W. Va. Code R. § 142-13-3 - Surety Bond, Letter of Credit, and Alternatives

3.1. Except as hereinafter provided, each health spa registering to do business in this state shall post a surety bond or letter of credit in the amount of fifty thousand dollars, or the equivalent in cash or marketable securities, with the attorney general. The form of bond and letter of credit shall be designated by the attorney general. No surety bond shall be accepted for filing unless it is with a surety company authorized to do business in this state, and no letter of credit shall be accepted for filing unless it is from a bank insured by the Federal Deposit Insurance Corporation. The surety may cancel the bond at any time upon giving thirty days prior written notice to the attorney general. The letter of credit shall not be cancelled or terminated except with the consent of the attorney general. The bond or letter of credit shall be in favor of the State of West Virginia and shall cover only claims by consumers for prorated refunds of monies tendered in advance for membership in a health spa which subsequently closes or is otherwise unable to provide services for the full period of time paid by the consumer.

3.2. A health spa is not required to post a surety bond, letter of credit or other indicator of financial security under this section if it charges an application fee, initiation fee, or other initial charge no higher than twenty-five dollars, and either (a) limits its sale of long-term contracts to no longer than three (3) months, or (b) agrees to require advance payment of no more than one-third of the full purchase price of contracts longer than three (3) months and accepts monthly payments for the balance of the contract period spread out equally over the rest of the contract period.

3.3. A health spa is required to send the attorney general's consumer protection division a letter thirty (30) days prior to opening indicating how it plans to comply with the options offered under this section.

3.4. The provision of this section shall not apply to health spas otherwise covered by this rule that have operated in this state for a continuous period of three (3) years or longer in the same market location and with the same principals, officers, or corporate identity including subsidiary. For purposes of this section, "operated in this state" does not include periods of pre-opening sales of membership; but, rather, only periods when the health spa is open and providing services to members.

Notes

W. Va. Code R. § 142-13-3