HOUSE BILL 23-1181 BY REPRESENTATIVE(S) Mauro, Snyder

HOUSE

BILL

23-1181

BY

REPRESENTATIVE(S)

Mauro,

Snyder,

Dickson,

Martinez,

Michaelson

Jenet,

Valdez,

Duran;

also

SENATOR(S)

Hinrichsen

and

Mullica.

CONCERNING

THE

REGULATION

OF

GUARANTEED

ASSET

PROTECTION

AGREEMENTS.

Be

it

enacted

by

the

General

Assembly

of

the

State

of

Colorado:

SECTION

1.

Legislative

declaration.

(1)

The

general

assembly

finds

and

declares

that:

(a)

A

guaranteed

asset

protection

agreement

(GAP

agreement)

is

either

an

insurance

policy

or

contractual

term

that

protects

a

consumer

in

the

event

that

the

consumer's

motor

vehicle

that

is

collateral

used

to

secure

credit

is

deemed

a

total

loss;

(b)

The

attorney

general's

office

has

regulated

GAP

agreements

for

nearly

two

decades,

but

there

have

been

few

updates

to

the

rules

during

that

time;

and

(c)

By

codifying

and

updating

the

GAP

agreement

rules

that

are

in

Capital

letters

or

bold

&

italic

numbers

indicate

new

material

added

to

existing

law;

dashes

through

words

or

numbers

indicate

deletions

from

existing

law

and

such

material

is

not

part

of

the

act.

the

code

of

Colorado

regulations,

the

general

assembly

will

provide

Colorado

consumers

with

stability,

predictability,

and

efficiency

regarding

GAP

agreements,

while

ensuring

a

fair

and

viable

market

for

GAP

agreement

providers

and

making

important

updates

to

the

laws

that

govern

these

agreements.

SECTION

2.

In

Colorado

Revised

Statutes,

5-2-202,

amend

(1)

introductory

portion;

and

add

(1)(c.5)

and

(1)(c.7)

as

follows:

5-2-202.

Additional

charges.

(1)

In

addition

to

the

finance

charge

permitted

by

this

article

ARTICLE

2

and

in

a

consumer

lease,

a

creditor

may

contract

for

and

receive

the

following

additional

charges

in

connection

with

a

consumer

credit

transaction:

(c.5)

CHARGES

FOR

DEBT

CANCELLATION

CONTRACTS

OR

DEBT

SUSPENSION

CONTRACTS

OFFERED

IN

COMPLIANCE

WITH

12

CFR

37

OR

12

CFR

721

OR

OTHER

FEDERAL

LAW;

(c.7)

CHARGES

FOR

GUARANTEED

ASSET

PROTECTION

AGREEMENTS,

AS

DEFINED

IN

SECTION

5-9.3-103

(4),

OFFERED

IN

COMPLIANCE

WITH

ARTICLE

9.3

OF

THIS

TITLE

5;

SECTION

3.

In

Colorado

Revised

Statutes,

add

article

9.3

to

title

5

as

follows:

ARTICLE

9.3

Guaranteed

Asset

Protection

Agreements

5-9.3-101.

Definitions.

As

USED

IN

THIS

ARTICLE

9.3,

UNLESS

THE

CONTEXT

OTHERWISE

REQUIRES:

(1)

"CONSUMER

FINANCE

AGREEMENT"

OR

"FINANCE

AGREEMENT"

MEANS

A

RETAIL

INSTALLMENT

SALES

CONTRACT

OR

CONSUMER

CREDIT

TRANSACTION,

OTHER

THAN

A

CONSUMER

LEASE,

FOR

THE

PURCHASE

OR

REFINANCE

OF

A

MOTOR

VEHICLE.

