SALT LAKE CITY — More than 120 Utah consumers are expected to receive restitution or debt relief as part of a $694 million multistate settlement with Credit Acceptance Corporation, one of the nation’s largest subprime auto lenders.
The Utah Attorney General’s Office and Utah Division of Consumer Protection announced the settlement, which includes nearly $1.9 million in relief connected to Utah. Of that amount, $122,092 will be paid directly to the state.
The settlement stems from an investigation in which states alleged Credit Acceptance issued auto loans it knew or should have known some consumers could not afford. The states alleged the company expected some borrowers would be unable to repay even the principal on their loans.
Credit Acceptance provides financing primarily to consumers with low or limited credit histories.
“No company should be able to profit by setting its own customers up to fail. This settlement holds Credit Acceptance accountable and makes clear that lenders who cut corners will answer for it,” Utah Attorney General Derek Brown said.
Under the settlement, 124 affected Utah consumers will share $177,935 in cash restitution. Another $1.08 million in debt will be canceled for Utah consumers whose vehicles were repossessed, while $526,810 in relief will go to consumers who retained their vehicles.
“Exploiting vulnerable Utah consumers through high-pressure sales and deception will not be tolerated,” Utah Division of Consumer Protection Director Katherine Hass said. “We remain committed to holding bad actors accountable and delivering justice directly to affected Utah households.”
The nationwide settlement provides $694 million in cash restitution and canceled debt. Pennsylvania’s attorney general also announced the multistate agreement this month.
The agreement also requires Credit Acceptance to change several of its lending and dealer practices beginning Nov. 2.
For five years, the company must offer certain borrowers whose loans quickly become delinquent an option that cancels 95% of what they owe, with Credit Acceptance agreeing not to sue to collect the remaining debt.
The company must also establish safeguards intended to prevent dealers from adding products such as service contracts and gap coverage without a buyer’s clear consent. Those requirements include additional disclosures, cancellation options and increased monitoring of dealers.
Credit Acceptance will also be required to disclose certain information about the risk of falling behind on payments and the value of a vehicle before a buyer signs a loan agreement.
For certain borrowers, vehicle prices will be limited to no more than 109% of standard book value for seven years. Dealers will also be prohibited from increasing the price of a vehicle based on a buyer’s credit or charging more than the advertised price.
Utah joined a multistate executive committee overseeing the settlement along with Maryland, Arkansas, California, Illinois, Minnesota and New Jersey.
Credit Acceptance will notify customers who qualify for debt relief, while a claims administrator will contact consumers eligible for restitution.
Utah consumers with questions can contact the Utah Division of Consumer Protection at consumerprotection@utah.gov.