2024-06-Legislative Changes to S.C. Code Ann. Secs. 38-78-55, 37-6-120, 38-78-20, and 37-1-301 relating to Service Contracts.

South Carolina Department of Insurance Capitol Center 1201 Main Street, Suite 1000 Columbia, South Carolina 29201 _________________________ Mailing Address: P.O. Box 100105, Columbia, S.C. 29202-3105 Telephone: (803) 737-6160 HENRY MCMASTER Governor MICHAEL WISE Director BULLETIN NUMBER 2024-06 TO: All Service Contract Providers, Consumers, and Other Interested Persons FROM: Michael Wise Director RE: 2024 Legislative Changes to S.C. Code Ann. §§ 38-78-55, 37-6-120, 38-78-20, and 37-1-301 relating to Service Contracts. DATE: July 31, 2024 I. PURPOSE The purpose of this bulletin is to summarize changes made during the 2024 legislative session of the South Carolina General Assembly relating to service contracts. II. S.C. ACT NO. 159 Effective May 20, 2024, S.C. Act No. 159 amends South Carolina Code of Laws by adding S.C. Code Ann. §§ 38-78-55 and 37-6-120. The new Code sections provide that no automatic renewal provision in a service contract shall be enforceable against the contract holder unless the contract holder was presented written or electronic notification of that automatic renewal provision not less than thirty (30) days nor more than sixty (60) days before the cancellation deadline required by the automatic renewal provision. The notification must “conspicuously disclose” (1) that unless the service contract holder cancels the contract, the contract will automatically renew; (2) the amount that will be charged upon renewal; and (3) methods by which the service contract holder may obtain details of the automatic renewal provision and cancellation procedure. This last element must include a toll-free telephone number, electronic email address, a postal address if the seller directly bills the consumer, or another cost-effective, timely, and easy-to-use mechanism for cancellation. The Act also amends S.C. Code Ann. § 38-78-20 by defining “automatic renewal provision” and amends § 37-1-301 by defining automatic renewal provision and service contract. (See S.C. Act No. 159 of 2024.) S.C. Code Ann. § 38-78-20(18) states that "Automatic renewal provision" means a provision under which a service contract is renewed for a specified period of more than one month if the renewal causes the service contract to be in effect more than six months after the day of the initiation of the service contract. Such renewal is effective unless the consumer gives notice to the seller of the consumer's intention to terminate the service contract. This term does not include a contract renewal for services provided by a telecommunications carrier or its affiliate when either the carrier or the affiliate is regulated by the South Carolina Public Service Commission or the Federal Communications Commission. S.C. Code Ann. § 37-1-301(31) states that "Automatic renewal provision" means a provision under which a service contract is renewed for a specified period of more than one month if the renewal causes the service contract to be in effect more than six months after the day of the initiation of the service contract. Such renewal is effective unless the consumer gives notice to the seller of the consumer's intention to terminate the service contract. This term does not include a contract renewal for services provided by a telecommunications carrier or its affiliate when either the carrier or the affiliate is regulated by the South Carolina Public Service Commission or the Federal Communications Commission. This term also does not include a contract renewal for services provided by any broadband entity covered by Act 175 of 2020, known as the Broadband Accessibility Act. S.C. Code Ann. § 37-1-301(32) states that "Service contract" means a written contract for the performance of services over a fixed period of time or for a specified duration. This term does not include service contracts sold or offered for sale to persons other than a natural person or an individual for personal, family, or household purposes and does not include contracts for services provided by an entity incorporated under Chapter 49, Title 33. III. AMENDMENTS OR MODIFICATIONS TO SERVICE CONTRACTS Any amendment or modification to the terms or conditions of a service contract that a service contract provider has on file with the Department must be submitted to the Department for its review prior to use of the modified contract form. Please note that contract terms cannot be changed or modified midterm without the express written consent of the contract holder. QUESTIONS Questions about the content of this bulletin or any Service Contract Provider license should be directed to the Office of Specialty Licensing via telephone at (803) 737-3787 or by email at specialtylicensing@doi.sc.gov. Bulletins are the method by which the Director of Insurance formally communicates with persons and entities regulated by the Department. Bulletins are departmental interpretations of South Carolina insurance laws and regulations and provide guidance on the Department’s enforcement approach. Bulletins do not provide legal advice. Readers should consult applicable statutes and regulations or contact an attorney for legal advice or for additional information on the impact of that legislation on their specific situation.