The Consumer Financial Protection Bureau has dropped cases against Reliant Holdings, which operates as Horizon Card, and subprime auto lender Credit Acceptance.
The bureau had alleged that Horizon Card marketed a “membership program” that charged users up to $300 a year for a credit card with a $500 limit. While advertised as a general-purpose credit card, it could only be used at the Horizon Outlet, which, the CFPB claimed, offered a “limited selection of overpriced or off-brand goods.”
The CFPB’s complaint claimed that only 6% of cardholders reportedly made a purchase and that Horizon made it very difficult for consumers to cancel their membership. The CFPB also alleged that the company routinely withheld refunds unless users escalated complaints to their bank or the Better Business Bureau.
In a separate case, the bureau and the New York Attorney General alleged that Credit Acceptance knowingly financed unaffordable loans. Though the company claimed an average APR of 22%, the agencies argued the actual cost of credit was significantly higher.
The agencies alleged that a strategy of having dealerships push ancillary products like vehicle service contracts generated $250 million in revenue in 2020 alone. The complaint also claimed that Credit Acceptance’s internal models projected nearly 40% of borrowers would fail to repay their loans in full.
While the CFPB has withdrawn from the case, the New York Attorney General will continue to pursue claims against Credit Acceptance, though it will only apply to New York consumers.