The VPA Voice
"Giving a Voice to Industry Members"
Monday, February 13, 2017
Thus far, in January 2017, we have entered Stage 2 of our Lobby efforts in California; we are well underway planning for our St. Louis regional Workshop, scheduled for April 3, 2017; and the VPA Certification Program has launched with very attractive pricing for VPA members. We’ve also worked closely with an administrator member to crack down and remove a sales center. We are within budget. The Board is acting vigorously and strongly to protect your interests. And yes, we are already planning for our next Las Vegas conference!
The VPA is very proud of its new certification program. VPA’s Certified Vehicle Protection Professional (“CVVP”) is brought to us by Train and Certify.org. Normally, sales rep certification through this company costs a minimum of $198 per person. BUT NOT FOR MY VPA FAMILY!! I put the screws to the company and negotiated introductory pricing at $69 per employee for VPA members.
So, why should your company spend the money on employee certification? Because in other industries employee certification provides direct proof of better customer retention, fewer cancellations and employee retention. In fact, some companies have hallways of hundreds of framed certificates. The pride and confidence that this process instills in your rep shows in higher sales numbers. Is 1 extra sale per month worth it? How about 5 or 10 from more confident, motivated reps? Customers stick around longer and you’ll have fewer cancellations too!
The program is now available now through the VPA website and we encourage every member to take advantage.
In California, the VPA remains optimistic about its lobbying efforts. This year we will continue to cooperate with the California Department of Insurance’s offer to accommodate VPA members through relaxation of the Breakdown Mechanical Insurance legislation. If we can reach an agreement and avoid legislation, we may open the state to our members as early as this year. While this is an expensive, uphill battle, especially against state consumer protection lobby groups and the dealer groups, the VPA has a seat at the table.
We continue to monitor legislation in all 50 states to provide our members with guidance and advance notice of relevant laws affecting us. We recently sent an email discussing proposed legislation by Pennsylvania and Illinois. We will continue to educate members on the states’ concerns, providing our members the ability to stay ahead of the game. We also recently issued a memo on the State of Florida’s law requiring payment of taxes on the sale of vehicle service contracts to Florida residents.
A goal this year is to continue the Chairman’s interest in promoting the industry by increasing the number of marketers (sellers) in the VPA. The VPA and the Board of Directors recognize marketers are very important to our industry and their participation in the VPA can only enhance the benefits of membership. The VPA and its Board strongly encourage all marketers to become members of the VPA. As mentioned in the last newsletter, I worked closely with about 12 new companies for eventual admission into our association. Of those twelve, at least 6 have been approved for membership.
The VPA’s Member Dues Sub-Committee finalized a new proposed payment structure for the VPA. A financially sound VPA enables us to provide additional benefits to our members. That payment structure provides for a flat fee monthly fee by all members. Instead of billing each member, the payments will be remitted from the administrators. More details to come on this shortly.
Let Us Hear and Speak to You - Update Your Info!
As a continuous reminder, the VPA is continuing to update membership records. Thank you to all of you who updated your records with the VPA. If you still haven’t done so, please do so promptly. We must have accurate company and ownership information so we can communicate with you and understand your needs. Please email us your updated full company names, owner names, addresses, emails and phones to firstname.lastname@example.org.
Save the Date: St. Louis Spring Workshop
The VPA has a regional workshop scheduled for St. Louis on April 3, 2017. For more details and to register for this workshop, please see the VPA website. This event is for members only and will be a great opportunity to meet up with your fellow members and network – we hope to see you there!
We welcome your comments and suggestions to improve the VPA and increase the services it can provide its members. Please email me with any questions, suggestions or anything else you need. My direct line is 954-343-6959. Robby.Birnbaum@gmlaw.com
To our success!
Robby H. Birnbaum
New Certification Program
As mentioned above, the VPA is proud to announce its new certification program is now available!
The VPA’s mission is to bring the vehicle service contract industry’s salesforce to a minimum standard of excellence, customer protection and product knowledge.
This certification is for VPA member companies and their employees. Special introductory pricing is available for $69 per employee and the certification is good for two years. Representatives can pay by credit card or PayPal and take the exam online. The exam tests your knowledge of the VPA Code of Conduct as well as the telemarketing and compliance rules and regulations. You will receive a certificate of certification, suitable for framing, upon successfully passing the exam.
If member firms wish to register multiple employees, a special member’s registration page is available. A search option is also available on the website. This option will identify each actively certified individual, and their city and state.
We encourage all member employees to take advantage of this opportunity to increase their knowledge of the industry, and demonstrate their competency and professionalism to their company as well as to customers and peers. For member firms, having a well-trained sales force will be an important marketing resource.
If you have questions, please contact the VPA Administrator or check out the VPA website.
Pennsylvania Vehicle Service Contract Legislation
Senate Bill 143, enacting the Service Contract Act has been reintroduced into the Senate. This bill is designed to protect consumers who invest in service contracts through companies that go out of business. The legislation requires each provider of service contracts to register with the Insurance Commissioner and pay a $600 fee upon initial registration and every two years thereafter. To assure the faithful performance of a provider’s obligations to its contract holders, each provider shall be responsible for complying with one of the following three requirements:
- Insure all service contracts under a reimbursement insurance policy issued by a licensed or registered insurer that maintains a certain surplus and annually files financial statements with the commissioner;
- Maintain a funded reserve account for its contractual obligations of not less than 40% of gross consideration received and place in trust with the commissioner a financial security deposit no less than 5% of the gross consideration received but not less than $25,000 consisting of either a surety bond, securities, cash, a letter of credit or another form of security authorized by the commissioner; or
- Maintain, or its parent company maintain, a net worth or stockholder’s equity of $100 million and provide the commissioner, upon request, a copy of the provider’s or parent company’s most recent Form 10-K or Form 20-F and a copy of the company’s financial statements.
