Finance Office

Santander Faces Class-Action Over ‘Worthless’ GAP Coverage

September 28, 2015

CHICAGO — A woman who claims she was duped into buying “void and worthless” GAP coverage on a used vehicle has filed a class-action lawsuit against the company that financed the transaction.

Joyce Pettye filed a lawsuit against Santander Consumer USA on Aug. 31, alleging the finance source violated the Illinois Motor Vehicle Retail Installment Sales Act and the federal Truth in Lending Act (TILA) when it purchased a retail installment sales contract associated with a 2012 Ford Focus she purchased from Al Piemonte Super Car Outlet in Northlake, Ill.

According to the lawsuit, Pettye was presented with a stack of documents related to her purchase and was instructed by dealership personnel to sign on the lines marked by the letter “X.” Among those documents was a contract for GAP coverage that cost $895, and was limited to purchases with a maximum APR of 24%. However, the APR on Pettye’s contract was 27.06%, rendering the GAP coverage “void and worthless, pursuant to its own terms,” according to the compliant.

Pettye also alleged that she was not presented with a copy of the disclosures required by the TILA “in a form she could keep” or told that she was making an additional purchase when she signed the GAP contract. In fact, according to the compliant, Pettye was “completely unaware that she had signed the [GAP contract], or that such signature represented an additional ‘non-required’ purchase.”

The lawsuit was filed as a class action on behalf of Illinois customers  who signed a similar GAP contract that was void because their APR was also in excess of the coverage’s maximum APR limit.

“…The ‘Maximum APR’ for the ‘GAP Program’ at issue is not determined on an applicant-specific basis,” the complaint read, in part. “And a form addendum for the purchase of GAP protection reflecting a maximum APR was used in most or all of the automobile purchases, on credit, that include the purchase of such GAP protection.”

The suit seeks damages in an amount to be determined at trial and the return of finance charges improperly collected by Santander.

Comments

  1. 1. howell clark [ October 01, 2015 @ 10:42AM ]

    well if any of what she says is true, and i have trouble believing santanders lawyers would have allowed such a scenario on its gap, they or the dealer or both have a serious issue to settle. when this was brought to their attention it should have immediately been reimbursed and an apology proffered for their not catching the glitch.

  2. 2. Larry [ October 03, 2015 @ 09:07AM ]

    This clause/exclusion has been found in a few different GAP products on the market. This is just the tip of the iceberg. How about excluding claims not filed in 30 days? How about excluding claims not reported within 24 hours of knowledge of the claim? Or paying based on the higher valuation of NADA or insurance company settlement amount? There are many, many more I could cite. The industry is its own worst enemy. Take a look at the contract you have. Read it. Then ask yourself what coverage is actually in the doc. This is an area that has been so abused for so long it is literally screaming for regulation. It's a shame.

  3. 3. Wayne Brown [ October 05, 2015 @ 11:27AM ]

    Looks like someone has a big problem..Santanders laywers should have caught this...

  4. 4. Minnie [ June 30, 2016 @ 09:08AM ]

    Gap insurance that I was made to take when signing the contract at santander was and is a fraud,that insurance they put are I might say added to my contract was 800.00 did not make sense to me at all its actually a scam........

  5. 5. Nicole Windsor [ September 17, 2016 @ 11:46PM ]

    They truly are a scam. They still want me to pay for a car that was totaled. The other driver was in the wrong and my full coverage insurance was active. They lied. They did not cover my gap. It hurts my credit even more because I have another car, I can't afford two car payments.

  6. 6. Desiree Jackson [ May 16, 2017 @ 04:24PM ]

    So how do I go about filing a class action lawsuit. I just had my car totaled, the gap insurance only paid $2800.00, leaving me a balance due of what I don't know because the letter from Santander states that they lowered my payment to 317.00 and expect me to pay the difference until 2020. I have been paying on this car since 2014 with the balance never going down due to high interest.

  7. 7. Diedre M. Jones [ June 12, 2017 @ 02:39PM ]

    Santander refused to pay the remaining balance on my 2011 due to my making two late payments eventhough I had paid twice as much as the car was worth due to a high APR rate.

  8. 8. Minnie christmas [ August 09, 2017 @ 07:29PM ]

    I was forced into the Gap insurance as well,I asked the man to take it off but he sounded as if I would not get the credit if I didn,the get the credit and get the car.the finance charges was extreme,I have payed on the car for over 4years but my payoff is darn near the same as 4years ago,the payment never go down,in have been paying 400.00 dollar for over four years

 

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