- Maryland AG Anthony Brown announced that Maryland and the AGs of 40 other states have reached a $694 million settlement with Credit Acceptance Corporation (CAC), a major auto finance company that provides loans to consumers with limited or impaired credit histories. The settlement provides a combination of cash restitution and debt relief related to certain CAC auto loans. The multistate investigation resolves allegations that CAC originated loans that the company knew or should have known consumers could not afford. The AGs allege that numerous CAC loans with low “scores”, which estimate the percentage of a loan CAC expects to collect, were unlikely to be repaid in full. Many of those low-score loans resulted in consumers defaulting on their loans and losing their cars to repossession or sold at auction.
- The settlement also addresses allegations concerning the sale of Vehicle Service Contracts (VSCs) and Guaranteed Asset Protection (GAP) products through dealers in CAC’s network. The AGs allege that CAC’s dealer compensation structure and oversight practices contributed to instances in which consumers were charged for these products without understanding they had purchased them or were told the products were required to obtain financing. The settlement includes injunctive terms that, among other things, require CAC to provide consumer 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 and Guaranteed Asset Protection products.
- The settlement provides $60 million in cash restitution that will be distributed to consumers to whom CAC gave particularly risky loans. For certain risky loans made between November 1, 2015, and November 30, 2025, CAC is also required to provide on or before November 2, 2026, $338,000,000 in debt relief to consumers whose cars have not been repossessed, allowing those consumers to keep their cars. CAC must also pay an additional $15 million to the AGs.