CFPB drops suit against auto lender Credit Acceptance

Samuel Corum/Bloomberg

The Consumer Financial Protection Bureau dropped its lawsuit against the subprime auto lender Credit Acceptance Corp., ending its effort to seek redress for what the bureau had said were deceptive practices and usury law violations. 

The CFPB filed an unopposed motion Thursday to withdraw from its joint lawsuit with the New York attorney general against Credit Acceptance Corp., a move that, while not terminating the case, limits the case's application to New York consumers and leaves the New York attorney general as the sole plaintiff. 

The CFPB stated in its filing that counsel for the New York AG's office indicated that the Empire State plaintiffs did not object to the federal agency's motion.

While the company's motion to dismiss remains pending in federal court, the CFPB's exit significantly narrows the scope of legal action against the lender, whose leadership celebrated the move in a press release.

"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."

Since President Trump's election in November 2024, the CFPB — currently led by Treasury Secretary Scott Bessent as acting director — has taken a number of actions to roll back regulation and unwind lawsuits launched during the Biden administration.

The Bureau — long an adversary of the financial industry — has undergone significant staff and enforcement changes, including firing significant numbers of agency staff and disassembly of divisions and offices, although a judge halted over 1,400 firings in April.

The American Financial Services Association, an industry trade group, praised the CFPB's exit from the Credit Acceptance lawsuit. 

"From the start, this litigation was a clear example of the CFPB's attempt to reverse well-settled law and invent new requirements that were contrary to existing statutes and regulations," the group wrote in a press release.

Regulation and compliance

CFPB, New York AG sue auto lender Credit Acceptance for deceiving borrowers

January 4, 2023 2:08 PM

The suit, filed in January 2023, alleged that Credit Acceptance inflated car prices, buried finance charges and issued loans at rates exceeding New York's usury cap.

According to the initial suit, roughly 1.9 million borrowers obtained loans through Credit Acceptance between 2015 and 2021, including $4.9 billion worth of loans in 2020 alone. Roughly 90% of the company's loans included add-on products that were concealed from consumers, the suit alleged.

When the suit was filed, then-CFPB Director Rohit Chopra said the company's model "led to severe financial distress" for borrowers.

The CPFB's exit from the case marks an ongoing shift in federal regulatory posture and a reduction in consumer protection enforcement under the new administration.

Earlier this month, the CFPB dropped a lawsuit against Comerica Bank, the $79.3 billion-asset Dallas-based firm. The case was dropped without prejudice, meaning the agency may file it again. 

Also in April, the CFPB dismissed its case against Reliant Holdings and its CEO. They had been accused of tricking subprime consumers into opening high-fee credit cards.

In February, the agency dropped a $2 billion suit against Capital One Financial over claims the company denied loyal customers higher interest rates on their deposits. That same month, the CFPB also abandoned an enforcement action against TransUnion after previously saying the credit reporting company violated a 2017 directive regarding deceptive marketing practices.