CFPB and AG James Sue Auto Lender for Allegedly Targeting Consumers Likely to Default

  • New York AG Letitia James and the CFPB sued Credit Acceptance Corporation (CAC) for allegedly violating New York usury limits and consumer and investor protection laws, as well as the Consumer Financial Protection Act, by making predatory loans to consumers with poor credit attempting to buy used vehicles.
  • According to the complaint, CAC marketed itself as an alternative for consumers with limited credit options who were seeking to purchase a used car and, in addition to other fraudulent and usurious practices, allegedly targeted consumers who were likely to default on their auto loans by using an algorithm to predict the amounts the company could collect if the consumer defaulted in the form of collection efforts, repossessions, auctions, and deficiency judgments.
  • The lawsuit seeks the rescission or reformation of all contracts obtained by fraud, disgorgement of fraudulently obtain profits, civil penalties, restitution and damages to injured consumers, and a permanent injunction preventing CAC from engaging in fraudulent and illegal practices, among other things.