Credit Acceptance Welcomes CFPB’s Withdrawal From Lawsuit

Rhea-AI Summary

Credit Acceptance (CACC) announced that the Consumer Financial Protection Bureau (CFPB) has filed a motion to withdraw from their joint lawsuit initiated on January 4, 2023, with the New York State Attorney General (NYAG). The withdrawal would leave NYAG as the sole plaintiff, limiting the case to New York consumers only.

The original lawsuit, filed in the United States District Court for the Southern District of New York, remains pending with Credit Acceptance's motion to dismiss. The company argues that the lawsuit attempts to create new law through litigation and presents legal theories conflicting with established statutes.

Credit Acceptance maintains that such legal actions negatively impact Americans by targeting companies providing financing to customers with non-prime or non-existent credit. The company has facilitated vehicle ownership for over five million people through their dealer network.

Positive

• CFPB's withdrawal significantly reduces legal risk and scope of the lawsuit
• Case now to New York consumers only instead of national scope
• Company maintains strong market position with over 5 million customers served

Negative

• Ongoing litigation with New York State Attorney General continues
• Legal challenges to company's lending practices remain unresolved

Insights

Financial Analyst

CFPB's withdrawal motion significantly reduces regulatory risk for Credit Acceptance, limiting potential penalties and business model threats.

The Consumer Financial Protection Bureau's motion to withdraw from its lawsuit against Credit Acceptance represents a substantial reduction in regulatory risk if approved by the court. This development would narrow the legal exposure from federal/nationwide to only New York state consumers, removing a significant regulatory overhang that has persisted since January 2023.

For a $5.8 billion market cap company operating in the sensitive subprime auto lending space, federal regulatory actions pose existential threats. The CFPB had authority to seek nationwide remedies that could have fundamentally altered Credit Acceptance's core business model of providing financing to non-prime borrowers.

While the New York Attorney General would remain as plaintiff (pending the court's decision on Credit Acceptance's motion to dismiss), the removal of federal involvement substantially decreases both the scope and severity of potential penalties. This development protects Credit Acceptance's ability to continue serving its target market of consumers with credit options, which the company describes as "essential to millions of Americans" needing vehicles for basic necessities.

The narrowing of regulatory scope from national to state level represents a meaningful de-risking event that preserves the company's operational flexibility across most of its markets, making this a significant positive development for Credit Acceptance.

Legal Expert

CFPB's lawsuit withdrawal motion dramatically reduces Credit Acceptance's legal exposure, localizing a federal case to NY jurisdiction only.

The CFPB's motion to withdraw from this legal action represents a major procedural victory for Credit Acceptance. If granted, this motion would transform what began as a powerful joint federal-state enforcement action into a significantly narrower state-only proceeding to New York consumers.

The original lawsuit, filed January 4, 2023, created dual-track regulatory exposure that posed considerable legal risk. Credit Acceptance's motion to dismiss - which remains pending - argues the case "seeks to create new law through litigation and asserts legal theories that conflict with established statutes." The CFPB's decision to file for withdrawal suggests potential weaknesses in applying federal consumer protection statutes to Credit Acceptance's business model.

This development is particularly significant because federal regulatory actions typically carry greater consequences than state proceedings - including nationwide injunctive relief, substantial monetary penalties, and industry-wide precedent. The New York Attorney General would continue as sole plaintiff, but with jurisdiction to a single state rather than nationwide authority.

From a legal standpoint, this motion, if granted, dramatically reduces both the geographical scope of potential remedies and the likelihood of sweeping business practice changes being imposed on the company. This represents a clear legal win that significantly de-risks Credit Acceptance's regulatory profile.