(2)

"DEFICIENCY

BALANCE"

MEANS

THE

AMOUNT

OWED

BY

THE

CONSUMER

UNDER

A

CONSUMER

FINANCE

AGREEMENT

AT

THE

TIME

OF

A

TOTAL

LOSS

OF

THE

CONSUMER'S

MOTOR

VEHICLE

THAT

WAS

COLLATERAL

SECURING

THE

CONSUMER

FINANCE

AGREEMENT,

CALCULATED

IN

PAGE

2

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BILL

23-1181

ACCORDANCE

WITH

THE

TERMS

OF

THE

FINANCE

AGREEMENT.

(3)

"GUARANTEED

ASSET

PROTECTION

ADMINISTRATOR"

OR

"GAP

ADMINISTRATOR"

MEANS

THE

PERSON,

OTHER

THAN

THE

CREDITOR

OR

INSURER,

THAT

PERFORMS

THE

ADMINISTRATIVE

OR

OPERATIONAL

FUNCTIONS

PURSUANT

TO

THE

GAP

AGREEMENT.

(4)

(a)

"GUARANTEED

ASSET

PROTECTION

AGREEMENT" OR

"GAP

AGREEMENT"

MEANS

AN

AGREEMENT,

STRUCTURED

AS

EITHER

AN

INSURANCE

POLICY

OR

A

CONTRACTUAL

TERM,

SOLD

OR

WRITTEN

IN

CONNECTION

WITH

A

CONSUMER

FINANCE

AGREEMENT,

THAT

RELIEVES

ALL

OR

PART

OF

A

CONSUMER'S

LIABILITY

FOR

THE

DEFICIENCY

BALANCE

REMAINING,

AFTER

THE

PAYMENT

OF

ALL

INSURANCE

PROCEEDS,

UPON

THE

TOTAL

LOSS

OF

THE

CONSUMER'S

MOTOR

VEHICLE

THAT

WAS

COLLATERAL

SECURING

THE

CONSUMER

FINANCE

AGREEMENT,

WHETHER

THE

LOSS

OCCURRED

FROM

THE

TOTAL

DESTRUCTION

OF

THE

MOTOR

VEHICLE,

THE

UNRECOVERED

THEFT

OF

THE

MOTOR

VEHICLE,

OR

BOTH.

(b)

A

GAP

AGREEMENT

MAY

ALSO

PROVIDE

A

CONSUMER

WITH

A

BENEFIT

THAT

WAIVES

A

CERTAIN

AMOUNT

OR

PROVIDES

A

CREDIT

FOR

A

CERTAIN

AMOUNT

TOWARD

THE

PURCHASE

OF

A

REPLACEMENT

MOTOR

VEHICLE.

(5)

"GUARANTEED

ASSET

PROTECTION

FEE"

OR

"GAP

FEE"

MEANS

THE

FEE,

CHARGE,

PREMIUM,

OR

OTHER

AMOUNT

THAT

A

CREDITOR

MAY

CHARGE

A

CONSUMER

FOR

A

GUARANTEED

ASSET

PROTECTION

AGREEMENT.

(6)

"MOTOR

VEHICLE"

MEANS

A

SELF-PROPELLED

OR

TOWED

VEHICLE

DESIGNED

FOR

PERSONAL

OR

COMMERCIAL

USE,

INCLUDING

BUT

NOT

LIMITED

TO

AUTOMOBILES,

TRUCKS,

MOTORCYCLES,

RECREATIONAL

VEHICLES,

ALL

-TERRAIN

VEHICLES,

SNOWMOBILES,

CAMPERS,

BOATS,

PERSONAL

WATERCRAFTS,

AND

RELATED

TRAILERS.

(7)

"ORIGINAL

CREDITOR"

MEANS

THE

CREDITOR

THAT

MAKES

OR

ARRANGES

A

CONSUMER

FINANCE

AGREEMENT

WITH

A

CONSUMER

AND

TO

WHICH

THE

FINANCE

AGREEMENT

IS

INITIALLY

PAYABLE.

"ORIGINAL

CREDITOR"

DOES

NOT

INCLUDE

ANY

ASSIGNEE

OF

THE

FINANCE

AGREEMENT.

