Auto Financing

February 18 2008

Kansas City, MO: (Feb-15-08) A lawsuit was brought against Credit Acceptance Corp. by Marvin Fielder, a Kansas City resident, in 1996, which later was certified as a class action lawsuit. The suit alleged that customers were overcharged for fees and interest on automobile installment contracts assigned to Credit Acceptance, and that the repossession notices Credit Acceptance sent to customers did not comply with Missouri law. The suit, originally filed in Jackson County Circuit Court, was transferred to federal court because the suit contained a federal Truth in Lending Act claim. Sources stated that Credit Acceptance, founded in 1972 and based in Southfield, finances car buyers with impaired credit. The company went public in 1992.

The company has agreed to a settlement in the case, in which it agreed to send checks to 15,000 Missourians as part of a $50 million-plus settlement. Under the terms of the agreement, Credit Acceptance will write off $39 million in outstanding account balances and distribute $13.1 million in cash to eligible car owners who financed used-car purchases through the company. Additionally, for those car owners against whom Credit Acceptance obtained court judgments, the company has also agreed to show the judgments as satisfied or partially satisfied based on the account balances that were written off. [KANSAS CITY STAR: AUTO FINANCING]

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