Utah consumers will receive nearly $1.9 million in a complaint settlement with Credit Acceptance Corp., a national auto-financing company.
Utah and 39 other attorneys general settled with CAC for $694 million in cash restitution and canceled debt to consumers nationwide on their car loans.
Utah officials said CAC extended credit to borrowers with low or limited credit histories. Following an investigation, the states alleged that CAC issued loans it knew or should have known consumers could not afford, including some the company expected borrowers would fail to repay even the principal. CAC assigned each loan a score reflecting how much it expected to collect, and many low-scoring borrowers defaulted and had their vehicles repossessed.
In the settlement, the 124 affected Utah consumers will receive a share of $177,935 in cash restitution. They will also benefit from about $1 million in full debt relief for those whose vehicles were repossessed and $526,810 for consumers who retained their vehicles.
Working alongside the Utah Division of Consumer Protection, the Office of the Utah Attorney General secured nearly $1.9 million in relief for Utah consumers, including $122,092 paid directly to the state.
“No company should be able to profit by setting its own customers up to fail,” said Utah Attorney General Derek Brown. “This settlement holds Credit Acceptance accountable and makes clear that lenders who cut corners will answer for it.”
“Exploiting vulnerable Utah consumers through high-pressure sales and deception will not be tolerated,” said Katherine Hass, director of the Utah Division of Consumer Protection. “We remain committed to holding bad actors accountable and delivering justice directly to affected Utah households.”
The settlement takes effect Nov. 2. It requires CAC to change how it makes loans and to stop dealers from quietly adding costly extras, like service contracts and “gap” coverage, to car deals without the buyer’s clear agreement. The states say CAC pushed dealers to sell these products and did too little to rein them in, so buyers often ended up paying for extras they didn’t know about or thought they had to buy to get the loan. According to the states, the way CAC paid its dealers, combined with weak oversight, encouraged the practice.
Going forward, the settlement requires CAC to:
• Give people a way out of certain risky loans that quickly go bad — canceling 95 percent of what they owe and agreeing not to sue them to collect. CAC must offer this for five years.
• Put safeguards in place so dealers can’t slip extra products into a deal, including clearer information before the sale, an easy way to cancel those products afterward, and closer monitoring of dealers.
• Tell buyers, before they sign, about the risk of falling behind and what the car is actually worth.
• Limit a car’s price to no more than 109 percent of its standard book value for certain buyers, for seven years.
• Stop dealers from raising a car’s price because of the buyer’s credit or above the advertised price.
In addition to the attorneys general, New York is concurrently settling litigation it brought against CAC in the U.S. District Court for the Southern District of New York.
Consumers with questions about the settlement can contact the Division of Consumer Protection at consumerprotection@utah.gov. CAC will notify customers eligible for debt relief. A claims administrator will notify eligible consumers of their restitution.
