The main lawsuit against Credit Acceptance is a January 2023 enforcement action brought jointly by the Consumer Financial Protection Bureau and the New York Attorney General, accusing the subprime auto lender of deceiving borrowers about the real cost of their loans and steering them into debt many could not repay. The CFPB withdrew from the case in April 2025, and as of June 2026 the New York Attorney General is reportedly close to a settlement with the company, though no terms have been disclosed.1Reporting based on New York federal court filings, June 2026.
Who Sued Credit Acceptance and What They Alleged
The CFPB and New York Attorney General Letitia James filed their joint complaint on January 4, 2023, in the U.S. District Court for the Southern District of New York. The case was docketed as No. 1:23-cv-00038 and assigned to Judge Jesse M. Furman.
At the center of the complaint was a gap between what borrowers were told they were paying and what they were actually charged. Loan agreements listed annual percentage rates of 22.99% or 23.99%, but the Attorney General’s investigation found that Credit Acceptance charged an average APR above 38%, with some loans topping 100%. Regulators said the difference came from inflated vehicle prices and undisclosed finance charges rolled into the loan amount.
One example in the complaint described a consumer required to pay more than $13,000 for a car the dealer needed only $5,614 to sell. After she paid $7,600 toward the loan, her vehicle was repossessed, and she was then sued for another $7,500.
The complaint also alleged that Credit Acceptance financed vehicles for far more than they were worth, made no meaningful effort to determine whether borrowers could repay, and allowed dealers to sell costly add-ons such as vehicle service contracts, sometimes without the buyer’s consent or by falsely claiming the products were required for financing.
The outcome data cited by the Attorney General was blunt. Nearly 90% of New York borrowers became delinquent at some point, more than half failed to repay their loans, and 44% had their vehicles repossessed. Even after repossession and auction, borrowers often owed thousands of dollars in remaining debt.
Alongside consumer protection claims under the federal Consumer Financial Protection Act, the New York Attorney General added securities fraud allegations under the state’s Martin Act. That count claimed Credit Acceptance packaged its subprime loans into securities sold to investors while falsely representing that the loans complied with applicable law.
How the Lending Model Fed the Allegations
Credit Acceptance does not lend directly to car buyers. It works with more than 12,000 dealerships nationwide, which originate loans at the point of sale. Once a contract is signed, it is immediately assigned to Credit Acceptance, which then services and collects on the loan. The company specializes in consumers with low credit scores who typically cannot qualify for conventional auto financing.
Regulators argued that this arrangement created incentives to push loans regardless of affordability. The New York complaint alleged that Credit Acceptance projected total collections on each loan down to the penny, counting payments, late fees, repossession proceeds, and wage garnishments, and then entered profit-sharing agreements with dealers based on those projections. According to the complaint, the company earned roughly $3,100 per transaction even when a borrower defaulted, because repossessed vehicles could be liquidated at auction.
What Credit Acceptance Said in Response
Credit Acceptance moved to dismiss the entire complaint on March 14, 2023. Its core argument was that regulators were trying to hold it responsible for dealership conduct it did not control and had no legal duty to police, noting that it had no contact with buyers until after financing contracts were executed and assigned.
On the hidden-finance-charge theory, the company argued that regulators had invented a hypothetical “cash price proxy” rather than relying on actual market comparisons, and that under the Truth in Lending Act, assignees like Credit Acceptance can only be liable for disclosure violations apparent on the face of the loan documents. The company also pushed back on the ability-to-repay claims, pointing out that Congress had imposed such requirements only on mortgage lenders and credit card issuers, not auto finance companies.
Where the Case Stands Now
Judge Furman has not ruled on the motion to dismiss. In a February 6, 2026 order, he deferred a decision to allow settlement talks to continue, terminated the motion from the active calendar, and said he would restore it for decision if talks failed. He directed the parties to file a joint status letter by April 6, 2026.
As of June 2026, court filings suggest Credit Acceptance and the New York Attorney General are close to a deal.1Reporting based on New York federal court filings, June 2026. No settlement amount, restitution fund, or timeline has been made public.
Why the CFPB Is No Longer Involved
On April 24, 2025, the CFPB filed an unopposed motion to withdraw as a plaintiff. The court granted the motion on April 29, 2025, leaving the New York Attorney General as the sole plaintiff and narrowing any resolution to New York consumers rather than borrowers nationwide.
Credit Acceptance’s chief legal officer, Erin Kerber, said the company was “pleased with the CFPB’s decision to withdraw from this case, which we believe never should have been brought in the first place.” The withdrawal came after Acting Director Russell Vought, appointed by the Trump administration in February 2025, directed the bureau to stay ongoing investigations and dismiss a range of Biden-era lawsuits. Agency leadership said it was moving away from cases where its “jurisdictional or statutory authority is in dispute.”
The Earlier Massachusetts Settlement
Before the federal case, Credit Acceptance had already resolved a similar enforcement action brought by the Massachusetts Attorney General. In September 2021, the company agreed to pay $27.2 million over allegations of unfair practices in loan origination, collection, and securitization. The deal, described at the time as the largest of its kind, provided compensation and debt relief to more than 3,000 eligible Massachusetts borrowers.
The settlement also required specific changes to the company’s practices in Massachusetts:
- A standalone document making clear that vehicle service contracts are optional, with a seven-day cancellation window after loan assignment.
- A cap of two unsolicited collection calls to a borrower per seven-day period.
- Pre-sale and post-sale repossession notices that explicitly state fair market value will be used to determine any deficiency balance.
- Waiver of remaining balances for certain borrower groups and requests to delete related negative credit reporting.
Credit Acceptance made no admission of liability. The Massachusetts changes apply to that state; they are not a nationwide fix, and the New York case has produced no comparable public conditions to date.
Shareholder Securities Case
A separate securities fraud class action was filed on behalf of investors who bought Credit Acceptance stock between May 3, 2018, and November 27, 2020, alleging the company misled investors during that period. Credit Acceptance agreed to pay $12 million to settle, and the settlement received final court approval with a claims deadline of December 2, 2022. That case is distinct from the government enforcement actions and did not provide relief to borrowers.