresolved complaints concerning a registered warrantor or questions concerning the regulation of the warrantor may be addressed to the department - 2306.205(h)(5)
  • Marketed, sold, offered, issued, made, proposed, or administered a vehicle protection product warranty that failed to state the terms, restrictions, or conditions governing cancellations of the warranty by the warrantor before the expiration date of the warranty - 2306.206(a)
  • Cancelled a warranty for a reason other than nonpayment, material misrepresentation, fraud, orsubstantial breach of duties by the consumer - 2306.206(a)
  • In the warranty or literature made a false or misleading statement or deliberately omitted a material statement that would be considered misleading if omitted - 2306.208(a)
  • Required as a condition of sale or financing that a retail purchaser purchase a protection product that was not installed on the vehicle at the time of the sale - 2306.208(b)
  • Refused to allow Department to audit, examine, or copy records - 71.70(c)
  • Disclosed nonpublic information obtained in connection with the sale of a vehicle protection product warranty or claims made under such a warranty - 71.70(e)

Class D:

1st Violation, Revocation

2nd Violation, Revocation

3rd Violation, Revocation

  • Obtained a license by fraud or false representation - 71.21(d), 60.63(b)
  • Failed to comply with previous order of Commission/Executive Director -71.90, 51.353(a)
  • Failed to pay the Department for a dishonored check - 60.82