In the realm of auto financing, the concept of Guaranteed Asset Protection (GAP) has become commonplace. GAP insurance aims to bridge the gap between the actual cash value of a vehicle and the outstanding loan balance in the event of a total loss. While GAP can provide peace of mind, a recent lawsuit against Toyota Motor Credit Corporation (TMCC) has brought to light concerns regarding unearned GAP fees.
The Allegations at the Heart of the Lawsuit
The lawsuit, filed in 2020, alleges that TMCC wrongfully collected and failed to refund unearned GAP fees when customers paid off their finance agreements early. Specifically, the plaintiffs claim that TMCC retained GAP premiums even after the risk of a total loss had diminished due to the early payoff.
TMCC’s Defense
TMCC has defended its actions, arguing that the GAP agreements clearly outlined the refund policy. The company contends that customers were required to send a written request to cancel their GAP agreement in order to receive a refund.
The Settlement and Its Implications
In October 2021, the parties reached a $59 million class action settlement. The settlement provides for refunds to eligible customers who purchased GAP from TMCC between January 1, 2016, and October 25, 2021.
FAQs
What is GAP insurance?
GAP insurance covers the difference between the actual cash value of a vehicle and the outstanding loan balance in the event of a total loss.
What was the basis of the TMCC GAP lawsuit?
The lawsuit alleged that TMCC wrongfully collected and failed to refund unearned GAP fees when customers paid off their finance agreements early.
How did TMCC defend itself against the allegations?
TMCC argued that the GAP agreements clearly outlined the refund policy, requiring customers to send a written request to cancel their GAP agreement to receive a refund.
What was the outcome of the lawsuit?
The parties reached a $59 million class action settlement, providing refunds to eligible customers who purchased GAP from TMCC between January 1, 2016, and October 25, 2021.
Who is eligible for a refund under the settlement?
Customers who purchased GAP from TMCC between January 1, 2016, and October 25, 2021, and who paid off their finance agreements early may be eligible for a refund.
How can I claim my refund?
Eligible customers will receive a notice with instructions on how to claim their refund.
Conclusion
The TMCC GAP lawsuit highlights the importance of carefully reviewing the terms and conditions of any insurance agreement before signing. Consumers should also be aware of their rights regarding early payoff refunds.
