Attorney General James Secures $700 Million from Abusive Subprime Auto Lender Credit Acceptance Corporation

NEW YORK – New York Attorney General Letitia James today secured $700 million, including more than $630 million in debt relief for consumers, from Credit Acceptance Corporation (CAC), an auto lender that specializes in subprime loans to consumers with low or no credit scores. Attorney General James and the Consumer Financial Protection Bureau (CFPB) sued CAC in January 2023, alleging that CAC deceptively pushed tens of thousands of consumers into unaffordable loans packaged with expensive add-on products, costing consumers millions of dollars and causing many to lose their vehicles when they could not make loan payments. The CFPB abandoned the lawsuit in early 2025 while the Office of the Attorney General (OAG) continued the case. Under a settlement with Attorney General James and a bipartisan coalition of 39 other states and the District of Columbia, CAC will end its deceptive and abusive lending practices, provide debt relief to more than 55,000 consumers, including about 2,500 New Yorkers, pay $60 million in restitution to consumers who lost their cars to repossession, and pay more than $15 million in penalties.

“CAC preyed on consumers in New York and across the nation with false promises of affordable loans, only to exploit them with outrageous interest rates that ruined their credit and cost them their cars,” said Attorney General James. “While their customers struggled to make payments, CAC made millions. By continuing our case to hold CAC accountable, we secured hundreds of millions of dollars in debt relief and restitution for all those who were taken advantage of by their schemes.”

CAC is a subprime lender that claims to help low-income borrowers with low credit scores or little credit history get approved for a car loan and purchase a vehicle. In January 2023, Attorney General James and CFPB sued CAC after a multiyear investigation by OAG found that CAC pushes borrowers into expensive loans with outrageous interest rates that they could not afford. The average CAC loan carried an annual interest rate of more than 38 percent, with some reaching over 100 percent. Attorney General James alleged that CAC hid the enormous cost of these loans from consumers, leading to high rates of delinquency or default and nearly half of all consumers having their vehicles repossessed during their loans. CAC projected precisely what it would collect from consumers in cash, payments, repossession and auction, and wage garnishment, and then cut backroom deals with dealers to ensure its own profits, even when consumers defaulted on their loans and lost their vehicles.

The OAG’s investigation also found that CAC helped car dealers push consumers to buy expensive and unnecessary add-on products and insurance. Consumers were either told that these add-ons were required to obtain loans or were never told about the products at all. CAC knew about these deceptive practices but took no steps to stop them. CAC allegedly unloaded its illegal loans onto investors by packaging and selling them as securities, falsely representing that the underlying loans complied with the law.

In April 2025, CFPB dropped its case against CAC, getting nothing in return. The OAG continued litigation and secured this settlement with a coalition of 39 other states and the District of Columbia. As a result, CAC will eliminate all debt owed by more than 55,000 consumers nationwide, resulting in more than $630 million in debt relief on auto loans that were destined to fail from the start. In addition, CAC will pay $60 million in restitution to thousands of additional consumers who were misled and lost their cars within months of taking out their loans with CAC. Finally, CAC will pay a $15.5 million penalty to the states. In total, New York will receive approximately $34 million in debt relief for consumers and restitution and penalty payments.

In addition to financial payments, CAC must adopt industry-leading practices to protect consumers. If certain at-risk borrowers default on car loans from CAC within 12 or 18 months and have their vehicle repossessed and sold, CAC must forgive 95 percent of their debt and will only be allowed to collect the remaining five percent. CAC is also barred from suing to collect the debt or reselling it to others. To prevent consumers from paying for unwanted add-ons, CAC must contact consumers outside of the dealer showroom to clearly inform them of any products they purchased and offer them a process to cancel those products while keeping their vehicles.

Joining Attorney General James in securing this settlement are the attorneys general of Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Illinois, Indiana, Kentucky, Louisiana, Maine, Maryland, Michigan, Minnesota, Nevada, Nebraska, New Hampshire, New Mexico, New Jersey, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Utah, Vermont, Virginia, Washington, Wisconsin, and the District of Columbia, along with the Office of Consumer Protection of the State of Hawaii.

This matter is being handled by Senior Enforcement Counsel Christopher L. Filburn of the Consumer Frauds and Protection Bureau, under the supervision of Bureau Chief Jane M. Azia and Deputy Bureau Chief Laura J. Levine, and Assistant Attorney General Amanda Yoon and Senior Enforcement Counsel Roger Waldman of the Investor Protection Bureau, under the supervision of Bureau Chief Shamiso Maswoswe and Deputy Bureau Chief Kenneth Haim. Data Scientists Chelsea Daniels, Jasmine McAllister, and Akram Hasanov, and former Director Jonathan Werberg, all of the Research and Analytics Department, provided data analysis for this matter. The Consumer Frauds and Investor Protection Bureaus are part of the Division of Economic Justice, which is led by Chief Deputy Attorney General Chris D’Angelo and overseen by First Deputy Attorney General Meghan Faux.

Legal Disclaimer:

EIN Presswire provides this news content "as is" without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the author above.