Net income at Credit Acceptance Corp. shot up 20% year over year to $574 million in 2018 despite ongoing investigations by two state attorneys general.
The lender filed a disclosure with the SEC last week meant to “provide an update on two state matters” that are related to investigations by Massachusetts and Mississippi state attorneys general, company Senior Vice President and Treasurer, Doug Busk, said during the earnings call. “We wanted to provide the disclosure at the time we release earnings,” Busk said. The last update was announced Oct. 29, 2018.
In regard to the AG investigations, the company responded: “We are cooperating with the inquiry and cannot predict the eventual scope, duration, or outcome at this time. As a result, we are unable to estimate the reasonably possible loss or range of reasonably possible loss arising from this investigation.”
Meanwhile, Credit Acceptance added 4,037 new dealers to its network in 2018 — a 7.9% increase. As such, CAC’s loan volume grew 13.6% year over year, to 373,329 units for the full year 2018. Average volume per active dealer increased 4.9%.
Investigations began in December 2014 when Credit Acceptance received a civil investigative demand from the Office of the Attorney General of the Commonwealth of Massachusetts relating to the origination and collection of nonprime auto loans in Massachusetts. In November 2017, the lender received a second CID from the AG’s office seeking additional information related to origination and collection of consumer loans, along with information regarding securitization activities.
Additionally, in August 2017 Credit Acceptance received a subpoena from the Mississippi AG’s office claiming the lender may have engaged in unfair and deceptive acts or practices relating to the origination and collection of nonprime auto loans in the state, according to the filing.
The company also has investigations pending with the CFPB, DOJ, FTC, N.Y. Department of Financial Services, and attorneys general in Maryland and New York. It also has a lawsuit pending with Westlake Financial Services. The company did not provide further updates in its Jan. 30 SEC filing.
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