Colorado CUs Collectively Refund Millions in GAP Fees to More Than 22,000 Members

Three Colorado credit unions have collectively refunded more than $6 million in guaranteed automobile protection fees to 22,318 members following an ongoing state investigation, Colorado Attorney General Phil Weiser in Denver said.

Weiser said last week that the $8.7 billion Ent Credit Union in Colorado Springs, the $1.5 billion Premier Members Credit Union in Boulder and the $1.1 billion Credit Union of Denver in Lakewood distributed the refunds after allegedly failing to return GAP fees to members.

Ent made 19,011 refunds to members totaling more than $5.16 million, PMCU refunded $792,873 to 2,563 members and Credit Union of Denver refunded $122,022 to 744 members, according to state authorities.

In each of their settlements with the state, however, the credit unions did not admit to any fault or liability. Nonetheless, in lieu of a monetary penalty, each credit union agreed to pay $30,000, for a total of $90,000, to reimburse the Attorney General’s costs of investigating the GAP consumer violations.

“It was identified in 2020 that, in some circumstances, premiums associated with GAP insurance were ‘unearned’ relative to the associated loans for certain members. At that time, Ent promptly disbursed checks to these members in order to return those unearned premiums to them as quickly as possible,” Casey Perkins, Ent’s vice president of consumer lending, said in a prepared statement. “We have implemented processes to ensure that, in similar instances moving forward, unearned premiums will be returned to our members in a timely fashion. Currently, we are contacting these affected members a final time regarding the return of unearned GAP premiums to insure that they received their check and to answer any additional questions they may have regarding the returned premiums they received in 2020.”

Premier Members Credit Union CEO Carlos Pacheco said in a prepared statement: “Premier Members Credit Union was glad to be able to work with the Colorado Attorney General’s office to review the process, procedures and actions that had taken place dating back to mid-2020.”

Credit Union of Denver did not respond to CU Times‘ requests for comment.

GAP is an add-on product sold 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 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. 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.

To date, the attorney general has secured nearly $19 million for consumers from GAP investigations, including more than $9.5 million from Wells Fargo and $1.68 million from BBVA USA (formerly known as Compass Bank).