VPA Newsletter November 26, 2014
VPA Voice Newsletter

The VPA Voice
"Giving a Voice to Industry Members"
November 26, 2014

Director’s Corner

We’re excited about many updates and changes in current programs as we move forward in the upcoming year developing new programs for your benefit. We are always available to listen to your ideas and concerns, and welcome your feedback as we continue to grow and make the VPA the best it’s ever been.

We hope this newsletter finds everyone well as we head into the holiday season. We wish all of you and your families a Happy Thanksgiving and hope you have a great holiday season.

All the Best,
Chris Carenza
Executive Director, VPA
email: chris@vpanet.org

VPA Regulatory Notice/Updates

North Carolina

We previously reported on North Carolina House Bill 1050 going into effect on October 1, 2014. The Bill mandates taxes on retail vehicle services contracts sold in the state. We correctly reported the state tax rate as 4.75%, but we have since learned that the 4.75% general state retail sales and use tax rate does not include additional county, local and use taxes. These additional taxes can add 2% to 2.75% to the tax bill, depending upon the county. For 2014, the largest metropolitan county of Mecklenburg (Charlotte) has a combined tax rate of 7.25%. Durham and Orange Counties have a combined tax rate of 7.5% and in all other counties the combined tax rate is 6.75%.


Effective immediately, we confirmed Florida’s position that companies who sell vehicle service contracts to Florida residents must pay state sales tax no matter where the company is located. See Fla. Administrative Code (FAC) 12A-1.105. Florida requires that any company desiring to sell vehicle service contracts to Florida residents be licensed in Florida. Through licensure, a company consents to Florida’s jurisdiction to impose a tax according to the Florida Department of Revenue. See Florida Department of Revenue Retailer and Wholesaler Standard Industry Guide. Therefore, any in state or out of state company selling a vehicle service contract to a Florida resident is required by Florida to pay state sales tax.

In both instances above, we are not aware of any court challenges to the state’s ability to collect taxes from out of state companies having no physical presence or other direct connection in the state. A cautionary word before you consider spending a lot of money to contest the state’s authority to impose taxes against an out of state company. The federal government is considering granting states the right to impose a sales tax collection requirement on out-of-state vendors selling into the state, either through the internet, by phone, or by mail-order. The Marketplace Fairness Act of 2013 (MFA), approved by the Senate in 2013 and currently being rewritten in the House of Representatives, would grant that right to states.

Delaware, Oregon, Alaska, Montana & New Hampshire
Maine, Missouri, Kansas, Iowa, West Virginia & Minnesota

Until such time as the Federal government passes legislation to this effect, many states continue, with increasing aggressiveness, to collect sales tax on tangible property sold to state residents by out of state companies. Although some states continue to exempt vehicle service contracts from an obligation to pay sales taxes at the time of sale, (viewing a service contract as a service rendered when claim is paid) and five states have no sales tax (Delaware, Oregon, Alaska, Montana and New Hampshire), within the last two years, states have legislated “affiliate” nexus (connection), and “click-through” nexus statutes to reach remote out of state companies. Affiliate nexus includes those out of state companies with significant contacts with in state companies from which an economic benefit is derived. Examples of affiliate nexus states are Maine, Missouri, Kansas, Iowa and West Virginia. “Click-through” nexus arises when the out of state companies enter into agreements with an individual or company in the state who refers potential customers to the out of state seller in exchange for a commission on the sales made. Examples of states with “click through” nexus laws are Kansas, Minnesota, and Missouri. NOTE: This regulatory update is intended for informational purposes only, and is not intended as legal advice.

State Attorney Generals Seek Clarification on Call-Blocking Rules

The National Association of Attorney Generals (“NAAG”) recently requested a formal opinion from the FCC regarding telephone carrier’s legal ability to implement call-blocking technology. Many carriers believe that FCC rules prohibit them from implementing call blocking technology. The NAAG notes that this call blocking technology exists and can be a solution to illegal telemarketing. The NAAG has requested the FCC to advise what legal and/or regulatory prohibitions, if any, prevent telephone carriers from implementing call-blocking technology such as NoMoRobo, Call Control, and Telemarketing Guard.

If the FCC decides that carriers can legally use this technology to block unwanted marketing calls, it will be very harmful for the call center industry. The belief is that the FCC will respond given that the request is signed by the majority of the country’s attorneys general. We will monitor this issue for the FCC’s response.

VPA Annual Member Dues Reminder

As a nationwide trade association committed to promoting fair business practices throughout the VSC industry, the VPA aims to equip its members with the tools and information needed to maintain regulatory compliance. Over the past couple of years we’ve seen steady growth in the VPA, and during this past year made progress in the following areas:

  • With over 65 current members, we have a higher number of members than ever before;
  • In March we had a very successful Administrator’s Council meeting providing guidelines for cancels and refunds;
  • Our Annual Meeting in St. Louis this year attracted more attendees than last year in Las Vegas, and brought together state and federal regulators who provided useful tips on compliance;
  • We had our 1st webinar in a series (which will continue into next year), and has been embedded for referral on the website;
  • We had every significant Administrator come to St. Louis in August for our 2nd Admin Council of the year, and conducted an open forum for discussion with attendees; with the combined effort of many Admins we distributed documents that can be used for applications and due diligence forms in vetting new partners;
  • Investigated violations of the VPA Standards of Conduct which resulted in 2 members being expelled this year, and another member being decertified; other investigations are ongoing;
  • Established significant relationships with Democratic and Republican Attorneys General and their staff attempting to set up an early warning system related to consumer complaints;
  • The Call Monitoring Program has grown over 100% in call centers contacted for evaluations (up to 80 per month); and the Board has begun the process of retrieving random cancel/refund customer service calls as well.

VPA membership has many benefits, which you can see at the VPA website, but most notably it assures customers that your organization is dedicated to ethical business practices.

Annual membership dues for 2015 are $2,000 per year and due from all members by Dec. 31, 2014. Membership renewal forms are available on the VPA website. Annual dues not received by Dec. 31, 2014 will be considered delinquent and the membership will be cancelled.

Please direct questions to Jessica at assistant@vpannet.org, or Chris at chris@vpanet.org.

BPA Quality Call Monitoring Process Reminder

With the help of BPA Quality, we’ve been able to make great strides with our Call Monitoring program, increasing our contact ratio over 100%. As a reminder, participation in the Call Monitoring program is required by VPA Standards of Conduct.

Each month the VPA selects 5 random calls from each call center to evaluate and assess compliance based on VPA Standards of Conduct. Call centers then upload their recorded calls to the BPA Quality portal. If they don’t respond within the prescribed time period, they will receive a failure. Additionally, failing to upload calls or provide the calls requested will also result in failure.

Starting January 1, 2015, the Board of Directors has voted to publish the results of the scores.

Contact Chris at chris@vpanet.org with any questions.

Precise Enterprises, LLC. Expelled from VPA

The VPA is committed to promoting regulatory transparency, education and accountability compliance in the marketing and servicing of vehicle service contracts. As such, the VPA conducted an investigation of Precise Enterprises, LLC, d/b/a Precise Auto Protection for alleged violations of the VPA Standards of Conduct for not complying with regulations regarding Do Not Call registries. During this time, Precise failed to fully cooperate with the VPA and consequently, the Board voted to expel Precise from membership in the VPA. .