(8)

"RETAIL

INSTALLMENT

SALES

CONTRACT"

MEANS

A

RETAIL

CONTRACT

TO

SELL

A

MOTOR

VEHICLE

TO

A

CONSUMER

IN

WHICH:

PAGE

3

-HOUSE

BILL

23-1181

(a)

THE

CONSUMER

AGREES

TO

PAY

THE

RETAIL

SELLER

OVER

TIME,

IN

INSTALLMENTS,

THE

COST

OF

THE

MOTOR

VEHICLE

PLUS

INTEREST;

AND

(b)

THE

RETAIL

SELLER

TAKES

OR

RETAINS

A

SECURITY

INTEREST

IN

THE

MOTOR

VEHICLE.

5-9.3-102.

Applicability.

(1)

THIS

ARTICLE

9.3

APPLIES

TO

EVERY

CREDITOR,

WHETHER

THE

CREDITOR

IS

AN

ASSIGNEE

OR

HOLDER

OF

A

FINANCE

AGREEMENT

THAT

INCLUDES

A

GAP

AGREEMENT.

A

CREDITOR,

ASSIGNEE,

OR

HOLDER

DOES

NOT

HAVE

ANY

SUBROGATION

RIGHTS

AGAINST

THE

CONSUMER.

(2)

TI-IIS

ARTICLE

9.3

DOES

NOT

APPLY

TO

A

GAP

AGREEMENT

THAT

IS

INCLUDED

IN:

(a)

A

CONSUMER

LEASE;

(b)

A

LOAN

THAT

DOES

NOT

INVOLVE

A

CONSUMER

AS

DEFINED

IN

SECTION

4-1-201

(10.5);

(c)

A

PRODUCT

THAT

DOES

NOT

MEET

THE

DEFINITION

OF

A

GUARANTEED

ASSET

PROTECTION

AGREEMENT;

OR

(d)

A

TRANSACTION

THAT

IS

NOT

SUBJECT

TO

THE

"UNIFORM

CONSUMER

CREDIT

CODE",

ARTICLES

1

TO

9

OF

THIS

TITLE

5.

5-9.3-103.

Guaranteed

asset

protection

agreement

requirements

-

application.

(1)

A

CREDITOR

MAY

OFFER,

SELL,

PROVIDE,

OR

ADMINISTER

A

GUARANTEED

ASSET

PROTECTION

AGREEMENT

IN

CONNECTION

WITH

A

CONSUMER

FINANCE

AGREEMENT

ONLY

IF

THE

CREDITOR

AND

THE

GUARANTEED

ASSET

PROTECTION

AGREEMENT

COMPLY

FULLY

WITH

THIS

ARTICLE

9.3

AND

MEET

ALL

OF

THE

FOLLOWING

CONDITIONS:

(a)

THE

CREDITOR

PROVIDES

TO

THE

CONSUMER

A

WRITTEN

NOTICE,

IN

BOLD

-FACE

TYPE,

THAT

SPECIFIES

THE

FOLLOWING:

(I)

THAT

THE

CONSUMER

IS

NOT

REQUIRED

TO

PURCHASE

A

GAP

AGREEMENT

IN

ORDER

TO

OBTAIN

THE

CREDIT

OR

ANY

PARTICULAR

OR

FAVORABLE

CREDIT

TERMS;

PAGE

4

-HOUSE

BILL

23-1181

(II)

THE

AMOUNT

OF

THE

GAP

FEE;

(III)

THAT

THE

CONSUMER

MAY

WISH

TO

CONSULT

AN

INSURANCE

AGENT

TO

DETERMINE

WHETHER

SIMILAR

COVERAGE

MAY

BE

OBTAINED

THROUGH

AN

INSURANCE

PRODUCT

AND

AT

WHAT

COST;

(IV)

THAT

THE

GAP

AGREEMENT

BENEFITS

MAY

DECREASE

OVER

THE

TERM

OF

THE

FINANCE

AGREEMENT;

(V)

