1.  A service contract is void and a provider shall refund to the holder the purchase price of the service contract if the holder has not made a claim under the service contract and the holder returns the service contract to the provider:

(a) Within 20 days after the date the provider mails a copy of the service contract to the holder;

(b) Within 10 days after the purchaser receives a copy of the service contract if the provider furnishes the holder with the copy at the time the contract is purchased; or

(c) Within a longer period specified in the service contract.

2.  The right of a holder to return a service contract pursuant to this section applies only to the original purchaser of the service contract.

3.  A service contract must include a provision that clearly states the right of a holder to return a service contract pursuant to this section.

4.  The provider shall refund to the holder the purchase price of the service contract within 45 days after a service contract is returned pursuant to subsection 1. If the provider fails to refund the purchase price within that time, the provider shall pay the holder a penalty of 10 percent of the purchase price for each 30-day period or portion thereof that the refund and any accrued penalties remain unpaid.