Sound Credit Union has reached a $750,000 class action settlement over allegations that it overcharged borrowers for collateral protection insurance premiums, or related fees or interest.
Individuals may be entitled to a settlement payment if they:
- Lived in Washington
- Financed a motor vehicle through the Sound Credit Union
- On or after February 11, 2016, were charged more for (or due to) collateral protection insurance than they would have been charged had Sound Credit Union informed them of alleged gaps in insurance coverage, had used a prorated refund message, and not charged an administrative fee or received an administrative refund from the third-party security protection insurance company or third-party security protection insurance administrator .
Plaintiff alleges that Sound Credit Union’s overcharges for collateral protection insurance violate Washington consumer protection law and Washington common law.
Warranty protection insurance is a type of auto insurance that protects a car against physical damage, according to Bankrate. It is usually chosen by a lender when borrowers do not provide proof of insurance coverage and is added to loan payments for borrowers who do not properly insure their car.
The Sound Credit Union class action lawsuit alleges that the lender failed to notify borrowers of alleged deficiencies in their insurance coverage and improperly imposed collateral protection insurance policies on borrowers.
Because Sound Credit Union allegedly forces insurance on borrowers, they don’t have the ability to shop around for cheaper options, the plaintiff says. The lender also routinely fails to notify borrowers when it increases monthly payment amounts, causing them to inadvertently become late payments and face additional charges.
Sound Credit Union denies any wrongdoing, but has agreed to settle the warranty protection insurance class action lawsuit to avoid the costs and risks associated with a lawsuit.
Class members will receive a cash payment equal to their proportionate share of the amount Sound Credit Union would have overcharged them for collateral protection insurance premiums, fees and interest.
It is estimated that band members will receive between a minimum payout of $10 and a maximum of $2,000.
The deadline for class members to opt out or object to the Sound Credit Union settlement is August 29, 2022.
The final approval hearing will take place on September 16, 2022.
Eligible Class Members who do not opt out will receive a check in the mail following final approval of the settlement. Those who need to update their address can do so on the rules website or by contacting the settlement administrator.
No claim form is required for the Sound Credit Union settlement.