Delivering GAP Refunds Efficiently & Compliantly
Does your GAP (Guaranteed Asset Protection) refund process need an overhaul? In recent years, the scrutiny surrounding GAP refunds has intensified, with state and federal regulators making deeper inquiries into how these payments are calculated and disbursed. While dealers are typically responsible for refunding consumers upon early termination of their GAP contract, state regulators often hold lenders accountable for the accuracy and delivery of refunds.
With litigation on the rise, more lenders are proactively overseeing—or even taking over—the GAP refund process from start to finish. For both lenders and dealerships, switching to a managed refund provider such as Onbe can help streamline the payout process to improve refund accuracy and timeliness, making it simpler to stay compliant and ensure a satisfactory customer experience.
Fixing payment inefficiencies
Inefficiencies and errors in the disbursement process can lead to consumers receiving an incorrect GAP refund amount—or not getting their payment at all, due to mistakes such as an incorrect address on file. While lenders and dealers are responsible for calculating refunds in adherence with state law, having a streamlined payout process in place can help prevent errors at the point of disbursement and ensure the refund arrives on time. Using a modern solution automates manual tasks, saving time for your team to focus on the areas of the GAP refund process that require their expertise.
Switching from paper checks to digital choices can further simplify the GAP refund process. Mailed refund checks are easily misplaced, with a recent study by Onbe and NRG discovering that nearly one-third of consumers have accidentally thrown away a check. Uncashed checks create complexity for payment administrators because unclaimed GAP refunds must be escheated, a process strictly enforced by state regulators. With today’s modern solutions, payouts can be delivered digitally, with a physical payment mailed if the consumer doesn’t select a digital or electronic payment option—helping to reduce instances of unclaimed refunds.
Improving transparency and trust
Making the payout process more straightforward and convenient helps increase consumers’ trust, satisfaction, and willingness to take action to claim their refund. With clear communications at every step, recipients are less likely to be confused about who the payment is coming from and why they are receiving it.
Switching to a digital-led refund solution also enables communication about the payment via email, creating a digital paper trail that can help GAP administrators more easily track the receipt of each refund. Look for a payment provider that will be by your side if a regulatory investigation should arise, providing support with gathering the reports you need as proof of refund submission. Also ensure your provider has experience handling the escheatment process in compliance with state laws.
As the regulatory crackdowns continue, lenders and dealers are advised to take a proactive approach to clarifying their GAP refund responsibilities, addressing inefficiencies, and ensuring compliance. Offloading the payout process to a third party is one step toward helping the refund process go more smoothly for administrators while providing recipients with greater convenience and choice.
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