Item 8.01. Other Events.
On May 7, 2019, Credit Acceptance Corporation (the "Company", "Credit
Acceptance", "we", "our" or "us") received a subpoena from the Consumer Frauds
and Protection Bureau of the Office of the New York State Attorney General,
relating to the Company's origination and collection policies and procedures in
the state of New York. On July 30, 2020, we received two additional subpoenas
from the Office of the New York State Attorney General, both from the Consumer
Frauds and Protection Bureau and the Investor Protection Bureau, relating to the
Company's origination and collection policies and procedures in the state of New
York and its securitizations. On August 28, 2020, we were informed that one of
the two additional subpoenas was being withdrawn. On November 16, 2020, we
received an additional subpoena for documents from the Office of the New York
State Attorney General. On November 19, 2020, the Company received a letter from
the Office of the New York State Attorney General stating that the New York
State Attorney General was considering bringing claims against the Company under
the Dodd-Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank
Act"), New York Executive Law § 63(12), the New York Martin Act and New York
General Business Law § 349 in connection with the Company's origination and
securitization practices. On December 9, 2020, we responded to the New York
State Attorney General's letter disputing the assertions contained therein. On
December 21, 2020, we received two additional subpoenas from the Office of the
New York State Attorney General, one relating to data and the other seeking
testimony. On February 24 and April 30, 2021, we received additional subpoenas
from the Office of the New York State Attorney General seeking information
relating to its investigation. On August 23, 2022, we received a letter from the
Consumer Frauds and Protection Bureau of the Office of the New York State
Attorney General stating that the Office of the New York State Attorney General
intended to commence litigation against the Company asserting violations of New
York Executive Law § 63(12) and New York General Business Law §§ 349 and 352 et
seq. and applicable federal laws, including but not limited to claims that the
Company engaged in unfair and deceptive trade practices in auto lending, debt
collection and asset-backed securitizations in the State of New York in
violation of the Dodd-Frank Act, New York Executive Law § 63(12), the New York
Martin Act and New York General Business Law § 349, and seeking to obtain
injunctive relief, restitution, civil penalties, damages, disgorgement,
reformation, rescission, costs and such other relief as the court may deem just
and proper. On January 4, 2023, the Office of the New York State Attorney
General and the Consumer Financial Protection Bureau ("Bureau") jointly filed a
complaint in the United States District Court for the Southern District of New
York alleging that the Company engaged in deceptive practices, fraud,
illegality, and securities fraud in violation of New York Executive Law § 63(12)
and New York General Business Law §§ 349 and 352, and that the Company engaged
in deceptive and abusive acts and provided substantial assistance to a covered
person or service provider in violation of the Consumer Financial Protection Act
of 2010 (the "CFPA"), 12 U.S.C. § 5531 and 12 U.S.C. § 5536(a)(1)(B). The
complaint seeks injunctive relief, an accounting of all consumers for whom the
Company provided financing, restitution, damages, disgorgement, civil penalties,
and payment of costs. We cannot predict the eventual scope, duration or outcome
of this lawsuit at this time. As a result, we are unable to estimate the
reasonably possible loss or range of reasonably possible loss arising from this
litigation. The Company intends to vigorously defend itself in this matter.
On April 22, 2019, we received a civil investigative demand from the Bureau
seeking, among other things, certain information relating to the Company's
origination and collection of Consumer Loans, Third Party Providers and credit
reporting. On May 7, 2020, we received another civil investigative demand from
the Bureau seeking additional information relating to its investigation. The
Company raised various objections to the May 7, 2020 civil investigative demand,
and on May 26, 2020, we were notified that it was withdrawn. On June 1, 2020, we
received another civil investigative demand that was similar to the May 7, 2020
demand, and which raised many of the same objections. We formally petitioned the
Bureau to modify the June 1, 2020 civil investigative demand. On September 3,
2020, the Director of the Bureau denied our petition to modify the June 1, 2020
civil investigative demand. On December 23, 2020, we received a civil
investigative demand for investigational hearings in connection with the
Bureau's investigation. The Company objected to certain portions of the civil
investigative demands for hearings and, on January 19, 2021, the Bureau notified
the Company that it had withdrawn such portions from the December 23, 2020 civil
investigative demands. On March 11, 2021, we received another civil
investigative demand from the Bureau seeking additional information relating to
its investigation and an investigational hearing. On June 3, 2021, we received
another civil investigative demand from the Bureau seeking additional
information relating to its investigation. On December 6, 2021, we received a
Notice and Opportunity to Respond and Advise ("NORA") letter from the Staff of
the Office of Enforcement ("Staff") of the Bureau, stating that the Staff was
considering whether to recommend that the Bureau take legal action against the
Company for alleged violations of the CFPA in connection with the Company's
consumer loan origination practices. The NORA letter stated that the Bureau may
allege that the Company (i) committed abusive and unfair acts or practices in
violation of 12 U.S.C. § 5531(c) and (d) and 12 U.S.C. § 5536(a)(1)(B) and (ii)
substantially assisted the deceptive acts of others in violation of 12 U.S.C. §
5536 (a)(3). The NORA letter also stated that, in connection with any action,
the Bureau may seek all remedies available under the CFPA, including civil money
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penalties, consumer redress and injunctive relief. On January 18, 2022, the
Company responded to the NORA letter disputing that it had committed any
violations. On March 7, 2022, we received another civil investigative demand
from the Bureau seeking additional information relating to its investigation. As
noted above, on January 4, 2023, the Bureau and the Office of the New York State
Attorney General jointly filed a complaint in the United States District Court
for the Southern District of New York alleging that the Company engaged in
deceptive practices, fraud, illegality, and securities fraud in violation of New
York Executive Law § 63(12) and New York General Business Law §§ 349 and 352,
and that the Company engaged in deceptive and abusive acts and provided
substantial assistance to a covered person or service provider in violation of
the CFPA, 12 U.S.C. § 5531 and 12 U.S.C. § 5536(a)(1)(B). The complaint seeks
injunctive relief, an accounting of all consumers for whom the Company provided
financing, restitution, damages, disgorgement, civil penalties, and payment of
costs. We cannot predict the eventual scope, duration or outcome of the lawsuit
at this time. As a result, we are unable to estimate the reasonably possible
loss or range of reasonably possible loss arising from the lawsuit. The Company
intends to vigorously defend itself in this matter.
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