Bill 740

                    Current Status

Bill Number:               740
Ratification Number:       465
Act Number:                400
Introducing Body:          Senate
Subject:                   Regulate motor club services

(A400, R465, S740)

AN ACT TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING CHAPTER 50 TO TITLE 38, SO AS TO REGULATE MOTOR CLUB SERVICES AND TO PROVIDE PENALTIES FOR VIOLATIONS.

Be it enacted by the General Assembly of the State of South Carolina:

Motor Club Services Act

SECTION 1. The 1976 Code is amended by adding to Title 38:

"CHAPTER 50

Motor Club Services Act

Section 38-50-10. This chapter may be cited as the 'Motor Club Services Act'.

Section 38-50-20. As used in this chapter:

(a) 'Club' means any person presently or hereafter engaged in selling, furnishing, or making available to members, either as principal or agent, motor club services.

(b) 'Club representative' means any individual in this State designated by the club who acts or aids in any manner in the solicitation, negotiation, or renewal of service contracts. This definition does not include any individual performing only work of a clerical nature in the office of a club or providing an application to a potential club member.

(c) 'Commissioner' means the Administrator of the Department of Consumer Affairs.

(d) 'Insurance service' means any act by a club to sell or furnish to a member insurance benefits including, but not limited to, accidental injury and death benefits when such insurance is issued only by an insurance company duly authorized to do business in this State.

(e) 'Motor club service' means the rendering, furnishing or procuring of, or reimbursement for any of the following: towing service, bail and arrest bond service, emergency road service, claim adjustment service, legal service, theft service, map service, emergency travel expense service, community traffic safety service, license service, merchandise and discount service, travel, touring, and travel information service, guaranteed hotel/motel rates service, new car pricing service, financial service, check cashing service, personal property registration service, credit card service, insurance service as defined herein, and buying and selling service to any member of the club.

(f) 'Service contract' means any written agreement whereby any club, for a consideration, promises to render, furnish, or procure for any member a motor club service.

Section 38-50-30. A club may not render or agree to render a motor club service without first depositing and thereafter continuously maintaining the amount of fifty thousand dollars in cash or securities approved by the Commissioner, or in lieu thereof, a bond in the amount of fifty thousand dollars executed by a surety company authorized by the laws of this State to transact business within this State. The bond must be executed to the State of South Carolina and must be for the use of the State and for any members who may have a cause of action against the club.

Section 38-50-40. Such security must:

(a) Be for the protection, use, and benefit of all persons whose applications for membership in a motor club have been accepted by the clubs or its representatives.

(b) Assure that the club shall faithfully furnish and render to members any and all of the motor club services furnished, sold, or offered for sale by it.

(c) Assure that the club shall comply with and abide by all the provisions of this chapter and all the regulations of the Commissioner prescribed, published, adopted, and promulgated under authority of this chapter.

(d) Assure that the club shall pay all fines and penalties that may become due to the State from the club and by virtue of the provisions of this chapter.

Section 38-50-50. If any member is defrauded or aggrieved by any misconduct, wrongful act, misrepresentation, failure of the club to render its services or fulfill its contractual obligations, the member may bring suit on such security in his or her own name, but the aggregate liability of the surety for all suits may, in no event, exceed the amount of the bond.

Section 38-50-60. The name of the club must be submitted to the Commissioner with its application for a certificate of authority and the Commissioner must approve any names so submitted unless the proposed name is deceptively similar to that of any other club licensed or qualified to do business in this State or unless the name is likely to confuse or mislead the public.

Section 38-50-70. (a) No club may offer, issue, or renew a motor club service contract in this State without first obtaining from the Commissioner a certificate of authority so to act. A certificate of authority must be issued by the Commissioner to the club upon submission of items (1) through (6) of this section in a form satisfactory to the Commissioner. The applicant must submit:

(1) A formal application for the certificate in such form and detail as the Commissioner requires, executed under oath by its president and secretary or two other principal officers of the club or other persons as the Commissioner may require.

(2) A certified copy of its charter or articles of incorporation and its by-laws, if any.

(3) If a corporation, a certified copy of the certificate of authority or good standing certificate from the Secretary of State.

(4) A copy of its most recent financial statement prepared in accordance with generally accepted accounting principles and certified by two principal officers of the applicant or in the event the applicant is not a corporation, other persons as the Commissioner may require.

(5) An explanation of its plan of doing business and copies of the following:

(i) Its application for membership;

(ii) The proposed membership certificate or identification card and any proposed addendum thereto;

(iii) Any individual insurance policy or group certificate to be offered; and

(iv) Any service contract to be issued.

(6) Any other relevant information requested by the Commissioner.

(b) No certificate of authority may be issued by the Commissioner until the club has paid an initial certificate of authority fee of five hundred dollars.

Section 38-50-80. Certificates of authority issued hereunder are permanent unless revoked or suspended as provided in this chapter. No certificate of authority may be renewed by the Commissioner until the club has:

(a) Paid an annual certificate of authority renewal fee of five hundred dollars on or before October thirty-first.