THAT

THE

CONSUMER

MAY

CANCEL

THE

GAP

AGREEMENT

FOR

ANY

OR

NO

REASON

WITHIN

THIRTY

DAYS

AFTER

THE

EFFECTIVE

DATE

OF

THE

GAP

AGREEMENT,

AND

THAT

THE

CONSUMER

WILL

RECEIVE

A

FULL

REFUND

OF

THE

GAP

FEE

SO

LONG

AS

NO

LOSS

OR

EVENT

COVERED

BY

THE

GAP

AGREEMENT

HAS

OCCURRED;

AND

(VI)

THAT

THE

GAP

AGREEMENT

IS

NOT

A

SUBSTITUTE

FOR

COLLISION

OR

PROPERTY

DAMAGE

INSURANCE;

(b)

(I)

THE

CREDITOR

PROVIDES

THE

CONSUMER

WITH

A

CANCELLATION

METHOD

THAT

IS

CONSPICUOUSLY

DISPLAYED

IN

THE

GAP

AGREEMENT

OR

IN

A

SEPARATE,

WRITTEN

CANCELLATION

FORM

AND

THAT

INCLUDES:

(A)

THE

NAME,

MAILING

ADDRESS,

E-MAIL

ADDRESS,

OR

PHONE

NUMBER

THAT

MAY

BE

USED

TO

CANCEL

THE

GAP

AGREEMENT;

(B)

A

STATEMENT

THAT

THE

CONSUMER

MAY

CANCEL

THE

GAP

AGREEMENT

FOR

ANY

OR

NO

REASON

WITHIN

THIRTY

DAYS

AFTER

THE

EFFECTIVE

DATE

OF

THE

GAP

AGREEMENT,

AND

THAT

THE

CONSUMER

WILL

RECEIVE

A

FULL

REFUND

OF

THE

GAP

FEE

SO

LONG

AS

NO

LOSS

OR

EVENT

COVERED

BY

THE

GAP

AGREEMENT

HAS

OCCURRED;

AND

(C)

A

STATEMENT

THAT

THE

CONSUMER

MUST

COMPLETE

AND

RETURN

THE

CANCELLATION

FORM

OR

SEND

OTHER

WRITTEN

NOTICE

OF

CANCELLATION

TO

THE

MAILING

ADDRESS

OR

E-MAIL

ADDRESS

THAT

THE

CREDITOR

PROVIDES

OR

CALL

THE

PHONE

NUMBER

LISTED

IN

ORDER

TO

CANCEL

THE

GAP

AGREEMENT;

(II)

IF

A

CREDITOR

WANTS

TO

PROVIDE

AN

ALTERNATIVE

CANCELLATION

METHOD

OTHER

THAN

THE

ONE

DESCRIBED

IN

SUBSECTION

PAGE

5

-HOUSE

BILL

23-1181

(1)(b)(I)

OF

THIS

SECTION,

THE

CREDITOR MUST

CLEARLY

AND

CONSPICUOUSLY

STATE

THE

ALTERNATIVE

METHOD

AND

INSTRUCTIONS

ON

HOW

TO

CANCEL

THE

GAP

AGREEMENT

IN

THE

AGREEMENT;

(C)

THE

CONSUMER

PROVIDES

TO

THE

CREDITOR

AN

AFFIRMATIVE,

WRITTEN

AUTHORIZATION

FOR

THE

PURCHASE

OF

THE

GAP

AGREEMENT;

AND

(d)

THE

CREDITOR

DELIVERS

TO

THE

CONSUMER,

IN

WRITING,

THE

GAP

AGREEMENT,

WHICH

MUST

INCLUDE:

(I)

A

WRITTEN

DESCRIPTION

OF

THE

GAP

AGREEMENT'S

BENEFITS,

TERMS,

CONDITIONS,

AND

EXCLUSIONS;

(II)

A

STATEMENT

THAT

DISCLOSES

ANY

LIMITATION

IN

COVERAGE

UNDER

THE

GAP

AGREEMENT;

AND

(III)

THE

PROCEDURE

AND

TIMING

TO

BE

FOLLOWED

IN

ORDER

TO

SUBMIT

A

CLAIM

AFTER

A

TOTAL

LOSS.

