Colorado Attorney General Phil Weiser recently announced that three Colorado-chartered credit unions had entered into Assurances of Discontinuance (AODs) with the Colorado Administrator of the Uniform Consumer Credit Code (UCCC) to resolve the issues between the Administrator and credit unions concerning whether the credit unions had failed to make refunds of unearned fees for Guaranteed Automobile Protection (GAP) as required by the Colorado UCCC. The credit unions that entered into the AODs are Ent Credit Union, Premier Members Credit Union, and Credit Union of Denver.
The GAP coverage in question was purchased by Colorado consumers who had entered into retail installment contracts (RICs) with auto dealers. The credit unions had purchased the RICs from the auto dealers. UCCC rules require the creditor to refund unearned GAP fees when a consumer prepays a consumer credit sale or consumer loan before maturity or the vehicle is no longer in the consumer’s possession due to the creditor’s lawful repossession and disposition of the collateral and no GAP claim has been made. The Administrator concluded that the three credit unions had engaged in unfair and deceptive trade practices under the Colorado Consumer Protection Act (CCPA) by failing to make the GAP refunds automatically without waiting for a request from the consumer.
The credit unions disputed that they had violated the CCPA. In the AODs, the credit unions represent that they have (1) changed their business procedures to assure that GAP refunds are paid without the need for a request from the consumer, and (2) paid GAP refunds as a result of self-audits in the amounts and to the number of consumers specified in the AODs. (According to the AODs, Ent paid approximately $5.16 million in refunds to 19,011 consumers, Premier Members paid $792,873 in refunds to 2,563 consumers, and Credit Union of Denver paid $122,022 in refunds to 744 consumers.)
Under the AODs, the credit unions agree to comply with the UCCC rule’s GAP refund requirements, be subject to an audit by the Administrator to verify the accuracy of their self-audits, and to send a confirmation letter pre-approved by the Administrator to each consumer to whom a GAP refund was paid as a result of the self-audits. The letter must state “that the Administrator has been in discussions with the [credit union] about Colorado law that requires creditors to refund unearned GAP premiums if consumers pay off their loans early or their car is repossessed.”
The Colorado AG has been very active in investigating companies to ensure that they are properly providing consumers with their full GAP benefits – with regard both to whether companies are giving consumers their full GAP coverage when a vehicle is totaled and whether companies are refunding GAP fees when a consumer sells a vehicle. Ballard Spahr attorneys have significant experience in dealing with the Colorado AG in matters involving these issues.