Do You Know Your Product Refund Liability Practices?
Duration: 3 minutes
About the Video
Dan Berger, President and CEO of NAFCU, details the challenges credit unions are facing with product refund liability for ancillary auto loan products. These products can include vehicle protection products, guaranteed asset protection (GAP), and extended warranties -- and over 60% of auto loans have at least one such option. When a member’s vehicle loan is terminated early, those ancillary products are also terminated, and often borrowers are entitled to a refund for the unused portion of those products. In fact, 3 of 10 auto loans a credit union issues are likely to trigger a product refund. Even though borrowers are frequently unaware of this fact, and the third party administrators of these programs are often unaware that the loan has been terminated, lenders are now expected to bridge this gap and ensure that borrowers receive these prorated refunds. Solutions are available to help credit unions of all sizes reduce potential legal and regulatory exposure by optimizing the cancellation and refund processes for auto loan ancillary products.