5-9.3-104.

Guaranteed

asset

protection

fees.

(1)

(a)

THE

MAXIMUM

GAP

FEE

THAT

A

CREDITOR

MAY

CHARGE

FOR

A

GAP

AGREEMENT

MUST

NOT

EXCEED

FOUR

PERCENT

OF

THE

TOTAL

AMOUNT

FINANCED

IN

THE

FINANCE

AGREEMENT,

OR

SIX

HUNDRED

DOLLARS,

WHICHEVER

AMOUNT

IS

GREATER.

(b)

THIS

SUBSECTION

(1)

DOES

NOT

APPLY

TO

ANY

GAP

AGREEMENT

THAT

IS

SUBJECT

TO

REGULATION

BY

THE

DIVISION

OF

INSURANCE

PURSUANT

TO

TITLE

10.

(2)

(a)

A

CREDITOR

MAY

CONTRACT

FOR,

CHARGE,

AND

RECEIVE

ONLY

ONE

GAP

FEE

AS

PART

OF

A

GAP

AGREEMENT,

REGARDLESS

OF

THE

NUMBER

OF

CO

-BORROWERS,

COSIGNERS,

OR

GUARANTORS

IN

THE

FINANCE

AGREEMENT.

(b)

IN

THE

EVENT

THAT

THE

GAP

AGREEMENT

HAS

BEEN

SOLD

AND

A

VALID

CLAIM

HAS

BEEN

MADE,

THE

CREDITOR

MAY

NOT

SEEK

INDEMNIFICATION

FROM

THE

CONSUMER,

CO

-BORROWERS,

COSIGNERS,

OR

GUARANTORS.

PAGE

6

-HOUSE

BILL

23-1181

(3)

EVERY

FINANCE

AGREEMENT

THAT

INCLUDES

A

GAP

FEE

FOR

A

GAP

AGREEMENT

SHALL

CONTAIN, EITHER

IN

THE

FINANCE

AGREEMENT

OR

GAP

AGREEMENT

SIGNED

BY

THE

CONSUMER,

THE

FOLLOWING

STATEMENT:

IF

THIS

TRANSACTION

CONTAINS

A

FEE,

CHARGE,

OR

PREMIUM

FOR

GUARANTEED

ASSET

PROTECTION,

ALL

HOLDERS

AND

ASSIGNEES

OF

THIS

CONSUMER

CREDIT

TRANSACTION

ARE

SUBJECT

TO

ALL

CLAIMS

AND

DEFENSES

THAT

THE

CONSUMER

COULD

ASSERT

AGAINST

THE

ORIGINAL

CREDITOR

RESULTING

FROM

THE

CONSUMER'S

PURCHASE

OF

THE

GUARANTEED

ASSET

PROTECTION.

5-9.3-105.

Calculation

and

payment

of

deficiency

balance.

(1)

THE

CALCULATION

OF

THE

PAYMENT

OR

WAIVER

OF

THE

DEFICIENCY

BALANCE

MAY

EXCLUDE

THE

FOLLOWING,

AS

LONG

AS

THESE

EXCLUSIONS

ARE

CLEARLY

SPECIFIED

IN

THE

GAP

AGREEMENT:

(a)

AMOUNTS

OWED

FOR

UNPAID

INSTALLMENTS

UNDER

THE

FINANCE

AGREEMENT,

INCLUDING

ANY

FEES

OR

SURCHARGES

IMPOSED

AS

LATE

CHARGES

FOR

UNPAID

INSTALLMENTS;

(b)

LEGALLY

PERMITTED

FEES

INCURRED

AFTER

THE

EFFECTIVE

DATE

OF

THE

FINANCE

AGREEMENT;

(c)

FEES

FOR

THE

RETURN

OR

DISHONOR

OF

CHECKS

OR

OTHER

INSTRUMENTS

TENDERED

AS

PAYMENT;

