Colorado AG focuses on GAP refunds with $4M settlement

Colorado Attorney General Phil Weiser inked a $4 million settlement earlier this month with two Colorado-based credit unions for failing to properly refund borrowers on unearned guaranteed asset protection as his office continues to home in on auto lenders’ policies and practices. Denver-based Canvas Credit Union and Greenwood Village, Colo.-based Bellco Credit Union were the two auto lenders named for allegedly failing to provide borrowers with “timely” refunds of unearned GAP fees when loans were paid off early. Under state law, borrowers are entitled to a refund of unearned GAP fees financed over the life of the loan if the car is repossessed or the loan is paid off before it amortizes. Colorado state law places the obligation for the refund on the holder of the retail installment contract, John Redding, partner at international law firm Alston & Bird , told Auto Finance News . “We’ve seen a lot of class action activity primarily in Colorado and California around GAP refunds,” Redding said. “The Colorado AG does take this quite seriously and is willing to engage in investigations and has done before.” Early payoff refunds Notably, the credit unions were cited for not providing refunds upon early payment, Redding said. “When you read the [assurance of discontinuance] both were already making refunds where the vehicle was repossessed. The issue that was front and center… is only those instances where the consumer paid off early.” The $4 million settlement is the latest in a long line of action taken by Weiser’s office. Since 2019, the Colorado AG has recovered $18.2 million in GAP refunds for Colorado borrowers, according to his office’s website. Wells Fargo Auto paid $9.5 million in March 2021, BBVA paid $1.5 million in September 2021, and Air Academy Federal Credit Union paid $1 million in September 2021, among others. Weiser’s office did not immediately return requests for comment. The settlement is “further evidence of the need to really be aware of what the legal requirements are, ensure that you've got processes in place that match that, but then also making sure that you just have some process by which you can have a periodic check to make sure that what you're doing complies with the law on an ongoing basis,” Redding said. Auto Finance Summit East, Auto Finance News’ new spring event, kicks off May 10-12 at the JW Marriott Nashville featuring a fireside chat with Peter Muriungi, CEO of Chase Auto. Visit autofinance.live/afs-east .

Colorado AG focuses on GAP refunds with $4M settlement

Bellco and Canvas credit unions settled for failing to refund borrowers

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