More than 50,000 Colorado residents were awarded over $9.5 million by Wells Fargo as part of a settlement regarding unfairly withheld guaranteed automobile protection (GAP) insurance fees.
Attorney General Phil Weiser announced the results of the multi-state settlement Wednesday in celebration of National Consumer Protection Week.
“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 will continue to demand compliance.”
GAP is often sold to buyers who finance vehicles. If a financed vehicle is totaled in an accident, insurance typically covers the fair market value which can be less than the amount owed.
In this situation, GAP would cancel or pay off the remaining balance owed on the loan.
If the borrower pays off the loan early or gets the vehicle repossessed before the loan is paid, state law requires that the borrower be refunded for the unearned portion of the GAP fee.
In 2018, Colorado and multiple other states learned that Wells Fargo had not been refunding those unearned GAP fees to customers.
The states entered a settlement with Wells Fargo in December 2018 that required the bank refund withheld fees collected between June 1, 2008 and July 19, 2018. Wells Fargo completed the $82.4 million of refunds on Dec. 28, 2020.
Weiser is also pursuing class action lawsuits to ensure that Wells Fargo and other institutions comply with the law. The cases could provide additional financial relief to Coloradans.