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Auto Subprime Lender Accused of Misleading Consumers and Investors

  • Massachusetts AG Maura Healey sued subprime auto lender Credit Acceptance Corporation (“CAC”) over allegations that it made unfair and deceptive auto loans to consumers, engaged in unfair debt collection practices, misled investors regarding auto securities offerings, and violated state usury limits.
  • According to the AG’s office, the complaint alleges that CAC violated Massachusetts law by making subprime loans it knew the borrowers could not repay, charged hidden finance fees which resulted in CAC loans exceeding the state law usury ceiling of 21%, and failed to inform investors that its packaged pools of loans included higher-risk loans than its disclosures claimed, among other things.
  • The complaint seeks injunctive relief, restitution, and civil penalties.
  • According to the AG’s office, the lawsuit against CAC is part of the AG’s industry-wide review and investigation of securitization practices in the subprime auto market, including the previously reported multistate $550 million settlement with Santander Consumer USA Inc. over its role in financing subprime auto loans.