DENVER (KDVR) — Colorado Attorney General Phil Weiser helped Colorado borrowers in a major settlement with Wells Fargo, finding the big bank did not properly refund certain fees for a decade.
It involves guaranteed automobile protection (GAP) fees that happen when consumers finance their car purchase. If a buyer’s car is totaled in an accident, the insurance usually pays for the fair market value of the car, which can be less than the amount owed on the loan. That’s where GAP comes in, to cancel, or pay off, the remaining balance owed.
While borrowers pay the full GAP fee when they buy a car, they are entitled to a proportional refund of that fee if the loan is paid off early, under Colorado law.
Colorado and other states learned Wells Fargo had not been refunding unearned GAP fees 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.”
Colorado entered a settlement with Wells Fargo in December 2018, requiring the bank to refund certain consumers in cash or account credits. This applies to fees collected by Wells Fargo from June 1, 2008, to July 19, 2018.
Wells Fargo refunded $9,580,950.36 on 51,434 accounts to Colorado consumers, on top of paying back $84.2 million to consumers in other states.
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 at firstname.lastname@example.org, or file a complaint at https://coag.gov/file-complaint/credit-and-debt-complaint/.