Do You Get a GAP Insurance Refund if You Pay Your Car Off Early?

Recently, Wells Fargo has been at the center of a new controversy. Some consumers claim that the major bank has failed to pay a GAP insurance refund after customers have ended their car loan early. This has led to an ever-growing pile of complaints, as well as litigation.

Wells Fargo is responsible for a large amount of car loans, and tens of thousands of customers may have been affected by this latest controversy.

What is Wells Fargo GAP insurance?

Many banks offer something called gap insurance, which essentially pays the difference between the car’s value at the time it’s totaled/stolen and the balance of its loan/lease. “Gap” is actually an acronym that generally stands for “guaranteed asset protection.” Gap insurance is significantly different from regular car insurance, which generally covers only the current market value of the vehicle.

The Wells Fargo GAP program specifically stands for “Guaranteed Automobile Protection,” and as with these other gap insurance programs, Wells Fargo essentially agrees that if the insurance payout does not cover the customer’s outstanding loan balance, it will cancel whatever portion of the loan balance remains.

The GAP program involves the prepayment of GAP fees meant to last for the entire term of the loan, separate from the car payment. According to the Wells Fargo GAP agreement, customers that choose to cancel the GAP program prior to the loan term ending will receive a GAP insurance refund for GAP fees that went unused.

What is the Wells Fargo GAP Insurance Refund Controversy?

However, consumers claim that Wells Fargo does not actually reimburse customers by returning unused fees—unless the customer provides them a written cancellation notice. It’s quite possible that at this point, many consumers may have forgotten that they were entitled to receive reimbursement for these unused prepaid fees—or they never knew in the first place.

Have any GAP insurance refund lawsuits been filed?

In February 2018, attorneys for a group of fifteen plaintiffs filed a class action lawsuit against Wells Fargo, alleging that the bank refuses to offer a GAP insurance refund to customers who terminate their car loan early and no longer use the service.

The plaintiffs claim that they—as well as many others in a similar situation—have been denied reimbursement for unused prepaid GAP fees because they opted out of the program early.

Can I file a GAP insurance refund lawsuit?

Consumers took legal action over Wells Fargo GAP insurance fees and, in 2021, successfully reached a $500 million settlement in a class action lawsuit. Also in 2021, the company was ordered to pay over $40 million to resolve other mortgage issues.

If you had a Wells Fargo car loan and ended it early by paying it off, refinancing, or selling or trading the car, you may be able to participate in this class action lawsuit investigation. Please note that loans terminated because of a total loss or repossession are not eligible for participation.

The GAP Insurance Refund Lawsuit is Case No. 8:18-cv-00332, in the U.S. District Court for the Central District of California.

Join a Free Wells Fargo GAP Insurance Class Action Lawsuit Investigation

If you had an auto loan through Wells Fargo and you paid your loan off early or traded it in or sold your vehicle before your loan’s full term, you may be entitled to compensation.

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