Credit Acceptance Corp. has formally settled a lawsuit brought last year by the attorney general of Massachusetts, which called into question many of the lender's business practices.
The suburban Detroit subprime auto lender will pay $27.2 million into a trust, with funds being made available to more than 3,000 borrowers in the Bay State, according to the terms of a settlement filed Wednesday in a Massachusetts court. The settlement also requires Credit Acceptance to be more transparent with borrowers in the state going forward.
"This matter was vigorously contested," the company said in a statement. "However, Credit Acceptance believes it to be in the best interest of the Company to conclude this litigation, and is pleased to announce its resolution. The Company looks forward to continuing to serve customers in the Commonwealth of Massachusetts through its financing programs."
Attempts to reach a spokesperson for the company for further comment were unsuccessful Wednesday afternoon.
Partial terms of the settlement were previously reported by Crain's Detroit Business, an affiliate of Automotive News, in April at the same time longtime CEO Brett Roberts announced his retirement from the lender. Kenneth Booth was named the company's new CEO at the same time.
"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," Massachusetts Attorney General Maura Healey said in a statement Wednesday.
"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..."
Healy has brought multiple other lawsuits against other lenders in Massachusetts as well.
Per the terms of the settlement, Credit Acceptance does not have to make any admission of liability.