PNC Bank Fraudulently Kept Millions in Unearned GAP Fees, Class Action Lawsuit Claims

PNC Bank (PNC) unlawfully collects and keeps tens of millions of dollars of customer money each year in unearned GAP fees, a new class action lawsuit claims.

The nationwide class action was filed in Illinois district court Wednesday by lead Plaintiff Judith Jones alleging that PNC knowingly keeps customer GAP fees it is not entitled to.

New car owners often pay GAP fees for a GAP Waiver (which stands for Guaranteed Automobile Protection) when paying off a new vehicle. The waiver acts as a debt cancellation agreement that insures customers in the event they suffer a “total loss” of their vehicle and the actual cash value of their vehicle is worth less than the balance owed to the creditor, according to the class action lawsuit. 

If a car owner has a GAP Waiver on their sales contract the creditor will agree to waive the difference – known as the “GAP.”

GAP fees are paid monthly over the life of the finance agreement. If a customer pays off the balance of their car early, contract holders are left with “unearned GAP fees” that should be refunded to the customer, states the PNC class action.

Jones added a GAP Waiver to the 72-month finance agreement on her new car that cost $695 for the full-term of her contract, according to the claim. Her contract was then sold by the auto dealer to PNC, who became responsible for collecting payments.

However, Jones paid off her car within 64 months, eight months ahead of the contract’s end date.

According to the class action, PNC recorded the pay-off electronically and in writing, but failed to refund Jones her unearned GAP fees – totaling $91.32 excluding interest.

“PNC knows these fees have not been earned, and will never be earned, but nevertheless includes them in the payoff amount when the customer pays off their contract early,” states the class action.

“As a result of this practice, PNC routinely collects and keeps tens of millions of dollars of unearned money each year that rightfully belongs to its customers.”

Unearned PNC Gap Fees Unlawfully Kept

According to the class action, PNC keeps the unearned GAP fees, unless the customer affirmatively requests a refund, which rarely happens.

“PNC is continuing its fraudulent, unfair and unlawful practice of including unearned GAP fees in the total payoff amount and refusing to automatically issue a credit or refund of those fees to its customers upon an early payoff.”

Jones is suing for breach of contract, money had and received, and declaratory relief. She wants to represent a nationwide class of people who entered into finance agreements that included GAP Waiver addendums that were assigned to PNC and who paid off their finance agreements before the end of the contract term without receiving a credit or refund of the unearned GAP fees. She also wants to represent an Illinois subclass.

The GAP fee lawsuit is not the only class action PNC has faced. In August, the bank reached a $7.5 million settlement resolving a 10 year old class action claiming that the bank improperly assessed and collected overdraft fees. More than 148,000 former customers received automatic payments in the settlement, reports Bloomberg Law.

Jones is represented by Robert A. Clifford and Shannon M. McNulty of Clifford Law Offices, P.C., Franklin D. Azar, Michael D. Murphy, Brian J. Hanlin, Margeaux R. Azar, and Alexander F. Beale of Franklin D. Azar & Associates, P.C., and Jason M. Frank, Andrew D. Stolper, and Scott H. Sims of Frank Sims & Stolper LLP.

The PNC GAP Fee Class Action Lawsuit is Jones v. PNC Bank, in the U.S. District Court for the Northern District of Illinois Eastern Division.

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