Wells Fargo Class Action Lawsuit Says Bank Keeps GAP Fees

Wells Fargo faces a class action lawsuit alleging that they refuse to refund GAP fees to customers who no longer use the service.

A group of plaintiffs have filed a class action lawsuit against Wells Fargo and others claiming that they have been denied reimbursement of unearned GAP fees after opting out of the program.

The Wells Fargo “Guaranteed Automobile Protection” (GAP) plan is a debt cancellation service offered to customers who finance auto loans through Wells Fargo. With this service, Wells Fargo agrees to cancel the remaining loan balance if the customer’s car is totaled and the insurance payout does not cover the outstanding balance on the loan.

When a customer signs up for the GAP program, they prepay the GAP fees for the entire term of the loan. This sum is paid separately from any payment on the car. If a customer cancels the GAP program before the end of the loan term, they will allegedly receive the unused GAP fees back, according to the GAP Agreement provided by Wells Fargo.

If the loan is paid off or terminated early, the GAP protection is stopped because there is no longer a loan for the protection to apply to. Likewise, if the customer’s vehicle is repossessed, the GAP protection is stopped because there is no vehicle in the customer’s possession.

Despite these terms allegedly set forth by Wells Fargo in their program contacts, plaintiffs claim that Wells Fargo is not returning fees to customers unless the customer provides a written notice of cancellation. Instead, “Wells Fargo sits back and keeps the funds for itself knowing full well that consumers are usually unaware or forget they are entitled to refund of the unused portion of their prepaid GAP fees,” the Wells Fargo class action lawsuit alleges.

The plaintiffs argue that this practice violates the contract set forth by Wells Fargo under the initial GAP Agreement and violates various state consumer protection acts. “[Wells Fargo] breached their obligations under the GAP Agreements by failing to refund the unearned portion of the prepaid GAP fees after the early termination of the loan with Wells Fargo or repossession of their vehicle,” states the class action lawsuit.

The Wells Fargo GAP insurance class action lawsuit accuses the company of breach of contract, unjust enrichment, conversion, and violation of several state consumer protection acts.

The plaintiffs seek to represent a Class of people who purchased GAP and did not receive a refund of their unused GAP fees after early termination of their agreement. The plaintiffs seek a trial by jury, damages, attorney’s fees, and court costs.

The plaintiffs are represented by Jason Frank, Andrew Stolper, and Scott Sims of Frank Sims & Stolper LLP; Ivy Ngo, Franklin Azar, and Brian Hanlin of Franklin D. Azar & Associates PC; Charles Scaffer and Daniel Levin of Levin Sedran & Berman.

The Wells Fargo GAP Fees Class Action Lawsuit is Armando Herrera, et al. v. Wells Fargo Bank NA, et al., Case No. 8:18-cv-00332, in the U.S. District Court for the Central District of California.

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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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