League Summarizes Steps Required for GAP Waiver Purchases in CA

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With Assembly Bill 2311 going into effect in California this coming Jan. 1, the California Credit Union League has developed a detailed summary to assist credit unions in complying with the law's implementation.

As a reminder, this new bill creates rights and remedies for consumers who purchase guaranteed asset protection (GAP) waivers in connection with the purchase of a vehicle pursuant to a conditional-sale contract.

Specifically, the bill includes new disclosure requirements, caps on the amount of GAP-waiver premiums that may be charged, and confirms the consumer’s right to cancel a GAP waiver and obtain a refund of any previously paid (but unearned) GAP fees without penalty.

Given the extensive technical and operational steps required to ensure full compliance, the League's detailed summary of AB 2311 for credit unions has been developed with the assistance of Moore, Brewer & Wolfe — A Professional Corporation.

The League will continue efforts with the California Attorney General’s Office, which sponsored the bill, regarding delaying enforcement actions so credit unions are given adequate time to design and implement comprehensive compliance solutions regarding this new law.

However, credit unions should still be prepared to comply beginning on Jan. 1, 2023, with regard to any vehicle loan where a GAP waiver was purchased from the seller in connection with a conditional-sale contract.

Credit unions are also encouraged to consult with legal counsel regarding any questions about how to implement and comply with these new requirements.

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