On Friday, August 2, 2024, New Hampshire Governor Chris Sununu signed House Bill 1243 into law. The bill became effective immediately replacing Chapter 361-A (Retail Installment Sales of Motor Vehicles) in the New Hampshire Revised Statutes.
The lengthy law covers many aspects of the retail sales process, such as licensing, record keeping, reporting requirements, and examinations. It adds new, stricter consumer protection measures and makes the violation of any provision by other than a natural person a felony.
The immediate effective date, extensive new requirements, and harsh penalties have presented lenders and dealers operating in New Hampshire with significant compliance challenges.
Implications for Auto Lenders
In response to these concerns, the New Hampshire Banking Department has stated that they will “engage in outreach and education on HB 1243 until January 1, 2025.” Many of the difficulties relate to the retail sale of automobiles, rather than add-on products.
However, lenders financing the purchase of add-on products in New Hampshire should be aware of the cancellation and refund provisions in the newly rewritten chapter, which are presented below in full:
361-A:20 Requirements and Prohibitions as to Servicing
- VIII. (a) Within 21 calendar days of the date any ancillary product is canceled, unearned premium refunds received by the holder shall be credited to the final maturing installments of the contract except to the extent applied toward payment for similar ancillary product protecting the interests of the buyer and the holder or either of them.
- (b) In this section, the term “date any ancillary product is canceled” shall be the date that the buyer requests the cancellation or a triggering event of the completion of loan such as the payoff or totaling of the vehicle.
- (c) The holder of the contract shall provide written notice of such payment to any company that has issued an ancillary product contract the premium of which was financed as part of such retail installment contract. Such notice shall contain the date the retail installment contract was paid in full, the name and last known address of the buyer under the contract, and shall state that pursuant to RSA 361-A a refund by the insurer of any unused prepaid premium is due the buyer upon receipt of the notice. A copy of the notice shall be given to the buyer, or mailed to the buyer’s last known address
New Hampshire Banking Department FAQ
The New Hampshire Banking Department issued an FAQ related to RSA 361-A on August 16, then reissued the FAQ on August 26. One of the refund-related question is listed below:
Who is responsible for the refund contemplated in RSA 361-A:20, VIII(c)?
(c) Pursuant to RSA 361-A:20, VIII(c), in the event an ancillary product is cancelled or a triggering event occurs, the holder of the contract is required to provide notice to the provider of services under the ancillary product contract. The holder shall provide a copy of the notice to the buyer of the vehicle or shall mail the notice to the buyer’s last known address. The provider of services is then responsible for issuing any applicable refunds pursuant to the terms of the agreement.
In the FAQ preamble, the New Hampshire Banking Department cautions that its answers are “provided as informal guidance only” and that readers with “specific questions…should consult with a private attorney.”
Despite this attempt to assuage industry concerns with an FAQs, confusion about the law’s meaning—and doubts about the industry’s ability to timely comply—remain widespread.
The degree of industry worry is evidenced by the American Financial Services Commission’s choice to publish its Petition for Emergency Rule or Order online on August 29. The petition, which was sent to the New Hampshire Banking Commissioner on August 5, asks for enforcement of the law to be delayed until January 1, 2025.
F&I Sentinel expects that conversations surrounding the refund-related provisions in RSA 361-A will continue, and we will keep you apprised of the evolving conversation between industry groups and regulators.
The information provided in this post does not, and is not intended to, constitute legal advice; instead, all information, content, and materials referenced are for general informational purposes only. Readers should contact their attorney to obtain advice with respect to any particular legal matter.
