Colorado borrowers receive over $9.5 million in multistate settlement with Wells Fargo
Topics: COLORADO WELLS FARGO
Guaranteed automobile protection (GAP) is often sold to car buyers who finance their purchase. If a buyer’s car is totaled in an accident, the buyer’s 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.
Borrowers pay the full GAP fee when they buy the car, but typically the lender only earns the fee gradually over the life of the loan. If the borrower pays off the loan early, or if the car is repossessed before the loan is paid off, Colorado law requires that the borrower receive a refund of the unearned portion of the GAP fee.
Through a multistate effort, Colorado learned that Wells Fargo historically had not been refunding unearned GAP fees owed to consumers in Colorado and other states.
“We are committed to protecting hard-working Coloradans, especially from deceptive and illegal practices that cause them significant stress, hardship, and financial losses,” Weiser said. “We are pleased to see this money returned and our message this National Consumer Protection Week is that we will continue demand compliance not only from Wells Fargo but other lending institutions in Colorado as well.”
Class action lawsuits are also underway that complement the attorney general’s efforts to ensure Wells Fargo and other institutions comply with the law. Those cases could provide additional financial relief to consumers in Colorado and address the type of conduct at issue.
Borrowers who believe they are owed a GAP fee refund because they paid off a car loan early, or had their car repossessed, should contact the Colorado Attorney General’s Office. ■