(The Center Square) – Nearly $2 million of a $694 million settlement with Credit Acceptance Corporation will go to about 1,300 North Carolina consumers, an estimated average of $1,345.
The multiple state litigation over predatory lending practices, resolved in the U.S. District Court for the Southern District of New York in Manhattan, included state-level consent judgments and approvals. The North Carolina settlement, says first-term Democratic Attorney General Jeff Jackson, includes $7.5 million in debt relief in addition to the consumers’ $2 million in restitution.
CAC, as it is more commonly known, also is banned from extending predatory loans in the future.
“This company preyed on vulnerable North Carolinians by convincing them to take out car loans they couldn’t afford,” said Jackson. “We’re getting money back for a lot of those customers, and we’re making sure that they can’t harm other people in this way again.”
CAC scored loans based on how much the company thought it would collect, the attorney general said. He said low-scored loans could not be afforded by consumers, and in some cases, they were not even able to pay back the principal. The result was often a default on the loan and loss of the vehicle.
The process begins with giving car loans carrying high interest to people with limited or poor credit. The state’s top prosecutor says misleading information on true costs of the loans and aggressive debt-collection tactics are part of the scheme.
A claims administrator is notifying eligible consumers for restitution; the company is notifying eligible consumers for debt relief.