Southfield, Michigan, April 24, 2025 (GLOBE NEWSWIRE) -- Credit Acceptance Corporation (Nasdaq: CACC) (referred to as the “Company”, “Credit Acceptance”, “we”, “our”, or “us”) announced today that on April 24, 2025, the Consumer Financial Protection Bureau (“CFPB”) filed an unopposed motion to withdraw from the lawsuit that it initiated jointly on January 4, 2023, with the Office of the New York State Attorney General (NYAG) against Credit Acceptance in the United States District Court for the Southern District of New York. As of the filing of the CFPB’s motion, Credit Acceptance’s motion to dismiss the case in its entirety remains fully briefed and pending before the Court. Credit Acceptance expects that, if the CFPB’s motion is granted, the NYAG would be the sole remaining plaintiff, and the case would thus be limited to New York consumers only. 

As outlined in Credit Acceptance’s motion to dismiss, this lawsuit seeks to create new law through litigation and asserts legal theories that conflict with established statutes. Credit Acceptance believes that actions like this harm hardworking Americans by targeting companies that offer financing to customers with non-prime or non-existent credit. The financing provided by Credit Acceptance and other finance companies through auto dealers is essential to millions of Americans who otherwise would be unable to purchase the cars they need to get to work or school, or obtain quality healthcare or groceries, and otherwise take care of their families. The CFPB’s withdrawal would be a significant step toward ensuring that this lawsuit against Credit Acceptance is not used to sidestep the legislative process and impose sweeping regulatory reform.

“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.” 

About Credit Acceptance  
We make vehicle ownership possible by providing innovative financing solutions that enable automobile dealers to sell vehicles to consumers regardless of their credit history. Our financing programs are offered through a nationwide network of automobile dealers who benefit from sales of vehicles to consumers who otherwise could not obtain financing; from repeat and referral sales generated by these same customers; and from sales to customers responding to advertisements for our financing programs, but who actually end up qualifying for traditional financing.  

Without our financing programs, consumers are often unable to purchase vehicles, or they purchase unreliable ones. Further, as we report to the three national credit reporting agencies, an important ancillary benefit of our programs is that we provide consumers with an opportunity to improve their lives by improving their credit score and move on to more traditional sources of financing. Credit Acceptance is publicly traded on the Nasdaq Stock Market under the symbol CACC. For more information, visit creditacceptance.com. 

Cautionary Statement Regarding Forward-Looking Information

We claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 for all of our forward-looking statements. Statements in this release that are not historical facts, such as those using terms like “may,” “will,” “should,” “believe,” “expect,” “anticipate,” “assume,” “forecast,” “estimate,” “intend,” “plan,” “target,” or similar expressions, and those regarding our future results, plans, and objectives, are “forward-looking statements” within the meaning of the federal securities laws. These forward-looking statements represent our outlook only as of the date of this release. Actual results could differ materially from these forward-looking statements since the statements are based on our current expectations, which are subject to risks and uncertainties. Factors that might cause such a difference include, but are not limited to, the factors set forth in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the Securities and Exchange Commission (the “SEC”) on February 12, 2025, and other risk factors discussed herein or listed from time to time in our reports filed with the SEC and the following:

Industry, Operational, and Macroeconomic Risks

• Our inability to accurately forecast and estimate the amount and timing of future collections could have a material adverse effect on results of operations.

• Due to competition from traditional financing sources and non-traditional lenders, we may not be able to compete successfully.

• Adverse changes in economic conditions, the automobile or finance industries, or the non-prime consumer market could adversely affect our financial position, liquidity, and results of operations, the ability of key vendors that we depend on to supply us with services, and our ability to enter into future financing transactions.

• Reliance on third parties to administer our ancillary product offerings could adversely affect our business and financial results.

• We are dependent on our senior management, and the loss of any of these individuals or an inability to hire additional team members could adversely affect our ability to operate profitably.

• Our reputation is a key asset to our business, and our business may be affected by how we are perceived in the marketplace.

• An outbreak of contagious disease or other public health emergency could materially and adversely affect our business, financial condition, liquidity, and results of operations.

