Federal Judge Has Paused A Suit Against A Predatory Auto Finance Company Over A Different Lawsuit

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The increase in car prices has come with more predatory loan practices, since so many people are trying to buy cars they can’t afford. Credit Acceptance has been accused of one such predatory loan company, and the Consumer Financial Protection Bureau (CFPB) and New York state regulators have brought a suit against it. But that suit has been paused by a federal judge, according to Automotive News.

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CFPC and New York Attorney General Letitia James accuse Credit Acceptance of predatory lending practices: getting low income buyers to sign on the dotted line for loans the company knew they couldn’t afford or be approved for. The APR for these loans averaged 22 percent. They cited one borrower who had her vehicle repoed twice:

In one alleged instance, Credit Acceptance approved a $260-a-month loan for a mother of two who made just $950 per month, and whose vehicle ended up being repossessed twice.

But U.S. District Judge Jennifer Rearden, presiding over the case, decided to pause the suit. The reason? A case that has nothing to do with the one against Credit Acceptance.

Rearden cited a current Supreme Court case against the CFBP, in which the U.S. fifth circuit court ruled that the agency was unconstitutional by design because of how it receives its funding; the CFBP receives its funding directly from the Federal Reserve and not through congressional approval like other agencies. The CFPB filed a brief earlier this year against that decision.

So it would seem that the protection of consumers has to take a backseat to how the agency receives its money. And while Judge Rearden acknowledged a public interest in “seeing consumer protection laws enforced,” she spoke to the benefit of a hold on the case.

“Any potential harm to the public caused by delaying this action is outweighed by the benefit to consumers in proceeding in a streamlined fashion,” Rearden said.