Vermont AG: Credit Acceptance Corp. to Pay $694M in Multistate Settlement

Attorney General Charity Clark today announced a bipartisan, multistate settlement with Credit Acceptance Corporation (CAC), resolving allegations that CAC originated loans the company knew, or should have known, consumers could not afford. Under the settlement, joined by 40 state attorneys general, CAC will provide $694 million in cash and debt relief to consumers in connection with their car loans. For its share, Vermont will receive $701,251 in total, including restitution to 87 consumers, totaling $124,841, as well as debt relief to 60 consumers, totaling $462,871. The remaining $113,539 will be paid by CAC to the State. “There is no room for deception in the marketplace,” said Attorney General Clark. “When companies break the law, they will be held accountable. This settlement is an important step toward providing harmed consumers financial relief and ensuring these illegal, predatory practices are not repeated in the future.” CAC is one of the nation’s largest auto finance companies and provides car loans to consumers with limited or impaired credit histories. CAC gives a proprietary “score” to each of its loans, representing its prediction of the percentage amount CAC will collect on the loan from all sources. The attorneys general allege that consumers could not reasonably afford many of CAC’s low “score” loans, including those where CAC predicted the consumer would not pay back even the loan’s principal amount. Unsurprisingly, many of those low “score” loans resulted in consumers defaulting on their loans and losing their cars when they were repossessed and sold at auction. The settlement also includes injunctive terms that, among other things, require CAC to provide consumers with disclosures about loan risks, give consumers protections from bad outcomes from certain risky CAC loans, and help guard consumers from dealers “packing” CAC auto-loan contracts with unwanted Vehicle Service Contracts (VSC) and Guaranteed Asset Protection (GAP) products. These terms are designed to meaningfully reform the company’s lending practices, including: Customers who are eligible for debt relief will be notified by CAC. Consumers who are eligible for restitution will be notified by a claims administrator. Vermont consumers with questions about today’s settlement are encouraged to contact the Attorney General’s Office’s Consumer Assistance Program (CAP) by calling 800-649-2424. Joining Attorney General Clark in reaching the settlement are the attorneys general of Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, the District of Columbia, Florida, Georgia, Hawaiʻi, Illinois, Indiana, Kentucky, Louisiana, Maine, Maryland, Michigan, Minnesota, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Utah, Virginia, Washington, and Wisconsin.