The Consumer Financial Protection Bureau (CFPB) and the New York State Office of the Attorney General filed a suit Wednesday against auto lender, Credit Acceptance Corporation.
The joint complaint alleged Credit Acceptance hid costs in loan agreements and violated New York usury limits and other consumer and investor protection laws.
The lawsuit seeks to force Credit Acceptance to reimburse consumers and pay a penalty.
Credit Acceptance obscured the true cost of its loans to car buyers, leading to severe financial distress for borrowers and subjecting them to aggressive debt collection tactics on loans its own systems predicted that borrowers can’t afford to repay.
Rohit Chopra, CFPB Director
“Credit Acceptance obscured the true cost of its loans to car buyers, leading to severe financial distress for borrowers and subjecting them to aggressive debt collection tactics on loans its own systems predicted that borrowers can’t afford to repay,” said CFPB Director Rohit Chopra. “The CFPB and the New York Attorney General seek to halt Credit Acceptance’s illegal practices and make consumers whole.”
“CAC claimed to help low-income New Yorkers purchase cars, but instead, drove them straight into debt,” said New York Attorney General Letitia James. “CAC steered hardworking New Yorkers onto a path of financial ruin by tricking them into unaffordable, high-interest auto loans while cutting backroom deals with dealers to increase their own profits. These predatory actions hurt innocent people and left them with mountains of debt. I thank the CFPB for their partnership to stop this harm and protect everyday New Yorkers.”
Credit Acceptance is headquartered in Southfield, Mich. Credit Acceptance is one of the country’s largest publicly traded auto lenders and does business with a network of more than 12,000 affiliated used-car dealers. According to the CFPB, approximately 1.9 million people took out used car loans with Credit Acceptance from Nov. 2, 2015 to April 30, 2021, with some rates as high as 22 percent.
In a statement to the Detroit Free Press, Credit Acceptance denied the complaint’s claims.
Credit Acceptance operates with integrity and believes it has complied with applicable laws and regulations. We believe the complaint is without merit and intend to vigorously defend ourselves in this matter.
Credit Acceptance statement
“Credit Acceptance operates with integrity and believes it has complied with applicable laws and regulations. We believe the complaint is without merit and intend to vigorously defend ourselves in this matter.”
This is not the only legal action Credit Acceptance has faced for allegedly violating consumer financial protection laws. Last year, the Massachusetts Attorney General secured more than $27 million from Credit Acceptance for individuals.
