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SF 2505

A bill for an act relating to licensing of service companies, motor vehicle service contracts, and residential service contracts, and providing civil penalties and including effective date provisions.

2025-2026 Regular Session

S.F. 2505 strengthens Iowa licensing by clarifying grounds to suspend or revoke service contractor licenses, targeting misrepresentation, financial misconduct, and dishonesty by ow

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Bill Summary · SF 2505

Summary of Bill: S.F. 2505 (Session 2025-2026) — Iowa

Purpose and intent

S.F. 2505 concerns licensing of service companies, motor vehicle service contracts, and residential service contracts. The bill sets grounds for license suspension or revocation, outlines penalties, and includes effective date provisions. The underlying aim is to strengthen regulatory oversight of service companies and to protect consumers from practices that jeopardize financial integrity or mislead customers.

Key provisions and changes

  • Grounds for license action (grounds for suspension/revocation): The bill enumerates a detailed list of circumstances under which a service company’s license may be suspended or revoked by the commissioner. Major categories include:

    • Repeated or frequent refusal to perform services, or negligent/incompetent performance, indicating poor business practices.
    • Violations of existing licensing statutes (e.g., section 523C.13).
    • Failure to demonstrate financial responsibility (see section 523C.5, if applicable).
    • Failure to maintain a corporate certificate of good standing (section 523C.3, subsection 1).
    • Providing incorrect, misleading, incomplete, or materially untrue information on the license application.
    • Obtaining or attempting to obtain a license through misrepresentation or fraud.
    • Improper withholding, misappropriation, or conversion of money or property received in the course of business as a service company.
    • Intentionally misrepresenting terms of an actual or proposed service contract.
    • Criminal convictions within the ten years prior for offenses related to securities, commodities, investments, franchises, insurance, banking, or finance (for owners with >10% stake, officers, or directors directly responsible for the business).
    • Convictions involving dishonesty, false statements, fraud, theft, misappropriation of funds, falsification of documents, deceptive acts or practices, or related offenses (for owners with >10% stake, officers, or directors directly responsible for the business).

  • Administrative scope: The grounds cover owners, officers, or directors with substantial control (>10% ownership or direct responsibility) who are implicated in disqualifying criminal conduct.

Who is affected

  • Service companies that license and operate under the regulatory framework covered by Iowa’s service contract statutes.
  • Owners, officers, and directors of service companies who hold more than 10% ownership or have direct responsibility for the business.
  • Consumers who purchase or rely on service contracts (motor vehicle and residential service contracts) may benefit from clearer license actions and improved enforcement of responsible business practices.
  • Regulatory authority (the Commissioner) is empowered to suspend or revoke licenses based on the enumerated grounds and to enforce compliance.

Procedural and timeline aspects

  • Action history: The bill was introduced on May 1, 2026, and advanced to the Ways and Means calendar. A committee report on the same date indicates approval and movement through the legislative process.
  • Effective date provisions: The summary notes the bill includes effective date provisions, but explicit dates are not provided in the text excerpt. Typically, such provisions define when the licensing changes become effective (e.g., upon enactment or a future date).

Practical impact

  • Strengthened regulator oversight with clearer grounds for license denial, suspension, or revocation.
  • Increased accountability for individuals in leadership roles with substantial control over service companies.
  • Potentially higher compliance standards for license applicants and ongoing operations.
  • Possible impact on license processing times and regulatory enforcement actions as authorities apply the listed grounds.

If you’d like, I can tailor this summary to highlight potential financial or consumer protection implications, or compare with existing Iowa licensing provisions for service contracts.

Compiled from official sources — confirm details with the bill’s official record.

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