Service contracts cannot be issued, sold or offered for sale unless the provider has provided a receipt and copy of the service contract to the contract holder. A contract must be printed or typed in understandable language stating the total purchase price and terms and any deductibles or restrictions. A contract holder may return the service contract within 20 days of the mail date or within ten days of delivery if the contract is provided at the time of sale. The provider is required to keep accurate accounts including maintaining written claims for at least two years after the specified period of coverage has expired. The commissioner may conduct examinations of providers and insurers to enforce the provisions of this act as well as issue cease and desist orders and impose a civil penalty of no more than $500 per violation and no more than $10,000 in the aggregate for all violations of a similar nature.
If passed and if no significant changes to the bill in the House, and then signed by the Governor, this bill as drafted will affect VPA administrators and payment providers who will now be required to obtain a reimbursement insurance policy.
Illinois Vehicle Service Contract Legislation
House Bill 2617 amends the Illinois Insurance Code. It provides that no vehicle protection product sold or offered for sale in this State shall be subject to the Service Contract Act. This is separate and apart from the Vehicle Service Contract Law, effective January 1, 2014.
Effective January 1, 2014, the definition of “service contract,” also referred to as extended warranties, expressly authorized the inclusion of popular ancillary benefits such as road hazard/tire & wheel coverage, painless dent removal, windshield cracks repair and replacement and key / key fob replacement. It also included what is referred to as vehicle protection products.
Providers of these contracts are required to satisfy Illinois’ current requirements, which include registration with the Illinois Department of Insurance, satisfying one of three available financial responsibility options and filing proposed terms and conditions with the Department.
House Bill 2617 strips the vehicle protection products outside of this law. This includes agreements relating to the application or installation of protective chemicals, substances, devices or systems which are specifically designed to prevent loss or damage to a motor vehicle from a specific cause, and which include a written product warranty providing for reimbursement of incidental costs in the event the product fails to prevent the loss or damage specified. Such agreements must be directly tied to the purchase of the preventive product that is designed to make the specified loss less likely or preventable. If passed, this bill will not significantly impact the vehicle service industry because the products are not common to a vehicle service contract and if a vehicle service contract does extend to these products, it merely advises they are not subject to the registration and reimbursement warranty requirements of the Service Contract Act.
Pennsylvania legislation will affect VPA members upon its effectiveness due to the monetary requirement of the purchase of a reimbursement insurance policy.
Illinois legislation will not significantly affect VPA members in that the legislation strips the vehicle protection products from the restrictions of the Service Contract. The vehicle service contract remains subject to the Service Contract Act.
Other State Developments
California: The VPA is currently in the second stage of its lobbying effort. We are focusing on the Division of Insurance’s offer to cooperate with us in finding an entry through the BMI legislation.
Missouri: As part of the VPA’s ongoing efforts to establish relationships with the various states’ regulatory agencies, the VPA has invited a speaker from the Missouri Department of Insurance to the regional VPA workshop in St. Louis this April.
Alert on FCC Chairman Selection
(reproduced from Greenspoon Marder Special Alert)
On Monday, Jan. 23, 2017, President Trump announced the appointment of Republican Commissioner Ajit Pai as Chairman of the Federal Communications Commission, a move that could have favorable consequences for the telecom industry. Pai, who was appointed by Obama in 2011, has served on the Commission since 2012 and thus will not need Senate approval. Pai is replacing the outgoing Democratic Chairman Tom Wheeler, shifting the Commission to a Republican majority. Pai is the 34th Chairman of the agency.
Pai is known for promoting an open and unregulated market, and has been an enthusiastic opponent to the Commission’s net neutrality rules, labeling the government’s attempts to regulate the Internet an “unlawful power grab.” On his FCC webpage, Pai claims, “[c]onsumers benefit most from competition, not preemptive regulation.” He also notes, “the FCC should do everything it can to ensure that its rules reflect the realities of the current marketplace and basic principles of economics.”
Pai fervently opposed the Commission’s 2015 Telephone Consumer Protection Act Omnibus Declaratory Ruling and Order. In his dissenting statement, Pai criticized the TCPA, calling it the “poster child for lawsuit abuse”, and recognized that TCPA trial lawyers tend to pursue claims against legitimate businesses since they are often profitable defendants. He has openly criticized the FCC for “twisting,” or failing to follow, the law.
Pai has recently advocated for more transparency and a new regulatory approach at the FCC in 2017. The Commission is now comprised of Pai, Democratic Commissioner Mignon Clyburn, and Republican Commissioner Michael O’Rielly. Due to its current composition, the Commission may issue rulings more favorable to a free market than consumer rights.
St. Louis Regional Workshop
VPA is hosting a St. Louis Regional Workshop on April 3, 2017. The half day event will be held at the St. Louis Airport Marriott. The VPA promises a jam-packed event with speakers of interest to the VPA and its members. Members may go online the VPA website to register for this event.