Oklahoma Settles $694 Million Multi-State Case with Credit Acceptance Corporation

Oklahoma's Attorney General Gentner Drummond has confirmed a multi-state settlement with Credit Acceptance Corporation (CAC), resulting in $694 million in cash and debt relief related to auto loans.

This significant agreement, which involves 41 states, is a response to allegations of predatory lending practices that left many consumers, particularly those with poor credit histories, financially vulnerable. Oklahoma's portion of the settlement amounts to $1.76 million. As a prominent auto financing company, CAC's settlement includes enforceable measures mandating the transparent communication of loan risks and safeguards against unscrupulous sales of unnecessary products like Vehicle Service Contracts (VSC) and Guaranteed Asset Protection (GAP). Attorney General Drummond emphasized the settlement's importance in addressing detrimental lending behaviors that contributed to consumer hardship and necessitated stringent changes to the company's operational standards.

Details of the Settlement Measures

The settlement, effective November 2, tackles the core issues that led to financially unsustainable loans for many consumers. According to the details, $60 million is earmarked for high-risk loans, ensuring debt relief and financial security for affected individuals. Of the total settlement, $388 million will be allocated for debt forgiveness specifically for those whose vehicles have already been repossessed, while an additional $246 million will support consumers whose vehicles remain operational but were at risk. These measures aim to ensure consumers retain vehicle possession and mitigate undue financial burdens.

Statewide Collaboration and Consumer Protection

The multi-state collaboration underscores a shared commitment to protect consumers from aggressive and misleading financial practices. The settlement also highlights the role of states like Maryland, Arkansas, California, Illinois, Minnesota, and New Jersey in advocating for consumer rights against CAC’s compensation structure that encouraged dealerships to upsell unwarranted products. These states argued that insufficient oversight allowed dealerships to manipulate loan agreements.

Key Settlement Allocations

Consumers seeking further details on the settlement can reach out to Credit Acceptance Corporation directly, while eligible individuals will be notified by CAC or a designated claims administrator regarding potential debt relief or restitution.