Credit Acceptance is Served Subpoena From Mississippi AG
The subprime auto lender Credit Acceptance Corp. disclosed that it has received a subpoena from the Mississippi Attorney General for issues with the company’s origination and collection of loans.
The subpoena was issued on Aug. 14 and the company said it is cooperating with the inquiry, according to a Securities and Exchange Commission filing late last week.
“We cannot predict the eventual scope, duration, or outcome at this time,” the company said in the filing. “As a result, we are unable to estimate the reasonably possible loss or range of reasonably possible loss arising from this investigation.”
Neither Credit Acceptance nor the state attorney general’s office responded for comment by press time.
In March 2016, Credit Acceptance received a similar subpoena from the Attorney General of Maryland “relating to the company’s repossession and sales policies and procedures in the state,” according to the company’s 10-Q filing.
Additionally, Credit Acceptance was tapped by the Federal Trade Commission in late 2016 for more information regarding the company’s use of kill switches.
Yet, this most recent disclosure adds another layer of complexity because it specifically cites the company’s originations. In March, Santander Consumer USA entered into a written agreement with Federal Reserve Bank of Boston over similar allegations. Santander paid $25.9 million to resolve an investigation in two states regarding the financing and securitization of subprime auto loans that were deemed “unfair” to the consumer.
Credit Acceptance has continued to originate higher loan volumes and extend terms, even while defaults and delinquencies rise, the company reported in second- quarter earnings. Still, the company’s total outstandings grew to $4.6 billion in the quarter — a 21% increase year over year.
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