Government Abandons Fight Against 'Predatory' Auto Lender
I have written a few times in the past through this substack that the CFPB, the police for the American public against unscrupulous banks, lending institutions, debt collection companies and credit cards, on a federal level, is being defunded and stripped of its powers. Here is another example:
Credit Acceptance Corporation - one of the nation’s largest subprime auto lenders—was once at the center of a high-profile lawsuit brought by the Consumer Financial Protection Bureau (CFPB). The agency accused the company of targeting low-income consumers with unaffordable, high-interest auto loans and exploiting them through aggressive collection tactics. But in April, the CFPB abruptly withdrew from the case, leaving New York’s attorney general - the co-plaintiff - pursue the matter alone.
Credit Acceptance is known for financing used vehicle purchases through a network of affiliated dealerships, often encouraging inflated pricing and selling costly add-ons like warranties and GAP insurance. Borrowers are frequently charged interest rates over 20%, and more than a quarter of financed vehicles end up repossessed. The company then sues borrowers for any remaining balance after auctioning the repossessed cars, typically recovering only 29% of the outstanding debt.
A CFPB lawsuit alleged that nearly 40% of Credit Acceptance loans were issued with the full knowledge that the borrower would likely be unable to repay the amount in full. Nonetheless, the lender continued profiting, thanks to inflated car prices, repossessions, lawsuits, and the sale of add-on products.
Since the beginning of President Trump’s second term, the CFPB has pulled back from at least 18 enforcement actions against financial firms, signaling a significant shift in regulatory posture. Critics argue that such retreats send a dangerous message: that high-risk lenders can operate without consequence.
Meanwhile, Credit Acceptance continues to thrive. Founded in 1972 by Don Foss, the company went public in 1992 and has become a Wall Street success story. Foss became a billionaire before his death, and his daughter remains a major shareholder.
To defend itself, the company has enlisted the law firm Skadden Arps and has challenged the constitutionality of the CFPB’s funding—an argument rejected by the Supreme Court in a separate case. The company also maintains it doesn’t directly issue loans but provides technology and guidance to car dealers, distancing itself from direct lending liability.
Despite multiple legal settlements - such as $325,000 to Mississippi in 2019 and $27 million to Massachusetts borrowers in 2020 - Credit Acceptance has never admitted wrongdoing.
The CFPB’s exit from the lawsuit leaves only state-level enforcement in play, further weakening consumer protections in an already predatory corner of the auto finance market.
Timeline of Main Events
1972: Don Foss founds Credit Acceptance Corporation.
1992: Credit Acceptance Corporation goes public.
2019: Credit Acceptance Corporation reaches a legal settlement, paying $325,000 to Mississippi.
2020: Credit Acceptance Corporation reaches a legal settlement, paying $27 million to Massachusetts borrowers.
Prior to April (unspecified year, likely during or after President Trump's second term): The Consumer Financial Protection Bureau (CFPB) initiates a high-profile lawsuit against Credit Acceptance Corporation, alleging predatory lending practices. The New York Attorney General joins as co-plaintiff.
During President Trump's second term (unspecified timeframe): The CFPB pulls back from at least 18 enforcement actions against financial firms, signaling a shift in regulatory posture.
April 2025: The CFPB abruptly withdraws from its lawsuit against Credit Acceptance Corporation, leaving the New York Attorney General to continue the case alone.
Ongoing: Credit Acceptance Corporation continues to thrive and operates successfully on Wall Street. It continues to defend itself against legal challenges.
Cast of Characters
Don Foss: Founder of Credit Acceptance Corporation in 1972. He became a billionaire before his death.
Don Foss's Daughter: A major shareholder in Credit Acceptance Corporation.
Consumer Financial Protection Bureau (CFPB): A government agency that previously brought a high-profile lawsuit against Credit Acceptance Corporation for alleged predatory lending practices. They later withdrew from the case.
New York Attorney General: Co-plaintiff in the lawsuit against Credit Acceptance Corporation alongside the CFPB. Remains the sole plaintiff after the CFPB's withdrawal.
President Trump: The US President whose second term coincided with a significant shift in the CFPB's regulatory posture, including pulling back from enforcement actions.
Skadden Arps: The law firm enlisted by Credit Acceptance Corporation to defend itself in legal actions.
Glossary of Key Terms
Add-on products: Optional services or items sold alongside a primary product, such as warranties or GAP insurance, often increasing the overall cost of a loan.
CFPB (Consumer Financial Protection Bureau): A U.S. government agency responsible for consumer protection in the financial sector.
Credit Acceptance Corporation: One of the nation's largest subprime auto lenders, the subject of the lawsuit discussed in the source.
Default: The failure to fulfill an obligation, especially to repay a loan or meet other financial terms.
GAP insurance (Guaranteed Asset Protection insurance): Insurance that covers the difference between the actual cash value of a vehicle and the balance of the loan if the vehicle is stolen or totaled.
Inflated pricing: The practice of charging excessively high prices for goods or services, often beyond their fair market value.
Predatory auto lender: A financial institution that targets vulnerable consumers with loans that have unfair or abusive terms, often leading to default and further financial distress.
Repossession: The act of taking back possession of an item, such as a vehicle, when a borrower fails to make payments as agreed.
Skadden Arps: The law firm enlisted by Credit Acceptance Corporation to defend itself.
Subprime auto lender: A lender that specializes in providing auto loans to borrowers with low credit scores or limited credit history, typically at higher interest rates due to the perceived higher risk.
Warranties: Written guarantees, typically from the manufacturer or a third party, that specify the conditions under which a product may be repaired or replaced if it breaks or malfunctions.
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