Multiple states and attorneys general that began to investigate Credit Acceptance during the height of the pandemic reached a $700 million resolution on Thursday.

The subprime auto finance company announced that it has entered, or will enter, into consent judgments with the office of the New York attorney general and 40 other attorneys general.

Credit Acceptance said the resolution ends the litigation filed by the New York attorney general in the United States District Court for the Southern District of New York in 2023, resolves the multistate investigation initiated in 2020, and was reached without any admission of fault or wrongdoing by the company.

According to a news release, the other states included in the matters are Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, District of Columbia, Florida, Georgia, Hawaii, Illinois, Indiana, Kentucky, Louisiana, Maine, Maryland, Michigan, Minnesota, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Utah, Vermont, Virginia, Washington, and Wisconsin.

“Credit Acceptance is pleased that the resolution provides greater clarity to industry participants regarding regulatory expectations and allows the management team to focus on serving customers, supporting dealer partners and executing the company’s long-term strategy,” Credit Acceptance said in the news release.

Under the consent judgments, Credit Acceptance said it will pay $60 million to a consumer relief fund, pay $15.5 million to the participating attorneys general for their investigation, and provide debt relief in the form of a waiver of all outstanding balances to certain customers.

That last component relates to 55,000 installment contracts, totaling $630 million, according to a news release from the New York attorney general.

The participating attorneys general will administer the consumer relief fund, according to the Credit Acceptance news release.

Credit Acceptance said the monetary components of the resolution will not require the company to record additional charges beyond amounts previously accrued and disclosed in the company’s financial statements.

Furthermore, Credit Acceptance said the consent judgments also allow the company to preserve and supplement its existing controls through consumer-facing disclosures relating to vehicle pricing and ancillary products, affordability-related protections and dealer oversight requirements.

“The company believes these requirements are broadly consistent with our focus on customers and our mission of changing lives, as well as the regulatory expectations in the automotive finance industry and do not fundamentally alter the company’s business model,” Credit Acceptance said.

The news release from the New York attorney general recapped prosecutors’ views of the investigation.

“In January 2023, attorney general (Letitia) James and the CFPB sued (Credit Acceptance) after a multiyear investigation by (the attorney general) found that (Credit Acceptance) pushes borrowers into expensive loans with outrageous interest rates that they could not afford. The average (Credit Acceptance) loan carried an annual interest rate of more than 38 percent, with some reaching over 100 percent,” the office’s news release said.

“Attorney general James alleged that (Credit Acceptance) hid the enormous cost of these loans from consumers, leading to high rates of delinquency or default and nearly half of all consumers having their vehicles repossessed during their loans. (Credit Acceptance) projected precisely what it would collect from consumers in cash, payments, repossession and auction, and wage garnishment, and then cut backroom deals with dealers to ensure its own profits, even when consumers defaulted on their loans and lost their vehicles,” the office’s news release continued.

In April of last year, the CFPB dropped its investigation into Credit Acceptance. James’ office explained why it continued to pursue a resolution.

“The investigation also found that (Credit Acceptance) helped car dealers push consumers to buy expensive and unnecessary add-on products and insurance. Consumers were either told that these add-ons were required to obtain loans or were never told about the products at all. (Credit Acceptance) knew about these deceptive practices but took no steps to stop them. (Credit Acceptance) allegedly unloaded its illegal loans onto investors by packaging and selling them as securities, falsely representing that the underlying loans complied with the law,” the office’s news release said.

James said in the news release, “While their customers struggled to make payments, (Credit Acceptance) made millions. By continuing our case to hold (Credit Acceptance) accountable, we secured hundreds of millions of dollars in debt relief and restitution for all those who were taken advantage of by their schemes.”

Credit Acceptance chief executive officer Vinayak Hegde — who took over the company last fall — offered these perspectives.

“This resolution provides certainty for our business, our dealer partners and the customers we serve. We believe the provisions we agreed to are constructive, customer-focused and consistent with the direction of regulatory expectations in our industry,” Hegde said in the news release.

“Importantly, the resolution allows us to keep our full attention on helping consumers who may have limited financing options obtain access to reliable transportation and the opportunity to improve their financial lives over time,” Hegde went on to say.