WA consumers get financial relief through auto lender settlement

Hundreds of Washington consumers will receive restitution through a $694 million multistate settlement with the subprime auto lender Credit Acceptance Corporation (CAC). The company will provide cash and debt relief to consumers nationwide to resolve allegations the company steered them into risky loans they would have difficulty repaying.

About 260 Washington consumers who were harmed will receive payments averaging about $1,400 from about $373,000 in restitution through the settlement. The settlement also includes approximately $2.4 million in debt relief for eligible Washingtonians who will be eligible for loan forgiveness.

CAC is one of the nation's largest auto finance companies, providing car loans to consumers with limited or impaired credit histories. The settlement also requires the company to, among other things, provide disclosures about loan risks, provide consumers "off ramps" from certain risky loans, and help guard consumers from dealers "packing" auto-loan contracts with unwanted insurance and vehicle servicing products.

"The law requires that lenders act fairly and transparently so that Washington borrowers understand what they're signing and do not get saddled with debt they can't afford to repay," Attorney General Nick Brown said. "This settlement will deliver much-needed relief to Washingtonians who were harmed by these unfair and deceptive practices."

The multistate investigation resolves allegations that CAC originated loans that the company knew or should have known consumers could not afford. The company gives each loan a proprietary "score" to predict the percentage amount it will collect. The states allege CAC issued loans even in cases where the company predicted the debt would not be paid back. Many consumers who took out those loans ended up in default and lost their vehicles, which were repossessed and sold at auction.

The settlement, effective Nov. 2, also resolves allegations the company encouraged and failed to reasonably prevent auto dealers from unlawfully "packing" loans with add-on products. The states allege the company's dealer compensation methodology and lack of reasonable dealer oversight resulted in dealers aggressively adding extra products when consumers were either unaware they were purchasing the products or were led to believe the products must be purchased to get financing.

The settlement provides $60 million in cash restitution that will be distributed by the attorneys general to consumers who received particularly risky loans from the company. For certain risky loans made between Nov. 1, 2015, and Nov. 30, 2025, CAC also will provide $388 million in debt relief to consumers whose cars have been repossessed, and $246 million in debt relief to consumers whose vehicles have not been repossessed, allowing those consumers to keep their vehicles.

Consumers with questions about the settlement can call CAC's customer service number: 800-634-1506. Customers eligible for debt relief will be notified by CAC. Consumers eligible for restitution will be notified by a claims administrator. The type of relief available will depend on when the loan was made, whether the loan is in default or collection, and whether the borrower has possession of the vehicle. The settlement does not require CAC to begin providing relief until Nov. 2.

The settlement also requires the company to make these changes to its lending practices:

• For consumers with certain risky loans made starting in December 2025, CAC will provide "off ramps" for loans that fail quickly. Qualifying consumers will get 95% debt relief, and the company is prohibited from filing collections lawsuits against them. CAC must provide these off ramps for a five-year period starting on Nov. 2.
• The settlement mandates a process to prevent unlawful product packing, including pre-purchase disclosures, a post-purchase process alerting consumers about the purchase(s) and allowing easier product cancelation, and dealer monitoring.
• CAC must provide consumers with pre-loan disclosures about the risks of default and the value of the vehicle.
• For seven years, the company must institute a price cap for vehicle prices at 109% of retail book value for certain consumers. This provision will protect consumers from dealers who may unfairly hike the price of the vehicle because the consumer chooses to finance the purchase or because the consumer has a low credit score.
• CAC must implement processes to prevent dealers from raising vehicle prices due to credit worthiness or above advertised prices.

The Executive Committee leading the settlement comprises the attorneys general of Maryland, Arkansas, California, Illinois, Minnesota, and New Jersey. Joining the settlement, in addition to Brown, are the attorneys general of Alabama, Alaska, Arizona, Colorado, Connecticut, Delaware, the District of Columbia, Florida, Georgia, Hawaiʻi, Indiana, Kentucky, Louisiana, Maine, Michigan, Nebraska, Nevada, New Hampshire, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Utah, Vermont, Virginia, and Wisconsin. New York is concurrently settling litigation it brought against CAC in the Southern District of New York.

Read the complaint and the consent decree.

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