Credit Acceptance Corp. (CAC) is at the center of regulatory actions initiated over a two-week period by the Consumer Financial Protection Bureau (CFPB) and the attorneys general of Mississippi and New York, the company disclosed in a July 30 10-Q filed with the SEC. “We don’t have any insight into when and why those things get started,” said Doug Busk, senior vice president and treasurer, in a second quarter earnings call yesterday.
Credit Acceptance was subpoenaed by the Office of the N.Y. State Attorney General on May 7 for issues related to origination and collection policies and procedures in the state. On April 23, the Mississippi AG’s Office filed a complaint in the Chancery Court of the First Judicial District of Hinds County alleging that CAC “engaged in unfair and deceptive trade practices in subprime auto lending, loan servicing, vehicle repossession and debt collection” in violation of the state’s Consumer Protection Act. One day prior, CAC received a civil investigative demand from the CFPB seeking, among other things, information related to origination and collection procedures, loan modifications and credit reporting.
“We are unable to estimate the reasonably possible loss or range of reasonably possible loss” arising from the investigations, CAC wrote in the 10-Q.
Meanwhile, two other investigations into CAC were wrapped up last quarter. Specifically, on May 9, the Federal Trade Commission (FTC) closed an examination into CAC’s usage of GPS starter-interrupt devices on consumer vehicles. The FTC had initiated the investigation in November 2016.
In addition, the Financial Frauds & Consumer Protection Division of the N.Y. Department of Financial Services closed a yearlong examination into whether CAC had violated fair lending law or misrepresented information related to starter-interrupt devices to consumers. “We cooperated with the DFS to address its concerns and, on April 24, 2019, we learned that the DFS has closed its current examinations of the company,” according to the filing.
CAC has several other investigations pending.
