AFSA, Joint Trades, Members of Congress File Briefs in GAP Case
AFSA filed a joint amicus brief regarding the Davidson v. United Auto Credit case yesterday. The case addresses whether financing Guaranteed Asset Protection (GAP) brought a vehicle contract under the Military Lending Act (MLA). The case is currently with the U.S. Circuit Court of Appeals for the Fourth Circuit.
The joint trade brief lays out clearly that a retail installment sales contract (RIC) is not subject to the MLA because the purchase of products like GAP are inextricably linked. They would not be purchased without the purchase of the vehicle. Accepting the arguments of the appellant in this case would require the court to rewrite the statute passed by Congress.
“Purchase money auto loans did not cause the problems that Congress sought to address in the MLA—i.e., financial problems suffered by servicemembers when using certain loan products,” the brief notes. “To the contrary, GAP waivers provide servicemembers a valuable means to mitigate risk and avoid the devastating financial impact if the vehicle securing the loan is destroyed or stolen.”
In addition to the joint trade brief, a group of current and former House and Senate members, most of whom were in Congress when the MLA first passed in 2005 and/or during subsequent amendments to MLA, submitted a brief which explains that the vehicle finance contract that the appellant is suing over was not intended to be covered.
The Members argued plainly that, while Congress “authorized the Department of Defense (DOD) to define the term “consumer credit,” which generally controls what types of loans the MLA covers, Congress withheld authorization for the DoD to define “consumer credit” in a way that would bring vehicle loans under the MLA’s regulatory umbrella.” The appellant argues exactly for the opposite to occur.
AFSA will continue to closely follow this case and keep members informed as the appeals process continues.
March 25th, 2022 by Dan Bucherer