S.B. No. 1199
 
 
 
 
AN ACT
  relating to service contract providers.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Section 1304.003, Occupations Code, is amended
  by amending Subsection (a) and adding Subsection (e) to read as
  follows:
         (a)  In this chapter:
               (1)  "Identity recovery" means a process, through a
  limited power of attorney and the assistance of an identity
  recovery expert, that returns the identity of an identity theft
  victim to pre-identity theft event status.
               (2)  "Service contract" means an agreement that is
  entered into for a separately stated consideration and for a
  specified term under which a provider agrees to:
                     (A)  repair, replace, or maintain a product, or
  provide indemnification for the repair, replacement, or
  maintenance of a product, for operational or structural failure or
  damage caused by a defect in materials or workmanship or by normal
  wear; [or]
                     (B)  provide identity recovery, if the service
  contract is financed under Chapter 348 or 353, Finance Code; or
                     (C)  provide compensation to the buyer of a
  vehicle on the total constructive loss under a depreciation benefit
  optional member program.
               (3)  "Depreciation benefit optional member program"
  means a service contract financed under Chapter 348 or 353, Finance
  Code, that pays to the buyer, as a credit toward the purchase of a
  replacement vehicle at a participating dealer, an amount less than
  or equal to the difference between the purchase price and actual
  cash value for a total constructive loss.
         (e)  A service contract described by Subsection (a)(2)(C):
               (1)  may not be required as a condition of approval of a
  loan for the purchase of a vehicle;
               (2)  may not be offered by a dealer who requires a loan
  for the purchase of a vehicle to be financed exclusively with the
  dealer;
               (3)  may be canceled by the buyer not later than the
  30th day after a buyer enters into the contract, without a penalty;
               (4)  may be canceled by the buyer later than the 30th
  day after a buyer enters into the contract, with a pro rata refund
  to be provided to the buyer; and
               (5)  may only charge a fee that is reasonable in
  relation to the benefit provided by the service contract.
         SECTION 2.  The changes in law made by this Act apply only to
  a depreciation benefit optional member program service contract
  entered into or renewed on or after the effective date of this Act.  
  A depreciation benefit optional member program service contract
  entered into or renewed before the effective date of this Act is
  governed by the law in effect immediately before the effective date
  of this Act, and that law is continued in effect for that purpose.
         SECTION 3.  This Act takes effect September 1, 2017.
 
 
 
 
 
  ______________________________ ______________________________
     President of the Senate Speaker of the House     
 
         I hereby certify that S.B. No. 1199 passed the Senate on
  April 26, 2017, by the following vote:  Yeas 31, Nays 0.
 
 
  ______________________________
  Secretary of the Senate    
 
         I hereby certify that S.B. No. 1199 passed the House on
  May 19, 2017, by the following vote:  Yeas 144, Nays 0, two
  present not voting.
 
 
  ______________________________
  Chief Clerk of the House   
 
 
 
  Approved:
 
  ______________________________ 
              Date
 
 
  ______________________________ 
            Governor