Westerra Credit Union refunds Colorado vehicle owners after failing to return unused GAP fees
Oct. 27, 2021 (DENVER)— Attorney General Phil Weiser announced that Westerra Credit Union is refunding Colorado borrowers after failing to return GAP fees to consumers.
Westerra provided $846,114.57 in refunds to 3,422 consumers in April of 2021 and agreed in this settlement to submit to additional auditing of its handling of GAP.
Guaranteed automobile protection (GAP) is an add-on product sold to car buyers who finance their purchase. If a buyer’s car is totaled in an accident, the buyer’s auto insurance typically pays only the fair market value of the car, which can be less than the amount owed on the buyer’s loan.
GAP applies in that situation to cancel, or pay off, the remaining balance owed on the loan. If a borrower pays off the loan early, or the car is repossessed before the loan is paid off, Colorado law requires that the lender automatically refund borrowers any unearned GAP payments—that is, funds that are not paying for any service of value to consumers.
The credit union also agreed to an audit by the Department of Law to ensure it has fully refunded consumers who were owed.
“Colorado GAP customers should trust their lending institutions to treat them fairly and abide by state law,” Weiser said. “Today’s settlement continues to demonstrate that we will hold lenders accountable for mistreating customers and ensure money is not withheld from hardworking Coloradans.”
Earlier this year, the department secured for Colorado consumers more than $9.5 million in refunds from Wells Fargo and $1.68 million from BBVA USA (formerly known as Compass Bank) for failure to return unused GAP fees and $121,983 from American Assurance Corporation related to GAP coverage overcharges.
The administrator of the Uniform Consumer Credit Code, who is part of the Consumer Protection Division of the Department of Law, is leading this investigation. In additional to enforcement activities, the administrator also licenses, regulates, and examines certain lenders and their contractors.
Borrowers who believe they are owed a GAP fee refund because they paid off a car loan early or did not receive a full benefit for GAP coverage can file a complaint here.