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F&I lobbyists seek easier state rules for wide range of products

Jim Henry is a special correspondent for Automotive News

F&I industry lobbyists have been pretty successful advocating a “model act” in state legislatures governing the sale of extended-service contracts. So the next move is to take a similar approach for other F&I products, such as GAP policies and tire-and-wheel plans.

That’s according to lawyers for the Service Contract Industry Council and the Guaranteed Asset Protection Alliance, which are both represented by the same law firm, Blank & Meenan of Tallahassee, Fla. Nikki Munro, a lawyer for Hudson Cook, a Washington, D.C.-area law firm that represents many dealers and auto lenders, recently voiced a similar opinion.

This isn’t just an academic exercise for state dealer associations. In Ohio, for instance, some lenders wouldn’t allow dealerships to include the cost of GAP in the vehicle finance contract because GAP fees occupied a legal gray area under state law.

A new Ohio state law that takes effect this month allows dealerships to include GAP fees in the finance contract. That’s a major selling point for retailers. The Ohio Automobile Dealers Association supported the change.

According to Blank & Meenan, 37 states have adopted some version of its model act. A key point is that states shouldn’t regulate extended-service contracts the same way as auto insurance. That is, dealerships shouldn’t need a license to sell insurance in order to sell extended-service contracts, and pricing shouldn’t be tightly regulated.

In a similar way, dealer advocates are turning their attention to clarifying the legal status of other F&I products.

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