PNC Bank No Refund of GAP Fees for Early Auto Payoffs Class Action

This class action concerns Guaranteed Automobile Protection (GAP) agreements when customers pay off their auto loans early. The complaint for this class action brings suit against PNC Bank, NA, which does business as PNC Auto Finance, alleging that the company retains unearned GAP fees, when it should be refunding them to consumers after early payoffs.

The class for this action is all persons

• Who entered into finance agreements with GAP addendums in an Automatic Refund State that were assigned to PNC
• Who paid off their finance agreements before the end of the contract term during the time period that an Automatic Refund Law was in effect, and
• Who did not receive a credit or refund of the unearned GAP fees and/or the accrued interest on those unpaid amounts.
• The class period is the applicable statute of limitation in each of the Automatic Refund States. (See below.)

Consumers who wish to buy cars may borrow money for that via an auto loan or a retail installment sales contract. Retail installment sales contracts may be initiated by dealers and then sold to parties like PNC.

Consumers often buy cars with installment sales contracts. It’s possible that, if the customer suffers a total loss of the vehicle, the payout from the customer’s insurance policy may not be enough to pay off the loan. GAP agreements are addendums to the finance agreements that offer to waive the amount of the gap between the insurance payout and the remaining debt. The price of the GAP addendum is included as part of the monthly payment for the vehicle.

If customers pay off their loans or sales contracts early, they have no more need of the GAP addendum, because the customer owns the vehicle.

The complaint alleges, “When customers want to pay off their finance agreements early, PNC informs its customers of the total payoff amount. PNC does not include the unearned finance charges in the total payoff amount quoted to customers, but it will include the earned GAP fees.” This means that customers pay the amount of GAP fees for the full term of the original finance agreement.

The complaint claims, “PNC then collects and keeps these unearned GAP fees, unless the customer affirmatively requests a refund, which rarely happens.”

According to the complaint, at least eleven states have a statue or regulation that requires lenders like PNC to automatically issue GAP addendum refunds—Alabama, Colorado, Indiana, Iowa, Massachusetts, New Jersey, Oregon, Texas, Vermont, Wisconsin, and Wyoming. In these states, lenders like PNC cannot require that customers be forced to ask for the refund as a condition of receiving it. The complaint refers to these are the Automatic Refund States and alleges that PNC has been violating these laws.

Article Type: Lawsuit
Topic: Loans
Tags: Failure To Pay For Refund, GAP Coverage, Loan-Related Unfair Practices