State AG Sues CAC

By Staff Writer September 11, 2020

A lawsuit has been filed against national auto lender Credit Acceptance Corporation (CAC) for allegedly making unfair and deceptive auto loans to thousands of Massachusetts consumers, providing investors with false or misleading information regarding auto securities they offered, and engaging in unfair debt collection practices, Attorney General Maura Healey announced.

The complaint, filed in Suffolk Superior Court, alleges that since 2013, CAC failed to inform investors that the company topped off the pools of loans that they packaged and securitized with higher-risk loans, despite claiming otherwise in disclosures to investors. The complaint also alleges that CAC has made high-interest subprime auto loans to Massachusetts borrowers that the company knew borrowers would be unable to repay, in violation of state law. While the company profited, borrowers experienced ruined credit, lost vehicles or down payments, and were left with an average of approximately $9,000 of debt. Additionally, CAC borrowers were subject to hidden finance charges, which resulted in CAC loans exceeding the usury rate ceiling of 21 percent mandated by state law.

“This company made unaffordable and illegal loans to borrowers, causing them to fall into thousands of dollars of debt and even lose their vehicles,” Healey said. “We are taking a close look at this industry and we will not allow companies to profit by violating our laws and exploiting consumers.”

In its lawsuit, the AG’s Office also alleges that the company took excessive and illegal measures to collect debt from defaulted borrowers, including sending faulty notices to borrowers with repossessed vehicles, harassing consumers with unlawfully repetitious collections calls, and overcharging consumers on their deficiencies.

The state is seeking relief for Massachusetts borrowers harmed by these alleged practices, as well as civil penalties and injunctive relief.

This lawsuit is part of AG Healey’s review of securitization practices in the subprime auto market — an industrywide investigation that remains ongoing. Last year, Exeter Finance paid more than $5.5 million for its role in financing unfair, subprime auto loans. Previously, the AG’s Office secured $22 million from Santander for its role in financing subprime auto loans for Massachusetts residents.

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Last modified on Monday, 21 September 2020 12:41