(d)

PREMIUMS

OR

FEES

FOR

LEGALLY

PERMITTED

INSURANCE

ADDED

AFTER

THE

EFFECTIVE

DATE

OF

THE

FINANCE

AGREEMENT;

(e)

REFUNDS

OWED

ON

CANCELLABLE

SERVICE

CONTRACTS

AND

OTHER

PROTECTION

PRODUCTS

THAT

WERE

FINANCED

IN

THE

FINANCE

AGREEMENT;

(f)

THE

SALVAGE

VALUE

OF

THE

MOTOR

VEHICLE,

AS

DETERMINED

BY

THE

CONSUMER'S

PRIMARY

INSURER

OF

THE

MOTOR

VEHICLE,

IF

THE

TOTALED

MOTOR

VEHICLE

IS

RETAINED

BY

THE

CONSUMER;

AND

(g)

DEDUCTIONS

TAKEN

BY

THE

CONSUMER'S

PRIMARY

INSURER

OF

THE

MOTOR

VEHICLE

FOR

PRIOR

UNREPAIRED

DAMAGE

TO

THE

MOTOR

PAGE

7

-HOUSE

BILL

23-1181

VEHICLE

IF,

BEFORE

TAKING

THE

DEDUCTION,

THE

GAP

ADMINISTRATOR

OR

LENDER

HAS

DOCUMENTARY

PROOF

THAT:

(I)

THE

CONSUMER

SUBMITTED

AN

INSURANCE

CLAIM

RELATED

TO

PRIOR

UNREPAIRED

DAMAGE

TO

THE

MOTOR

VEHICLE;

OR

(II)

THE

CONSUMER

RECEIVED

PAYMENT

FOR

THE

PRIOR

UNREPAIRED

DAMAGE

TO

THE

MOTOR

VEHICLE.

(2)

EXCEPT

AS

PROVIDED

IN

THIS

ARTICLE

9.3,

THE

GAP

AGREEMENT

MUST

PAY

OR

WAIVE

ALL

OF

THE

DEFICIENCY

BALANCE

THAT

WOULD

HAVE

BEEN

OWED

IF:

(a)

THE

CONSUMER

HAD

MAINTAINED

PROPERTY

DAMAGE

INSURANCE

COVERING

THE

ACTUAL

CASH

VALUE

OF

THE

MOTOR

VEHICLE

AS

OF

THE

DATE

OF

LOSS,

EVEN

IF

THE

CONSUMER

HAS

NOT

MAINTAINED

SUCH

PROPERTY

DAMAGE

INSURANCE;

OR

(b)

THE

CREDITOR

HAD

PURCHASED

PROPERTY

DAMAGE

INSURANCE

FOR

THE

MOTOR

VEHICLE

PURSUANT

TO

SECTION

5-2-209.

(3)

THE

GAP

AGREEMENT

MUST

PROVIDE

THE

CONSUMER

WITH

A

FULL

REFUND

OR

A

CREDIT

OF

THE

AMOUNT

OF

THE

CONSUMER'S

DEDUCTIBLE

CHARGED

FOR

PROPERTY

DAMAGE,

UP

TO

FIVE

HUNDRED

DOLLARS,

AS

PART

OF

THE

PAYMENT

OF,

OR

RELIEF

FROM,

LIABILITY

FOR

THE

DEFICIENCY

BALANCE.

THE

GAP

AGREEMENT

MAY

PROVIDE

ADDITIONAL

COVERAGE

FOR

THE

CONSUMER'S

DEDUCTIBLE

IN

EXCESS

OF

FIVE

HUNDRED

DOLLARS.

5-9.3-106.

Cancellation

of

GAP

agreement.

