Red Rocks Credit Union GAP insurance refunds $394K class action settlement

Red Rocks Credit Union agreed to a nearly $394,000 settlement to resolve claims it failed to refund customers for GAP insurance refunds.

The settlement benefits consumers who had a loan with Red Rocks Credit Union with GAP protection in Colorado that was paid off early between Oct. 1, 2014, and July 1, 2020, but did not receive a GAP refund. The settlement does not include borrowers whose vehicles were repossessed by Red Rocks due to a failure to make loan payments.

Red Rocks Credit Union is a Colorado-based financial institution. The credit union offers a wide range of services including automotive loans and GAP insurance.

According to a class action lawsuit, Red Rocks Credit Union violated Colorado law by failing to refund customers for unused GAP coverage when they paid off their loans early. 

GAP insurance, which covers remaining balances when a car is declared a total loss, is financed in full when a customer secures an auto loan. When the customer pays off their loan early, they no longer need GAP insurance for the full term of the loan. According to the GAP insurance class action lawsuit, customers should be refunded for the unused portion of their GAP insurance.

Despite this, Red Rocks allegedly failed to refund its borrowers for the unused portion of their GAP insurance upon early payoffs. This allegedly violated Colorado law which requires refunds for “unearned” fees.

Red Rocks Credit Union hasn’t admitted any wrongdoing but agreed to resolve these allegations with a settlement of $393,522.10. This includes $81,254.26 in fees and expenses and a payment fund of $312,267.84. 

Under the terms of the settlement, class members can recover a payment from the fund. Each consumer is able to collect the full amount they should have been paid as a GAP refund. This amount will vary by class member, depending on their financing agreement and early payoff circumstances.

In addition to funding GAP refunds, Red Rocks has agreed to continue a new business practice it implemented after the lawsuit was filed. Under this policy, Red Rocks Credit Union ensures GAP refunds are paid to consumers in the case of an early payoff.

The deadline for exclusion and objection in the settlement is Aug. 4, 2022.

The final approval hearing for the deal is scheduled for Sept. 8, 2022.

No claim form is required to benefit from the settlement. Eligible class members will automatically receive their settlement payment in their Red Rocks Credit Union account or, for those without a Red Rocks account, through the mail as a check.

Who’s Eligible

The settlement benefits consumers who had a loan with Red Rocks Credit Union with GAP protection in Colorado that was paid off early between Oct. 1, 2014, and July 1, 2020, but did not receive a GAP refund. The settlement does not include borrowers whose vehicles were repossessed by Red Rocks due to a failure to make loan payments.

Potential Award

Varies

Proof of Purchase

No proof of purchase applicable

Exclusion and Objection Deadline

08/04/2022

Case Name

Saba Rael et. al v. Red Rocks Credit Union, Case No. 2020CV32226, in the District Court, Denver County, Colorado

Final Hearing

09/08/2022

Settlement Website

RRCUGapSettlement.com

Claims Administrator

RRCU GAP Settlement
c/o Atticus Administration
PO Box 64053
St. Paul, MN 55164
RRCUGapSettlement@atticusadmin.com
888-205-6166

Class Counsel

Jason M Frank
Scott H Sims
FRANK SIMS & STOLPER LLP

Franklin D Azar
FRANKLIN D AZAR & ASSOCIATES PC

Defense Counsel

Tamara A Seelman
John M Palmeri
Margaret Boehmer
GORDON REES SCULLY MANSUKHANI LLP