Thousands of Georgia consumers will receive <a href="https://bitcomme.com/audit-reveals-many-financial-inventory-missteps-in-wv-arts-department/” title=”Audit reveals many financial, inventory missteps in WV arts department”>financial relief under a multistate settlement with an auto financing company
The company is accused of issuing loans to people it allegedly knew could not afford them and adding unnecessary costs to their agreements.
Georgia Attorney General Chris Carr announced that Credit Acceptance Corporation has agreed to a settlement with 41 attorneys general that will provide $694 million in cash and debt relief nationwide. Of that amount, $28 million will go directly to 4,890 Georgia consumers.
The settlement is expected to provide a variety of forms of relief. Some consumers whose vehicles were repossessed will receive cash payments, while others will have outstanding loan balances forgiven.
The lawsuit filed by Georgia alleged that Credit Acceptance “engaged in deceptive, unfair, and abusive business practices when offering subprime auto loans to Georgia consumers.”
“Really transactions that were built to fail,” said Sarah Mancini, an attorney with the National Consumer Law Center.
According to the complaint, Credit Acceptance’s internal data showed the company knowingly approved loans for consumers who had a high likelihood of defaulting.
“They alleged that Credit Acceptance knew with a high degree of certainty that certain people were going to default and they made them loans anyway, with a profit motive,” Mancini said..
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The complaint also alleged the company added unnecessary charges and costs for products such as service agreements and warranties.
Court filings stated that many consumers “were unaware they were purchasing the products, did not understand that the products were optional, or were led to believe the products must be purchased to get financing.”
The settlement focused on loans made to so-called subprime borrowers, consumers with lower credit scores or incomes who may have limited access to traditional financing options.
“These are the most vulnerable people who are trying to get ahead, trying to get some economic stability, who are being targeted by a business model that was built to fail and that would leave them worse off in the end,” Mancini said.
In addition to consumer payments and debt relief, the consent agreement requires Credit Acceptance to make changes to its business practices going forward.
Consumers who believe they may be eligible for relief should watch for information sent through the mail regarding the settlement.