(1)

THE

ORIGINAL

CREDITOR

MUST

REFUND

TO

THE

CONSUMER

THE

UNEARNED

GAP

FEE

PAID

PURSUANT

TO

THE

GAP

AGREEMENT

IF:

(a)

THE

FINANCE

AGREEMENT

IS

PREPAID

PRIOR

TO

MATURITY

OR

THE

MOTOR

VEHICLE

IS

NO

LONGER

IN

THE

CONSUMER'S

POSSESSION

DUE

TO

THE

CREDITOR'S

LAWFUL

REPOSSESSION

AND

DISPOSITION

OF

THE

COLLATERAL;

AND

(b)

THE

CONSUMER

HAS

NOT

MADE

A

CLAIM

UNDER

THE

GAP

AGREEMENT.

PAGE

8

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BILL

23-1181

(2)

(a)

IF

THE

GAP

AGREEMENT

IS

PROVIDED

AS

A

CONTRACTUAL

TERM

OF

THE

FINANCE

AGREEMENT,

ANY

REFUND

ISSUED

MUST

BE

CALCULATED

USING

A

PRO

RATA

METHOD

OR

ANY

OTHER

METHOD

APPROVED

BY

THE

ADMINISTRATOR.

(b)

IF

THE

GAP

AGREEMENT

IS

PROVIDED

AS

INSURANCE,

ANY

REFUND

ISSUED

MUST

BE

CALCULATED

USING

A

METHOD

AUTHORIZED

UNDER

APPLICABLE

INSURANCE

STATUTES,

RULES,

OR

INTERPRETATIONS

OF

THE

COMMISSIONER

OF

INSURANCE

PURSUANT

TO

TITLE

10.

(3)

(a)

IN

THE

EVENT

THAT

THE

CONSUMER

FINANCE

AGREEMENT

HAS

BEEN

ASSIGNED

TO

A

PERSON

OTHER

THAN

THE

ORIGINAL

CREDITOR,

THE

ASSIGNEE

SHALL

SEND

NOTICE

TO

THE

ORIGINAL

CREDITOR

REQUESTING,

ON

BEHALF

OF

THE

CONSUMER,

A

REFUND

OF

THE

UNEARNED

GAP

FEE

PURSUANT

TO

THE

GAP

AGREEMENT.

UPON

RECEIPT

OF

SUCH

NOTICE

FROM

THE

ASSIGNEE,

THE

ORIGINAL

CREDITOR

SHALL

PROVIDE

THE

UNEARNED

GAP

FEE

TO

THE

CONSUMER

WITHIN

THIRTY

DAYS.

(b)

IF

THE

ORIGINAL

CREDITOR

HAS

NOT

REFUNDED

THE

UNEARNED

GAP

FEE

TO

THE

CONSUMER

WITHIN

THIRTY

DAYS

PURSUANT

TO

SUBSECTION

(3)(a)

OF

THIS

SECTION,

THE

ASSIGNEE

SHALL

PROVIDE

THE

REFUND

TO

THE

CONSUMER,

AND

THE

ORIGINAL

CREDITOR

OR

GAP

ADMINISTRATOR

SHALL

REIMBURSE

THE

ASSIGNEE

FOR

THE

AMOUNT

OF

SUCH

REFUND

NO

LATER

THAN

FORTY-FIVE

DAYS

AFTER

THE

ORIGINAL

CREDITOR

OR

GAP

ADMINISTRATOR

HAS

RECEIVED

NOTICE

FROM

THE

ASSIGNEE.

(4)

A

CANCELLATION

FEE

OF

NOT

MORE

THAN

TWENTY-FIVE

DOLLARS

MAY

BE

CHARGED

TO

A

CONSUMER

IF

THE

CONSUMER

CANCELS

THE

GAP

AGREEMENT

MORE

THAN

THIRTY

DAYS

AFTER

THE

EFFECTIVE

DATE

OF

THE

GAP

AGREEMENT.

5-9.3-107.

Filing

of

claim.

