Ongoing GAP insurance investigation leads to over $6.5 million in refunds for Colorado vehicle owners
Three credit unions distribute refunds after failing to return GAP fees
March 3, 2022 (DENVER)— Attorney General Phil Weiser today announced that, as a result of his office’s ongoing investigation of the auto-lending GAP market, Ent Credit Union, Premier Members Credit Union (PMCU), and Credit Union of Denver distributed refunds to Colorado borrowers after failing to return GAP fees to consumers.
Ent made 19,011 refunds to Coloradans totaling over $5.16 million, PMCU refunded $792,873 to 2,563 consumers, and Credit Union of Denver refunded $122,022 to 744 consumers.
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.
Investigations into Ent, PMCU, and Credit Union of Denver showed they neglected to refund unearned gap fees for many Colorado consumers. All three lenders agreed in their respective settlements to submit to additional auditing of their handling of GAP.
“Today’s settlements are part of our office’s efforts to ensure lending institutions follow Colorado law and do not cheat hardworking consumers out of money they are entitled to under their lending and coverage agreements,” said Weiser. “When a consumer purchases GAP coverage and their car is then totaled, paid off, or repossessed, withholding payments to which they are entitled is unfair and illegal.”
Click below to view the settlements:
The Attorney General’s Office has secured millions in GAP refunds for Colorado consumers, including more than $9.5 million from Wells Fargo and $1.68 million from BBVA USA (formerly known as Compass Bank). To date, the attorney general has secured nearly $19 million for consumers from GAP investigations.
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 addition 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.