Two Denver-Area Credit Unions Agree to Refund Members $4 Million

Two more Colorado credit unions have been ordered to refund members for guaranteed automobile protection (GAP) fees on paid-off auto loans.

Canvas Credit Union of Lone Tree, Colo., 18 miles south of Denver ($4.2 billion, 295,103 members), has agreed to pay $2.6 million to members and Bellco Credit Union in Greenwood Village, 14 miles south of Denver ($7.1 billion, 358,564 members), has agreed to pay $1.4 million.

The action brought the number of settlements with credit unions to eight since 2021, together accounting for 72% of auto loans held by credit unions in Colorado last September. They have collectively agreed to refund $12.4 million. Average refunds to credit union members have ranged from $164 to $309 for the five where the number of refunds was provided.

Both credit unions denied violating Colorado consumer protection laws and contended they did not engage in any unfair or deceptive trade practices.

Attorney General Phil Weiser announced Jan. 4 that the Canvas and Bellco borrowers were owed a GAP fee refund because they paid off a car loan early or had their car repossessed and sold at auction from October 2018 to October 2021. The credit unions agreed to refund the amounts, plus pay $100,000 each to cover investigation costs.

“Bellco followed all applicable laws and denies any wrongdoing,” it said in a written response to CU Times. “As a not-for-profit credit union, it’s in our members’ best interest to settle with the Colorado Attorney General rather than continue to fight a costly lawsuit.”

Canvas said it was “working to implement the necessary practices to ensure we continually meet all evolving regulations. Doing everything in our power to support our members and their financial needs will always remain our top priority.”

Canvas’ written response said its purpose is “to help our members ‘afford life’ and grow stronger financially.”

“This commitment is unwavering and guides every step we take,” it said. “It is with this spirit that we are fully cooperating with the Colorado Attorney General’s office regarding the GAP fee refunds, as we share the common goal of protecting our members and their best interests.”

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 fee is only earned gradually over the life of the loan. If the borrower pays off the loan early, or if the car is repossessed and later sold at auction before the loan is paid off, Colorado law requires that the borrower receive a refund of the unearned portion of the GAP fee.

An investigation by the Consumer Protection Section in the Colorado Department of Law found that Bellco and Canvas historically were not refunding unearned GAP fees owed to consumers.

“When hardworking Coloradans pay for GAP coverage, they deserve to receive what they are owed,” Weiser said. “My office will continue to hold accountable companies that violate the law and leave Coloradans without the money they were due.”

According to the settlement, “Bellco and Canvas also agreed to refund GAP fees to borrowers in a timely manner in the future.”

Since 2021, the attorney general has secured $23.5 million in refunds from eight credit unions and two banks.

The largest settlement was with Wells Fargo, which agreed in 2021 to refund $9.5 million to 51,434 Coloradans. In total Wells Fargo agreed to refund $82.4 million, including payments in other states.

Canvas and Bellco are among the state’s three largest credit union auto lenders:

• The state’s largest car lender and the nation’s 24th largest is Ent Credit Union in Colorado Springs, Colo. ($9.6 billion in assets, 496,340 members), which agreed in March 2022 to refund $5.2 million to 19,011 members. It held $2.3 billion in car loans Sept. 30, up 17.1% from a year earlier.
• Canvas is the state’s second largest and the nation’s 35th largest with $1.9 billion in car loans Sept. 30, up 20.2% from a year earlier.
• Bellco is the state’s third largest and the nation’s 58th largest with $1.3 billion in car loans Sept. 30, up 15.7% from a year earlier.

The other five credit unions that reached settlements earlier were:

1. Air Academy Federal Credit Union, Colorado Springs, Colo. ($876.4 million in assets, 46,621 members), which agreed to refund $1.1 million to 4,943 members. It held $292.9 million in car loans Sept. 30, up 27% from a year earlier and ranking sixth in the state.

2. Westerra Credit Union, Denver, ($1.9 billion, 115,631 members), which agreed to refund $850,000 to 3,422 members. It held $237.9 million in car loans Sept. 30, up 42.9% from a year earlier and ranking ninth in the state.

3. Premier Members Credit Union, Boulder, Colo. ($1.7 billion, 79,326 members), which agreed to refund $792,873 to 2,563 members. It held $349.4 million in car loans Sept. 30, up 30.1% from a year earlier and ranking fifth in the state.

4. Red Rocks Credit Union, Littleton, Colo. ($350.2 million, 17,110 members), which agreed to refund $300,000 to 1,328 members. It held $41 million in car loans Sept. 30, down 2.1% from a year earlier and ranking 23rd in the state.

5. Credit Union of Denver, Lakewood, Colo. ($1.1 billion, 68,182 members), which agreed to refund $122,022 to 744 members. It held $253.2 million in car loans Sept. 30, up 8% from a year earlier and ranking eighth in the state.