(b) Filed a copy of its most recent financial statement prepared in accordance with generally accepted accounting principles and certified by two principal officers of the club or in the event the applicant is not a corporation, other persons as the Commissioner may require.

Section 38-50-90. (a) Serving of process in any action, rule, order, or legal proceeding may be made on any club not domiciled in this State having a certificate of authority to transact business in this State by mailing two copies of the process to the Commissioner by registered or certified mail. One copy, certified by the Commissioner or his deputy as having been served upon him, is considered sufficient evidence, and service upon the Commissioner or his deputy as attorney is considered valid service upon the club.

(b) When legal process is served upon the Commissioner as attorney for a club not domiciled in this State, he must forthwith forward one of the duplicate copies of the process served on him to the club. The Commissioner must give immediate notice of process to the club by telephone. As a condition of valid and effective service and of the duty of the Commissioner in the premises, the plaintiff in each process must pay to the Commissioner, at the time of service, the sum of ten dollars, which the plaintiff may recover as taxable costs in the case if he prevails in the suit. The Commissioner must keep a record of all processes, which must show the day and hour of service and where and by whom served.

Section 38-50-100. The Commissioner may order the club to cease and desist, or may revoke, suspend, or refuse to continue the certificate of authority of a club, whenever after a hearing and for cause shown, he determines that the club:

(a) Has violated or failed to comply with any provisions of this chapter or regulations promulgated under authority of this chapter.

(b) Has obtained a certificate of authority through wilful misrepresentation or fraud.

(c) Has engaged in fraudulent or deceptive practices.

(d) Has wilfully, orally or in writing, misrepresented the terms, benefits, privileges, and provisions of any service contract issued or to be issued by it or any other club.

(e) Is unable to meet its obligations as determined by generally accepted accounting principles.

(f) Has, after notice to the club of an alleged occurrence of any of items (a) through (e), of this section, refused without just cause to submit relevant information to the Commissioner with respect to the motor club services within this State.

Section 38-50-110. No service contract may be issued or delivered in this State unless it contains the following:

(a) The exact corporation or other name of the club.

(b) The exact location of its home office or any business office to which inquiries may be made.

(c) The motor club services contracted for.

(d) The territory wherein motor club services contracted for are to be rendered.

(e) The duration of such service contract.

Section 38-50-120. (a) No individual may act as a club representative in this State without the club having registered the individual with the Commissioner within thirty days of the date of designation as a club representative. Registration as a club representative must be made to the Commissioner upon forms prescribed and furnished by him. The registration must be permanent, subject to revocation or suspension as provided in this chapter.

(b) The club representative shall furnish information concerning his identity, business address, personal history, business experience, and other information that the Commissioner deems pertinent and germane. A club representative must:

(1) Be at least eighteen years of age.

(2) Be trustworthy persons of good repute.

(3) Have received training from the club or have otherwise qualified by experience in the business of clubs rendering motor club services.

(c) Any wilful misrepresentation of any information required to be disclosed in any registration is subject to the sanctions provided for in this chapter.

(d) Upon termination of any club representative's authority to act on behalf of the club, the club must notify the Commissioner in writing within thirty days of termination.

(e) The fee to be paid to the Commissioner at the time registration is made and annually on or before April thirtieth for the renewal, must be ten dollars.

Section 38-50-130. Upon satisfactory evidence that a club representative has violated or failed to comply with any provision of this chapter or regulation promulgated under authority of this chapter, the Commissioner may issue an order requiring the club representative to cease and desist from engaging in such violation, or may revoke or suspend the club representative's authority.

Section 38-50-140. No club may make reference to its certificate of authority or approval from the Commissioner or the State in advertising, circular, contract, or a membership card; nor may it advertise or describe its services in a manner as would lead the public to believe that it is an insurance company, association, or exchange.

Section 38-50-150. The offering of motor club services is subject solely and exclusively to the provisions of this chapter and the offering of services by any authorized club is not considered transacting business as an insurance company, association, or exchange, except as otherwise provided herein.

Section 38-50-160. The Commissioner shall administer this chapter and may promulgate regulations, subject to the Administrative Procedures Act, necessary to carry out its provisions.

Section 38-50-170. Any person who violates the provisions of this chapter is guilty of a misdemeanor, and upon conviction, must be punished by a fine of not more than five hundred dollars, or by imprisonment for not more than three months, or by both.

Section 38-50-180. A club representative is not required to be a licensed insurance agent in connection with the sale of accidental injury and death benefits or other insurance covering a motor club service, which are issued in conjunction with and as a part of a motor club service contract but must be licensed to sell any other type of insurance.

Section 38-50-190. Nothing contained in this chapter prohibits a club from offering services which augment or are incidental to any service offered by the club or any other services which are of assistance and are beneficial to members and are feasible for the club to render.

Section 38-50-200. Any person who brings a civil suit for damages suffered because of any violation of any provision of this chapter, or any regulation promulgated by its authority, and who prevails in such suit, may be awarded reasonable attorneys fees."

Time effective

SECTION 2. This act shall take effect one hundred twenty days after approval by the Governor.