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Wells Fargo will pay $500 million to end a class action lawsuit, refunding U.S. consumers who paid off their car loans early and paid what they say were improper GAP insurance fees.
Lead plaintiff Armando Herrera had alleged Wells Fargo collected the entire amount of the loan, including the cost of the GAP insurance coverage.
GAP insurance, or guaranteed auto protection insurance, will cover the difference between what a borrower owes on the vehicle and what the insurer is willing to pay should the vehicle be stolen or damaged beyond repair. GAP insurance typically adds $400 to $600 to the vehicle’s purchase price.
Because GAP insurance is paid for up front and covers the term of the loan, vehicle owners who are able to pay off the loan early are entitled to a refund of the unused portion of their GAP insurance under state laws.
But instead of refunding consumers, Wells Fargo pocketed that difference, Herrera alleged.
The Class is made up of anyone in the United States who entered into finance agreements with GAP agreements that were assigned to Wells Fargo, whose finance agreements were terminated as the result of an early payoff that occurred during the Class Period, and who did not receive a GAP refund. It also includes the members of the Statutory Subclass.
The Statutory Subclass consists of all individuals who entered into finance agreements with GAP agreements that were assigned to Wells Fargo, whose finance agreements were subject to state refund laws, whose finance agreements terminated as the result of an early payoff occurring during the Statutory Subclass Period, and who did not receive a GAP refund from Wells Fargo, or for whom Wells Fargo did not receive written confirmation from a dealer or GAP administrator that the GAP refund was paid.
Class Periods will vary by state.
If the settlement receives final approval, Class Members will need to file a claim form in order to benefit.
Wells Fargo says it has already paid more than $33 million to Statutory Subclass Members between Feb. 22, 2019, and March 31, 2021, with individual payments averaging $316.87, according to the settlement agreement.
That total is separate from the supplement settlement fund of $45 million, which will be used to paid approved claims from Non-Statutory Subclass Members and additional compensation for the Statutory Subclass, as well as attorneys’ fees and other expenses.
Non-Statutory Subclass Members — those who are not part of the Statutory Subclass — will be eligible for proportionate refunds, regardless of the method specified in the Class Member’s GAP agreement.
In addition to the early-payoff GAP insurance fee refunds, each member of the Statutory Subclass will receive up to $5.
Wells Fargo also will, by at least Jan. 1, 2022, implement processes to automatically provide early payoff GAP insurance refunds to consumers nationwide.
Did you pay off your Wells Fargo auto loan early and pay GAP insurance fees? Tell us about it in the comment section below.
The plaintiff is represented by Jason M. Frank, Andrew D. Stolper, and Scott H. Sims of Frank Sims & Stolper LLP; Franklin D. Azar of Franklin D. Azar & Associates PC; and Charles E. Schaffer of Levin Sedran & Berman LLP.
The Wells Fargo GAP Insurance Fees Class Action Lawsuit is Armando Herrera, et al. v. Wells Fargo Bank, et al., Case No. 8:18-cv-00332, in the U.S. District Court for the Central District of California.
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368 thoughts onWells Fargo to Pay $500M to Settle GAP Insurance Fees Class Action
Can Wells Fargo run a bank without screwing their customers? After about three of these “ mistakes “ by WF it’s not just a mistake.
I am part of the statuary subclass but have not received my actual gap refund.