The Consumer Financial Protection Bureau (CFPB) has withdrawn from a lawsuit it initiated jointly with the Office of the New York State Attorney General (NYAG) against Credit Acceptance Corporation (CACC) in the United States District Court for the Southern District of New York, marking a significant development in the case.
Background on the Lawsuit
The CFPB and NYAG filed the lawsuit on January 4, 2023, alleging that Credit Acceptance engaged in unfair and deceptive practices. However, the CFPB has now withdrawn its participation in the case, allowing only the NYAG to proceed with the lawsuit.
- Credit Acceptance is a publicly traded company that offers financing options to customers with non-prime or non-existent credit.
- The company provides financing through auto dealerships, which is essential for millions of Americans who cannot afford to purchase cars on their own.
Arguments Made by Credit Acceptance
Credit Acceptance has argued that the lawsuit seeks to create new law through litigation and asserts legal theories that conflict with established statutes. The company believes that actions like this harm hardworking Americans by targeting companies like its own that offer financing to customers with non-prime or non-existent credit.
| Key Points | Arguments |
|---|---|
| Established Statutes | Credit Acceptance argues that the lawsuit seeks to create new law through litigation, which conflicts with established statutes. |
| Impact on Americans | Credit Acceptance claims that actions like this harm hardworking Americans by targeting companies like its own that offer financing to customers with non-prime or non-existent credit. |
Reaction from Credit Acceptance
“We are pleased with the CFPB’s decision to withdraw from this case, which we believe never should have been brought in the first place,” stated Erin Kerber, Credit Acceptance’s Chief Legal Officer. “We are proud to have provided over five million people with the opportunity to own a vehicle through our network of dealers. We look forward to millions more consumers having such an opportunity and remain committed to operating with integrity and in compliance with all applicable laws.”
About Credit Acceptance
Credit Acceptance is a leading provider of financing options to customers with non-prime or non-existent credit. The company offers financing through auto dealerships, which is essential for millions of Americans who cannot afford to purchase cars on their own.
“Without our financing programs, consumers are often unable to purchase vehicles, or they purchase unreliable ones. Further, as we report to the three national credit reporting agencies, an important ancillary benefit of our programs is that we provide consumers with an opportunity to improve their lives by improving their credit score and move on to more traditional sources of financing.”
— Erin Kerber, Credit Acceptance’s Chief Legal Officer
Cautionary Statement Regarding Forward-Looking Information
The company claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 for all of its forward-looking statements.
- Forward-looking statements include statements using terms like “may,” “will,” “should,” “believe,” “expect,” “anticipate,” “assume,” “forecast,” “estimate,” “intend,” “plan,” “target,” or similar expressions.
- These statements represent the company’s outlook only as of the date of this release.
Industry, Operational, and Macroeconomic Risks
The company faces various risks, including industry, operational, and macroeconomic risks.
- Industry risks include competition from traditional financing sources and non-traditional lenders.
- Operational risks include reliance on third parties to administer ancillary product offerings.
- Macroeconomic risks include adverse changes in economic conditions, the automobile or finance industries, or the non-prime consumer market.
Technology and Cybersecurity Risks
The company is also vulnerable to technology and cybersecurity risks.
- Dependence on technology could have a material adverse effect on the business.
- Dependence on secure information technology and proper safeguarding of proprietary business information and confidential consumer and team member personal information are essential.
Legal and Regulatory Risks
The company faces various legal and regulatory risks, including litigation and changes in tax laws.
- Litigation could adversely affect the company’s financial condition, results of operations, and cash flows.
- Changes in tax laws and the resolution of uncertain income tax matters could have a material adverse effect on the company’s results of operations and cash flows from operations.
Contact
For more information, contact the Investor Relations department at (248) 353-2700 Ext. 4432 or IR@creditacceptance.com.
