Companies fail to pay full GAP benefits in series of settlements in restitution for 3,550 vehicle owners
Denver—Attorney General Phil Weiser has announced that his office secured a series of settlements with more than $2.87 million in restitution for 3,550 Colorado vehicle owners. These consumers were entitled restitution because they did not receive their full guaranteed automobile protection (GAP) benefits under Colorado law.
GAP is an optional benefit offered 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.
Colorado law ensures that consumers receive their buyer protection in full, and only allows creditors to deduct from this benefit a handful of items such as missed payments, late fees, or returned check fees. An investigation by the Colorado Department of Law revealed that GAP administrators did not always pay full coverage owed to consumers under Colorado law.
“We are committed to ensuring hardworking Coloradans receive the full GAP benefits they are entitled to,” said Weiser. “Our department will continue to protect consumers by holding accountable institutions that fail to fully pay the amounts owed for GAP coverage or keep charging GAP coverage after a vehicle is already paid off.”
The attorney general reached the following settlements with four of the largest GAP administrators operating in Colorado:
- Safe-Guard International Products, Inc. ($1,030,076.53)
- Jim Moran & Associates, Inc. ($1,655,124.78)
- Norman & Co., Inc. ($120,886.38)
- National Auto Care Corporation ($64,036.56)
The attorney general previously settled with American Assurance Corporation, which voluntarily reported the issue to this office.
In addition to restitution, Safe-Guard paid the department $100,000 for attorneys’ fees and costs, restitution, for future consumer or creditor educational purposes, for future consumer credit or consumer protection enforcement, or public welfare purposes.
In September 2022, the administrator of the Uniform Consumer Credit Code, who is part of the department, issued guidance on GAP in light of these ongoing compliance issues.
These are the latest settlements that are related to Attorney General Weiser’s broader efforts on GAP, which have resulted in total refunds to consumers of $23.5 million. Learn more about the Colorado Department of Law’s work to secure GAP refunds owed to consumers.
Borrowers who are having issues with their loan or lender can file a complaint with the department.