On May 8, Colorado Attorney General Phil Weiser announced settlements with four of the largest guaranteed automobile protection (GAP) administrators — Safe-Guard Products International, Inc., Jim Moran & Associates, Inc., Norman & Co., Inc., and National Auto Care Corporation — operating in Colorado, totaling more than $2.87 million in restitution for 3,550 Colorado vehicle owners. Settlement amounts ranged from $4,036.56 to $1,655,124.78, with each settling entity agreeing to provide refunds to impacted consumers under an assurance of discontinuance agreement. We posted about previous GAP refund settlements here and here.
GAP is a debt cancellation product frequently sold by auto dealers to customers who finance their automobile purchases through the dealer — a type of financing arrangement known as indirect auto lending. If a car is totaled, the car buyer’s primary automobile insurance typically pays only fair market value, which may amount to less than owed on the loan due to a vehicle’s depreciation. GAP covers a portion of this remaining balance or “gap” owed to the lender on the finance agreement. Because GAP is tied to the term of the customer’s finance agreement, the purchaser is often entitled to a refund of the “unused” portion of GAP if the finance agreement ends early (e.g., the buyer pays off the car loan early or if the car is repossessed). The indirect auto lender’s refund obligations vary by state. A minority of states, including Colorado, place certain obligations on indirect auto lenders to ensure that a customer receives a refund of a portion of the GAP cost when his/her loan ends early, regardless if the customer requests the refund.
Why It Matters
To date, the Colorado AG has secured $23.5 million in refunds as part of the office’s broad GAP refund initiative. The AG’s pursuit of GAP refunds for impacted consumers demonstrates his commitment “to protect consumers by holding accountable institutions that fail to fully pay the amounts owed for GAP coverage or keep charging GAP coverage after a vehicle is already paid off.”
Troutman Pepper State Attorneys General Team
|Ashley Taylor – Co-leader and Firm Vice Chair
Ashley is a partner in the firm’s Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group and co-leader of the State Attorneys General practice. He focuses primarily on federal and state government regulatory and enforcement matters involving state attorneys general, the Consumer Financial Protection Bureau (CFPB), and the Federal Trade Commission (FTC). Drawing upon his experience as a deputy attorney general, Ashley has developed an extensive consumer practice with regard to the consumer financial services industry.
|Clay Friedman – Co-leader
Clay is a partner in the firm’s Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group and co-leader of the State Attorneys General practice. Informed by nearly a decade in a state attorneys general office, and more than 25 years in private practice, Clay spends much of his time representing clients in singular or multistate regulatory actions. Clay has repeatedly led teams before all 50 state attorneys general and also handles matters with the Federal Trade Commission, the Consumer Financial Protection Bureau, and other local, state and federal agencies.
Judy is a partner in the firm’s Regulatory Investigations, Strategy and Enforcement (RISE) practice, based in the Richmond office. She brings experience serving as chair and commissioner of the Virginia State Corporate Commission (VSCC) from 2006 through 2022, which includes regulating the utilities, insurance, banking, and securities industries. She also served as Virginia’s attorney general from 2005-2006.
Stephen represents clients interacting with, and being investigated by, state attorneys general and other enforcement bodies, including the CFPB and FTC, as well as clients involved with litigation, particularly in heavily regulated industries.
A former deputy attorney general of New York, Avi applies his experience in bet-the-company matters, representing clients in criminal and civil investigations and enforcement actions before state and federal regulators, prosecutors and enforcement agencies.
Michael handles high-profile state attorneys general, FTC, and CFPB investigations by advising clients through these complex government inquiries. He assists clients through the entire life cycle of investigations, from regulatory enforcement through formal litigation.
As a former government official at the state and federal level, Ketan leverages extensive experience in the public and private sectors to skillfully represent client interests.
Tim is an attorney in the firm’s Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group, with a primary focus on financial services litigation.
Chris represents clients in regulatory, civil and criminal investigations and litigation. In his practice, Chris regularly employs his prior regulatory experience to benefit clients who are interacting with and being investigated by state attorneys general.
Natalia is an associate in the firm’s business litigation practice. She recently received her J.D from the University of California, Davis School of Law.
Namrata is an associate in the firm’s Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group, based in the Washington, D.C. office. Her work includes advising clients in regulatory investigations and compliance matters, in addition to representing clients in civil litigation matters.
Susan is an associate in the firm’s Consumer Financial Services Practice Group, and focuses her practice on consumer financial services matters. She has defended several of the nation’s largest and most influential financial institutions in individual and class action litigation involving the Telephone Consumer Protection Act (TCPA), Fair Credit Reporting Act (FCRA), Fair Debt Collection Practices Act (FDCPA), and other consumer privacy statutes. Susan also represents banks, fintechs, and financial services companies in connection with regulatory examinations and investigations brought by the CFPB, state attorneys general, and the California Department of Financial Protection and Innovation.
John represents clients in a wide variety of general and complex litigation matters, shareholder disputes, products liability, and privacy claims.
Whitney is an attorney in the firm’s Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group. She represents clients facing state and federal regulatory investigations and enforcement actions, as well as related civil litigation.
Trey is an associate in the firm’s Regulatory Investigations, Strategy + Enforcement practice. His experience includes serving as a summer associate at the firm in 2021.
An experienced litigator, Daniel advises and represents regional, national and international companies, financial institutions and insurers in all facets of business, complex commercial and insurance coverage litigation. He is committed to working with his clients to find creative solutions to meet their needs.
Stephanie is Troutman Pepper’s senior government relations manager in the state attorneys general department.