A

CONSUMER

HAS

NINETY

DAYS

AFTER

THE

LOSS

SETTLEMENT

FROM

ANY

PROPERTY

DAMAGE

INSURANCE

OR

FROM

THE

DATE

THE

CREDITOR

NOTIFIES

THE

CONSUMER

OF

ANY

DEFICIENCY

BALANCE

OWED,

WHICHEVER

IS

LATER,

TO

FILE

A

CLAIM

UNDER

THE

GAP

AGREEMENT

OR

SEEK

DEBT

CANCELLATION

FROM

THE

CREDITOR.

5-9.3-108.

Prohibitions

on

sale

of

guaranteed

asset

protection

agreements.

(1)

A

GAP

AGREEMENT

SHALL

NOT

BE

SOLD

TO

A

CONSUMER

PAGE

9

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BILL

23-1181

IF:

(a)

THE

CONSUMER

IS

INELIGIBLE

FOR

A

GAP

AGREEMENT;

(b)

THE

FINANCE

AGREEMENT

TERMS

PRECLUDE

COVERAGE

UNDER

A

GAP

AGREEMENT;

(c)

THE

MOTOR

VEHICLE

USED

AS

COLLATERAL

FOR

THE

FINANCE

AGREEMENT

IS

INELIGIBLE

FOR

COVERAGE

UNDER

A

GAP

AGREEMENT;

(d)

THE

GAP

AGREEMENT

LIMITS

COVERAGE

TO

A

MAXIMUM

LOAN

TO

VALUE

RATIO

AND

THE

TERMS

OF

THE

FINANCE

AGREEMENT

EXCEED

THE

MAXIMUM

LOAN

TO

VALUE

RATIO

STATED

IN

THE

GAP

AGREEMENT;

(e)

THE

MAXIMUM

LOAN

TO

VALUE

RATIO

IN

THE

GAP

AGREEMENT

EXCEEDS

ONE

HUNDRED

FIFTY

PERCENT;

OR

(f)

THE

TRANSACTION

WOULD

BE

UNCONSCIONABLE

AS

DESCRIBED

IN

SECTION

5-4-106,

5-5-109,

OR

5-6-112.

5-9.3-109.

Enforcement.

THE

ADMINISTRATOR

DESIGNATED

IN

SECTION

5-6-103

MAY

ENFORCE

THE

PROVISIONS

OF

THIS

ARTICLE

9.3,

PURSUANT

TO

ARTICLE

6

OF

THIS

TITLE

5,

AGAINST

ANY

CREDITOR

OR

GAP

ADMINISTRATOR

WHO

VIOLATES

THIS

ARTICLE

9.3.

SECTION

4.

Act

subject

to

petition

-

effective

date

-

applicability.

(1)

This

act

takes

effect

January

1,

2024;

except

that,

if

a

referendum

petition

is

filed

pursuant

to

section

1

(3)

of

article

V

of

the

state

constitution

against

this

act

or

an

item,

section,

or

part

of

this

act

within

the

ninety

-day

period

after

final

adjournment

of

the

general

assembly,

then

the

act,

item,

section,

or

part

will

not

take

effect

unless

approved

by

the

people

at

the

general

election

to

be

held

in

November

2024

and,

in

such

case,

will

take

effect

on

the

date

of

the

official

declaration

of

the

vote

thereon

by

the

governor.

PAGE

10

-HOUSE

BILL

23-1181

(2)

This

act

applies

to

guaranteed

asset

protection

agreements

entered

into

on

or

after

the

effective

date

of

this

act.

ot/

Julie

McCluskie

SPEAKER

OF

THE

HOUSE

OF

REPRESENTATIVES

Robin

Jones

CHIEF

CLERK

OF

TH

OUSE

OF

REPRESENTATIVES

Steve

Fenberg

PRESIDENT

OF

THE

SENATE

e.idicte:c

e

Aireer-e.p

Cindi

L.

Markwell

SECRETARY

OF

THE

SENATE

APPROVED

IMIL,

-

at_

'6.

01

ry

(Date

and

Time)

Jared

S

lis

GO

OR

OF

T

STATE

OF

COLORADO

PAGE

11

-HOUSE

BILL

23-1181