HAWAIʻI OFFICE OF CONSUMER PROTECTION ANNOUNCES SETTLEMENT WITH SUBPRIME AUTO LENDER CREDIT ACCEPTANCE CORPORATION

News Release from DCCA, September 23, 2026

HONOLULU – The Hawaiʻi Department of Commerce and Consumer Affairs Office of Consumer Protection (OCP) announced that Hawaiʻi has entered into a settlement with Credit Acceptance Corporation (CAC) that will provide cash and debt relief to Hawaiʻi consumers in connection with their CAC car loans. If approved, individual Hawaiʻi consumers eligible for cash restitution may receive up to $115,000 in restitution or debt relief.

CAC is one of the nation’s largest auto finance companies, providing car loans to consumers with limited or impaired credit histories. The settlement includes injunctive terms that, among other things, require CAC to disclose loan risks and protect consumers from risky CAC loans and from “packing” CAC auto-loan contracts with unwanted Vehicle Service Contracts (VSC) and Guaranteed Asset Protection (GAP) products.

The multistate investigation resolves allegations that CAC originated loans that the company knew or should have known consumers could not afford. CAC gives a proprietary “score” to each of its loans representing its prediction of the percentage amount CAC will collect on the loan from all sources. The attorneys general allege that consumers could not reasonably afford many of CAC’s low “score” loans, including those where CAC predicted the consumer would not pay back even the loan’s principal loan amount. Unsurprisingly, many of those low “score” loans resulted in consumers defaulting on their loans and losing their cars when they were repossessed and sold at auction.

“Making high‑risk loans a lender knows a borrower cannot reasonably afford predictably leads to bad outcomes for borrowers and lenders,” said Mana Moriarty, executive director of the Office of Consumer Protection. “This settlement provides cash to affected borrowers, removes the threat of collection lawsuits and removes negative items from borrowers’ credit reports.”

The consent judgment, which will be submitted to a state court judge, also addresses allegations that CAC encouraged and failed to reasonably prevent unlawful VSC and GAP product “packing” by auto dealers in CAC’s network. The OCP and the coalition of state attorneys general investigating CAC’s conduct allege that CAC’s dealer compensation methodology and lack of reasonable dealer oversight resulted in dealers aggressively selling VSCs and GAP products in connection with CAC loans when consumers were either unaware they were purchasing the products, or were led to believe the products had to be purchased for the consumer to get financing.

Hawaiʻi’s settlement is part of a nationwide settlement involving CAC, the OCP and the attorney generals of 40 other states. The nationwide settlement, which requires approval of consent judgments in each participating state, includes a total of up to $60 million in cash restitution to be distributed to consumers to whom CAC gave particularly risky loans, up to $15 million to be paid to the settling attorneys general, and up to $634 million in debt forgiveness.

Hawaiʻi consumers eligible for cash restitution are presently expected to receive nearly $115,000 in direct payments from a settlement administrator, while those eligible for debt relief are expected to receive, or have already received a portion of, a total of nearly $830,000 in debt relief, meaning that CAC will not initiate collection lawsuits or attempt to collect on certain debt consumers owe on their loans. The state would be expected to receive approximately $112,000 in additional payments to be used for future consumer protection and education purposes.

The settlement’s injunctive terms include the following long- and short-term requirements designed to meaningfully reform the company’s lending practices:

For consumers with certain risky CAC loans that CAC made starting in December 2025, CAC will provide “off-ramps” for loans that fail quickly. Qualifying consumers will get 95% debt relief, and CAC is prohibited from filing collections lawsuits against them. CAC must provide these off-ramps for a five-year period starting on November 2, 2026.

The settlement mandates a process to prevent unlawful VSC and GAP product packing, including enhanced pre-purchase disclosures, a post-purchase process alerting consumers about the purchase(s) and allowing easier product cancelation, and dealer monitoring.

CAC must provide consumers with pre-loan disclosures about the risks of default and the value of the vehicle.

For seven years, CAC must institute a price cap for vehicle prices at 109% of retail book value for certain consumers.

CAC must implement processes to prevent dealers from raising car prices due to credit worthiness or above advertised prices.

The consent judgment requires CAC to reach out to consumers who are entitled to certain types of debt relief. Consumers with questions about their eligibility for relief can reach out to CAC’s customer service number, 800-634-1506, or, if the consent judgment is approved, directly to the claims administrator.

The Hawaiʻi Office of Consumer Protection appreciates the work of the multistate coalition, especially the Executive Committee leading the settlement, which comprises the attorneys general of Maryland, Arkansas, California, Illinois, Minnesota and New Jersey. The other states joining the settlement are Alabama, Alaska, Arizona, Colorado, Connecticut, Delaware, the District of Columbia, Florida, Georgia, Indiana, Kentucky, Louisiana, Maine, Michigan, Nebraska, Nevada, New Hampshire, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Utah, Vermont, Virginia, Washington and Wisconsin. New York is concurrently settling litigation it brought against CAC in the Southern District of New York.

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