Dozens of Utahns are set to have their debt canceled and receive payments after a national auto loan company agreed to a settlement over claims it exploited borrowers with low credit scores. Utah and 39 other states reached the approximately $700 million settlement earlier this month with the Michigan-based Credit Acceptance Corporation. The states accused the company of quietly adding extra costs that buyers did not know were optional and issuing loans that consumers could not afford to repay. This settlement aims to bring relief to those impacted by what state officials described as predatory lending practices.
Utah Attorney General Derek Brown confirmed last week that a total of 124 Utahns will directly benefit from the settlement. These individuals are designated to receive a share of about $178,000 in direct restitution. Beyond these payments, the agreement provides significant debt relief for other Utah residents. More than $1 million in full debt relief is allocated for those whose vehicles were repossessed, offering a fresh start from overwhelming obligations. Additionally, nearly $527,000 in debt relief is designated for drivers who managed to keep their vehicles, reducing their outstanding loan balances. Attorney General Brown emphasized the importance of holding companies accountable for their practices, stating, "No company should be able to profit by setting its own customers up to fail." He further explained that this settlement ensures Credit Acceptance Corporation is held accountable and sends a clear message that lenders who prioritize shortcuts will face consequences.
The agreement also mandates new operational safeguards for Credit Acceptance Corporation, according to the attorney general’s office. These include a requirement for the company to offer buyers an immediate "out" when loan conditions rapidly deteriorate, preventing them from being trapped in rapidly worsening financial situations. Furthermore, the company must implement new steps designed to prevent car dealers from subtly integrating optional extras into a deal without the buyer's clear knowledge or consent. These and other measures are intended to protect consumers from misleading practices in the future.
The states' allegations against Credit Acceptance Corporation detailed a system where the company reportedly assigned each of its loans a specific internal score, which was meant to indicate how much money it realistically expected to collect from the borrower. State officials contended that many of these borrowers, particularly those with low scores, frequently defaulted on their loans, leading to the unfortunate repossession of their vehicles. Katherine Hass, who serves as the director of the Utah Division of Consumer Protection, firmly articulated the state's position, asserting, "Exploiting vulnerable Utah consumers through high-pressure sales and deception will not be tolerated."
Despite the settlement, Credit Acceptance Corporation maintained its stance in a news release published on its website, stating explicitly that it did not admit fault or wrongdoing. Vinayak Hegde, the company’s chief executive of credit acceptance, commented on the resolution, noting that it "provides certainty for our business, our dealer partners and the customers we serve." He further added that the provisions to which the company agreed are viewed as constructive, customer-focused, and align with evolving regulatory expectations within the industry. This settlement marks a significant step in consumer protection efforts across Utah and the nation.
