MLA Rule Change: A Message from Dave Robertson

The good news is that GAP and credit insurance can be sold as they were before the Department of Defense published its 2017 amended interpretive rule. As of February 28, 2020, the Department withdrew that rule because it was concerned that creditors were unable to technically comply with the MLA “if the purchase included products not expressly related to the purchase of the vehicle…because [the MLA] would prohibit creditors from taking a security interest in the vehicle in those circumstances and creditors may not extend credit if they could not take a security interest in the vehicle being purchased.”  

The bad news is that GAP and all other voluntary protection products are in the spotlight in an election year – more than the usual level of regulatory oversight. Moreover, the 2020 amended interpretive rule indicates that the Department plans to conduct additional analysis of the issue.  Thus, it’s unclear whether further developments will be forthcoming, after the Department conducts its additional analysis. In addition, some state regulators have been active when it comes to ancillary products offered in connection with auto financing transactions.    

It’s important that dealers adhere to the following fair practice policies in marketing and selling voluntary protection products:

  • The retail price charged should be commensurate with the product’s value – based on a conservative and accurate dollars-and-cents interpretation of consumer value received.
  • The products must be accurately explained and properly disclosed.
  • All parties involved in the transaction should be aware of – and comply with – any applicable voluntary protection product refund requirements.   

Of course, when it comes to selling GAP, you should first make sure a legitimate gap actually exists. But what if the customer wants GAP coverage – even after being informed there is no

AFIP Best Practice

If a gap doesn’t exist and the F&I person explains to the customer that there isn’t a gap, but the customer wants GAP coverage anyway, the F&I person should write a note to record the situation and the customer’s choice, and have the customer and the F&I manager initial the note and put it in the deal jacket.

The NADA/NAMAD/AIADA-published “Driven – Voluntary Protection Products: A Model Dealership Policy” is addressed in the AFIP certification curriculum. Copies are available from AFIP on request at no charge by emailing

David Robertson, MBA   

Executive Director, AFIP

The information herein was approved by attorneys at Hudson Cook, LLP.