Red Rocks Credit Union returns more than $300,000 in GAP refunds to Colorado consumers
June 23, 2022 (DENVER) – Attorney General Phil Weiser today announced that Red Rocks Credit Union refunded Coloradans more than $300,000 after the credit union failed to return money consumers were entitled to under state law for unearned guaranteed automobile protection premiums.
Guaranteed automobile protection (GAP) is an add-on product 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 that 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.
Red Rocks Credit Union reached a settlement with consumers in early 2022 and paid $312,267.84 to 1,328 consumers after the credit union failed to return GAP refunds from Oct. 1, 2014, to July 1, 2020. The credit union also agreed in the class-action settlement to pay 8% interest to consumers.
Red Rocks Credit Union was aware of the Colorado Department of Law’s ongoing GAP enforcement actions against other lending institutions and, before agreeing to the class-action settlement, sought an agreement with the department to release the credit union from any legal action if it paid full refunds plus interest to Colorado consumers.
“This settlement reflects our office’s efforts to ensure hardworking consumers are not cheated out of money, even by trusted lending institutions whose business practices must comply with Colorado law,” said Weiser. “Denying a consumer GAP refunds to which they are entitled is unfair and illegal.”
Going forward, the credit union will ensure that GAP refunds are made to all its customers as provided for under Colorado law. Today’s settlement also requires Red Rocks Credit Union to verify the refund totals and allows the department to audit the credit union anytime within the next 12 months to ensure accuracy and compliance with consumer protection laws.
The attorney general’s office has secured millions in GAP refunds for Colorado consumers, including more than $9.5 million from Wells Fargo, $1.68 million from BBVA USA (formerly known as Compass Bank), and more than $6 million from Ent Credit Union, Premier Members Credit Union, and Credit Union of Denver. To date, the attorney general has secured over $19 million for consumers in 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 various 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.