• The concentration in several states of automobile dealers who participate in our programs could adversely affect us.

• Reliance on our outsourced business functions could adversely affect our business.

• Our ability to hire and retain foreign engineering personnel could be hindered by immigration restrictions.

• We may be unable to execute our business strategy due to current economic conditions.

• Natural disasters, climate change, military conflicts, acts of war, terrorist attacks and threats, or the escalation of military activity in response to terrorist attacks or otherwise may negatively affect our business, financial condition, and results of operations.

• Governmental or market responses to climate change and related environmental issues could have a material adverse effect on our business.

• A small number of our shareholders have the ability to significantly influence matters requiring shareholder approval and such shareholders have interests which may conflict with the interests of our other security holders.

Capital and Liquidity Risks

• We may be unable to continue to access or renew funding sources and obtain capital needed to maintain and grow our business.

• The terms of our debt limit how we conduct our business.

• A violation of the terms of our asset-backed secured financings or revolving secured warehouse facilities could have a material adverse impact on our operations.

• Our substantial debt could negatively impact our business, prevent us from satisfying our debt obligations, and adversely affect our financial condition.

• We may not be able to generate sufficient cash flows to service our outstanding debt and fund operations and may be forced to take other actions to satisfy our obligations under such debt.

• Interest rate fluctuations may adversely affect our borrowing costs, profitability, and liquidity.

• Reduction in our credit rating could increase the cost of our funding from, and restrict our access to, the capital markets and adversely affect our liquidity, financial condition, and results of operations.

• We may incur substantially more debt and other liabilities. This could exacerbate further the risks associated with our current debt levels.

• The conditions of the U.S. and international capital markets may adversely affect lenders with which we have relationships, causing us to incur additional costs and reducing our sources of liquidity, which may adversely affect our financial position, liquidity, and results of operations.

Technology and Cybersecurity Risks

• Our dependence on technology could have a material adverse effect on our business.

• We depend on secure information technology, and a breach of our systems or those of our third-party service providers could result in our experiencing significant financial, legal, and reputational exposure and could materially adversely affect our business, financial condition, and results of operations.

• Our use of electronic contracts could impact our ability to perfect our ownership or security interest in Consumer Loans.

• Failure to properly safeguard our proprietary business information or confidential consumer and team member personal information could subject us to liability, decrease our profitability, and damage our reputation.

Legal and Regulatory Risks

• Litigation we are involved in from time to time may adversely affect our financial condition, results of operations, and cash flows.

• Changes in tax laws and the resolution of uncertain income tax matters could have a material adverse effect on our results of operations and cash flows from operations.

• The regulations to which we are or may become subject could result in a material adverse effect on our business.

Other factors not currently anticipated by management may also materially and adversely affect our business, financial condition, and results of operations. We do not undertake, and expressly disclaim any obligation, to update or alter our statements, whether as a result of new information or future events or otherwise, except as required by applicable law.

Investor Relations: Douglas W. Busk 
Chief Treasury Officer 
(248) 353-2700 Ext. 4432 
IR@creditacceptance.com 

FAQ

What is the impact of CFPB's withdrawal from the lawsuit against Credit Acceptance (CACC)?

The withdrawal would limit the case to New York consumers only, with NYAG becoming the sole plaintiff, significantly reducing the scope of the legal challenge against CACC.

When was the original lawsuit filed against Credit Acceptance (CACC) and by whom?

The lawsuit was jointly filed on January 4, 2023, by the Consumer Financial Protection Bureau (CFPB) and the New York State Attorney General (NYAG) in the United States District Court for the Southern District of New York.

How many customers has Credit Acceptance (CACC) served through their financing program?

Credit Acceptance has provided financing opportunities to over five million people through their network of dealers.

What is Credit Acceptance's (CACC) main argument against the lawsuit?

CACC argues that the lawsuit attempts to create new law through litigation and presents legal theories that conflict with established statutes.