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Massachusetts reaches $27M settlement with auto lender

BOSTON (AP) — A national subprime auto lender has agreed to pay more than $27 million to settle allegations that it took advantage of thousands of Massachusetts borrowers, the state attorney general’s office said Wednesday.

The settlement with Credit Acceptance Corp. in Suffolk Superior Court will provide debt relief and credit repair to consumers, according to a statement from Attorney General Maura Healey.

“Thousands of Massachusetts consumers, many of them first-time car buyers, put their faith in CAC to help them with an auto loan, but were instead lured into high-cost loans, fell deeper in debt, and even lost their vehicles,” she said. “With this significant $27 million settlement, eligible Massachusetts drivers who have been suffering under the weight of a crushing car loan due to CAC’s deceptive practices will be able to receive relief and avoid new defaults.”

More than 3,000 borrowers across the state are expected to be eligible for settlement funds, many of them in Boston, Springfield, Worcester and Brockton.

The settlement also requires the company to make changes to its loan handling practices.

A voicemail seeking comment was left with the Southfield, Michigan-based company.

According to the lawsuit filed in August 2020, the company made high-interest loans to Massachusetts borrowers it knew or should have known they would be unable to repay; subjected some borrowers to hidden finance charges, which resulted in violations of the state’s 21% usury cap; and engaged in harassing and illegal collection practices.

The suit also alleged that the company did not inform investors that the company topped off the pools of loans they packaged and securitized with higher-risk loans.

Healey’s office has now settled with several subprime auto lenders she said engaged in deceptive and unfair practices.

Source: on 2021-09-01 14:42:46

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