PRINTER'S NO. 854
No. 791 Session of 1999
INTRODUCED BY O'PAKE, BODACK, WAGNER, COSTA, MUSTO, BELAN,
STAPLETON, KASUNIC AND MELLOW, APRIL 12, 1999
REFERRED TO CONSUMER PROTECTION AND PROFESSIONAL LICENSURE,
APRIL 12, 1999
AN ACT
1 Amending the act of December 17, 1968 (P.L.1224, No.387),
2 entitled "An act prohibiting unfair methods of competition
3 and unfair or deceptive acts or practices in the conduct of
4 any trade or commerce, giving the Attorney General and
5 District Attorneys certain powers and duties and providing
6 penalties," further providing for a service assurance
7 agreement reserve account and penalties for noncompliance.
8 The General Assembly of the Commonwealth of Pennsylvania
9 hereby enacts as follows:
10 Section 1. The act of December 17, 1968 (P.L.1224, No.387),
11 known as the Unfair Trade Practices and Consumer Protection Law,
12 reenacted and amended November 24, 1976 (P.L.1166, No.260), is
13 amended by adding a section to read:
14 Section 7.1. Service Assurance Agreement Reserve Account.--
15 (a) During the term of a service assurance agreement, the
16 vendor shall place and maintain the purchase sum in an account
17 kept exclusively to pay for services that may be required under
18 such agreements, or shall obtain and/or maintain a financially
19 adequate prepaid service provision agreement. A reserve account
20 shall be funded and maintained monthly at an amount equal to the
1 actuarial risk. Not more than fifteen percent (15%) of the
2 amount contained in the account may be used each month for costs
3 of administering the service program.
4 (b) The purchaser of a service assurance agreement which is
5 not based on a prepaid service provision agreement shall hold a
6 secured interest in the reserve account equal to the service
7 assurance agreement purchase price.
8 (c) In addition to any other relevant provisions of law,
9 failing to maintain a reserve account or a prepaid service
10 provision agreement adequate to cover the actuarial risk is a
11 violation punishable by a fine of up to seven thousand five
12 hundred dollars ($7,500) per day when a failure extends for
13 three or more consecutive days or occurs for more than ten (10)
14 days in any one hundred eighty (180) day period.
15 (d) For the purposes of this section the following
16 definitions shall have the following meanings unless the context
17 clearly indicates otherwise:
18 "Actuarial risk" shall be the average monthly service cost
19 per agreement over the preceding two years multiplied by the
20 number of months remaining on the outstanding agreements issued
21 by the vendor after passage of this bill.
22 "Prepaid service provision agreement" shall be an agreement
23 between a vendor with a third party to provide services that may
24 be called for under service assurance agreements.
25 "Service assurance agreement" shall be an agreement between a
26 consumer and vendor to obtain services or warranty protection
27 for a definite time and set price.
28 Section 2. This act shall take effect in 60 days.
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