Coloradans to split $9.5M in Wells Fargo settlement

DENVER — Wells Fargo Bank NA has agreed to pay more than $9.5 million to 51,434 Coloradans to settle a multi-state lawsuit brought by bank customers who had guaranteed automobile protection insurance fees unfairly withheld, Colorado Attorney General Phil Weiser announced Wednesday. 

“We are committed to protecting hard-working Coloradans, especially from deceptive and illegal practices that cause them significant stress, hardship, and financial losses,” Weiser said in a prepared statement. “We are pleased to see this money returned and our message this National Consumer Protection Week is that we will continue demand compliance not only from Wells Fargo but other lending institutions in Colorado as well.”

Banks sell GAP insurance “to car buyers who finance their purchase. If a buyer’s car is totaled in an accident, the buyer’s insurance typically pays only the fair market value of the car, which can be less than the amount owed on the buyer’s loan. GAP applies in that situation to cancel, or pay off, the remaining balance owed on the loan,” according to Weiser’s office. “Borrowers pay the full GAP fee when they buy the car, but typically the lender only earns the fee gradually over the life of the loan. If the borrower pays off the loan early, or if the car is repossessed before the loan is paid off, Colorado law requires that the borrower receive a refund of the unearned portion of the GAP fee.”

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In their suit, customers alleged that Wells Fargo failed to reimburse unearned GAP fees owed to consumers in Colorado and other states.

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