Ability Of Credit Unions To Sell Vehicle Service Contracts To Their Members
Generally, state-chartered credit unions must have specific authority under Mass. Gen. Laws chapter 171, or another provision of the General Laws, to perform any act or provide products or services for its members in connection with the business of the credit union. M.G.L. ch. 171 does not expressly permit credit unions to sell motor vehicle service contracts. Based upon a review of M. G. L. ch. 171 and the Division's Opinion # 96-153, a state-chartered credit union cannot engage in the business of selling motor vehicle service contracts to members in conjunction with vehicle financing or as a separate product. Additionally, vehicle service contracts may or may not be deemed to be an insurance product by the Commonwealth's Division of Insurance ("DOI"). If such service contracts are determined to be classified as an insurance product by the DOI, state-chartered credit unions would be restricted from selling such contracts since there is no law enabling them to do so.