June 16, 2017
On June 12, 2017, Maine Governor Paul LePage signed Public Law 2017, ch. 178 (LD 1506), An Act to Amend the Usage and Consumer Protections of Guaranteed Asset Protection Waivers (the "Gap Chapter"). The Gap Chapter clarifies that: (1) gap waivers are exempt from the Maine Insurance Code; (2) the sale and financing of gap waivers is permissible in Maine; and (3) the cost of the gap waiver is not a finance charge or interest as long as it is disclosed in compliance with the federal Truth in Lending Act. The Gap Chapter applies to both consumer-purpose retail installment sale contracts and direct loans made for the purchase of a motor vehicle and requires that dealers insure their waiver obligations under a CLIP or other insurance policy. In addition, the Gap Chapter states that the Superintendent of the Maine Bureau of Consumer Credit Protection and Maine Bureau of Financial Institutions "may require" a gap waiver administrator to file a notification under the Maine Consumer Credit Code and "may require" the filing of gap waivers in use by an administrator.
Among other things, gap waivers are required to disclose that the consumer may cancel the waiver within the 30-day free look period and that the consumer is entitled to a full refund of the purchase price as long as no waiver benefits have been provided. The gap waiver must also be cancellable after the free look period and the buyer is entitled to a pro rata refund of any unearned portion of the purchase price upon cancellation or early termination of the gap waiver. The Gap Chapter takes effect on January 1, 2018.