Recent developments from both federal- and state-level law enforcement include matters associated with refunds connected to guaranteed automobile protection (GAP) as well as a dealership defrauding consumers.

Connected to industry-wide compliance challenges highlighted multiple times by Allied Solutions, Colorado attorney general Phil Weiser recently announced that his office secured $4 million in refunds for Colorado residents who were entitled to refunds of GAP fees from Bellco Credit Union and Canvas Credit Union.

According to a news release, an investigation by the Consumer Protection Section in the Colorado Department of Law revealed that Bellco and Canvas historically were not refunding unearned GAP fees owed to consumers after either the retail installment contract was paid off or the vehicle was repossessed.

In the settlement, Bellco and Canvas also agreed to refund GAP fees to consumers in a timely manner in the future.

“When hardworking Coloradans pay for GAP coverage, they deserve to receive what they are owed,” Weiser said in the news release. “My office will continue to hold accountable companies that violate the law and leave Coloradans without the money they were due.”

This latest settlement is part of Weiser’s broader efforts related to GAP, resulting in total refunds to consumers of $23.5 million.

Allied Solutions discussed how credit unions and other finance companies can avoid these pitfalls both through this podcast recorded during Used Car Week 2022 in San Diego as well as this free, in-depth webinar.

Wisconsin dealer sentenced in federal court

U.S. Attorney Gregory Haanstad of the Eastern District of Wisconsin recently announced that John Solberg of Suamico, Wisc., was sentenced to 30 months in federal prison by Senior United States District Judge William Griesbach.

According to court records, Solberg established Backwoods Bargains, an independent dealership located in Suamico in 2012. Ultimately, the dealership was renamed Standard Pre-Owned, and Solberg opened a second location in Kaukauna, also named Standard Pre-Owned.

While operating his dealerships, court records indicated Solberg developed a scheme to defraud individuals that listed their vehicles for sale on Craigslist.

Officials said Solberg would contact these individuals and offer to sell their vehicles on consignment from his lots.

Court records indicate that Solberg then would sell the consignment vehicles without paying the owners of the vehicle and would provide fraudulent vehicle titles to the purchasers.

“At sentencing, Senior Judge Griesbach noted the serious nature of Solberg’s scheme based on the emotional and financial toll he imposed on his victims,” officials said in the news release. “He also questioned whether Solberg truly accepted responsibility for his criminal acts.”

Though Solberg requested a sentence of probation, the judge determined that a 30-month term in federal prison was required to address the magnitude of the crime and to send a message to Solberg and others that taking advantage of people will result in serious consequences.

After serving his prison sentence, officials said Solberg will spend three years on supervised release. 

The court also ordered Solberg to pay approximately $290,000 in restitution to his victims.