Credit Acceptance Corporation Securities Litigation (2020)

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Lawsuit Overview

Defendant:Credit Acceptance Corporation
Date Filed:October 2nd, 2020
Industry:Finance: Consumer Services
Class Start Date:November 1st, 2019
Class End Date:August 28th, 2020

According to the Complaint, Credit Acceptance Corporation is a subprime auto finance company providing loans and other related financial products that enable automobile dealers to sell vehicles to consumers. In 2019, Credit Acceptance funded about 370,000 subprime auto loans nation-wide of which over 95% were subprime loans. A substantial portion of Credit Acceptance's loans are never repaid. The Company also securitizes and sells its loans to investors.

The Complaint alleges that during the Class Period, Defendants made materially false and/or misleading statements and failed to disclose material adverse facts about the Company's business, operations, and adherence to the appropriate laws and regulations. Specifically, the Complaint alleges Defendants failed to disclose to investors: (i) that the Company was topping off the pools of loans that they packaged and securitized with higher-risk loans; (ii) that Credit Acceptance was making high-interest subprime auto loans to borrowers that the Company knew borrowers would be unable to repay; (iii) that the borrowers were subject to hidden finance charges, resulting in loans exceeding the usury rate ceiling mandated by state law; (iv) that Credit Acceptance took excessive and illegal measures to collect debt from defaulted borrowers; (v) that, as a result, the Company was likely to face regulatory scrutiny and possible penalties from various regulators or lawsuits; and (vi) that, as a result of the foregoing, Defendant's positive statements about the Company's business, operations, and adherence to appropriate laws and regulations were materially misleading and/or lacked a reasonable basis.

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First Identified Complaint

Palm Tran, Inc. Amalgamated Transit Union, et al. v. Credit Acceptance Corporation, et al.

Date Filed:October 2nd, 2020
Class Period Start:November 1st, 2019
Class Period End:August 28th, 2020
First Identified Complaint Filings
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