§ 37-30-120 — Offering and sale of GAP waivers in state.

South Carolina § 37-30-120

• Jurisdiction: South Carolina
• Title 37: CONSUMER PROTECTION CODE
• Ch. 30: GUARANTEED ASSET PROTECTION

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(A) The offering and sale of GAP waivers in this State are subject to the provisions of this chapter. (B) GAP waivers, at the option of the creditor, may be sold for a single payment or may be offered with a monthly or periodic payment option. (C) Notwithstanding another provision of law, any cost to the borrower for a GAP waiver subject to the Truth in Lending Act, 15 U.S.C. 1601, and its implementing regulations, as amended, or subject to Title 37, is a permissible additional charge pursuant to Sections 37-2-202 and 37-3-202 that must be separately stated and is not to be considered a finance or credit service charge or interest. This subsection also applies to any bank or credit union offering a debt cancellation or debt suspension contract in compliance with 12 C.F.R. Part 37, or 12 C.F.R. Part 721, or any other federal law. (D) A motor vehicle dealer shall insure its GAP waiver obligations under a contractual liability or another insurance policy issued by an insurer. However, dealers of motor vehicles that are lessors on motor vehicles are not required to insure obligations related to GAP waivers on leased vehicles. (E) A GAP waiver must remain a part of the finance agreement upon its assignment, sale, or transfer by a creditor. (F) Neither the extension of credit, the term of credit, nor the term of the related motor vehicle sale or lease may be conditioned upon the purchase of a GAP waiver. (G) A creditor that offers a GAP waiver shall report the sale of and forward funds received on all waivers to the designated party, if any, as prescribed in an applicable administrative services agreement, contractual liability policy, other insurance policy, or other specified program documents. (H) Funds received or held by a creditor or manager and belonging to an insurer, creditor, or manager pursuant to the terms of a written agreement must be held by the creditor or manager in a fiduciary capacity. (I)(1) A creditor may not sell a GAP waiver unless the creditor reasonably believes that the borrower will be eligible for a benefit under the GAP waiver in the event of a covered total loss. In addition, a creditor may not sell a GAP waiver if: (a) the consumer, the credit terms including, but not limited to, cash price, automobile value, or amount financed, or the automobile used as collateral for the credit transaction do not qualify for or conflict with any restrictions or limitations of the GAP waiver conditions; or (b) the amount financed, less the cost of a GAP waiver, the cost of credit insurance, and the cost of service contracts is less than eighty percent of the manufacturer suggested retail price for a new vehicle or the National Automobile Dealers Association average retail value for a used vehicle. (2) A bona fide error resulting in a violation of this subsection will result in the GAP waiver being void and the borrower receiving a full refund of the purchase price of the waiver.

Legislative History

HISTORY: 2015 Act No. 31 (S.441), SECTION 2, eff June 1, 2015. Editor's Note 2015 Act No. 31, SECTION 3, provides as follows: "SECTION 3. This act takes effect upon approval by the Governor and applies to all GAP waivers which become effective one hundred eighty days after the effective date."