Government Actions & Settlements

 Boston — A finance company operating in Massachusetts, Exeter Finance LLC, will pay more than $5.5 million for its role in allegedly financing unfair, subprime auto loans for Massachusetts car buyers, Attorney General Maura Healey announced today.

“This company’s loans put Massachusetts car buyers in economic danger,” AG Healey said. “Today’s settlement with Exeter provides millions of dollars in relief and repairs damaged credit. Our office will continue to investigate the subprime lenders, financiers, and securitizers, and protect consumers.”

This assurance of discontinuance, filed in Suffolk Superior Court, includes $4.675 million that will be available to provide relief to harmed borrowers and an $825,000 payment to the state. Exeter will also waive deficiencies on certain subprime loans and will ask the major credit bureaus to wipe all trade lines for involved subprime loans on consumers’ credit reports.

The AG’s Office alleges that Exeter facilitated the origination of Massachusetts auto loans that the company knew or should have known were unfair and in violation of the state Consumer Protection Law. Courts have held that lending is unlawful under the statute if lenders do not have a basis for believing that borrowers will be able to repay their loans in normal course. Exeter also allegedly mishandled servicing and collecting activities in violation of the Attorney General’s debt collection regulations. 

Car loans to consumers with poor credit, known as subprime auto loans, are often made through contracts signed at the car dealership, but the loans are funded by non-dealer financial institutions, like Exeter. As part of the funding process, these financial institutions securitize the loans, funding them by selling investment notes. 

This settlement is part of AG Healey’s review of securitization practices in the subprime auto market—an industry-wide investigation that remains ongoing. Previously, the AG’s Office secured $22 million from Santander for its role in financing subprime auto loans.

The AG’s Office worked collaboratively with the Delaware Attorney General’s Office on this investigation. Today, the Delaware Attorney General’s Office has also entered into a settlement with Exeter.

Consumers eligible for payments from today’s settlement will be contacted by an independent trustee and the AG’s Office. Consumers with questions about settlement eligibility should contact AG Healey’s Insurance and Financial Services hotline at 1-888-830-6277.

This matter was handled in the AG’s Office by staff of the AG’s Insurance and Financial Services Division, including Peter Leight, Burt Feinberg, Matt Frank, Tim Hoitink, Maggie Wallace, Jessica Nario, Arwen Thoman, Erin Morris, and Division Chief Glenn Kaplan.

 In the spring of 2020, attorneys general from nearly three dozen states announced a landmark legal settlement with the nation’s largest auto lender for risky borrowers.

Santander Consumer USA had for years made high-interest loans to people it knew couldn’t afford them, the officials alleged. When those borrowers got into financial trouble, it allowed them to delay making payments — without disclosing the steep costs of doing so. Because of those extensions, customers ended up owing thousands of dollars in surprise interest charges, and in many cases, they lost their cars.

“Predatory lending practices like this led to the 2008 financial crisis and harmed millions,” Josh Shapiro, then Pennsylvania’s attorney general and now its governor, said in a press release announcing the settlement, which imposed new consumer protections and required clearer disclosure about how loan extensions work.

The multistate effort, he added, “will put a stop to some of Santander’s most outrageous tactics.” The bank did not admit any wrongdoing as part of the settlement, which it said resolved a “legacy underwriting issue.”

But by the time the attorneys general were heralding their crackdown, they were receiving strikingly similar complaints from customers with loans from another lender, Exeter Finance.

The parallels were more than coincidence. The company was being run by former Santander executives who had left that bank amid the investigation. By 2020, most of Exeter’s corporate leadership — including its CEO and its operations chief — was composed of people who had overseen Santander during the period that the state attorneys general said it was “misleading, failing to disclose material information, or otherwise confusing consumers.”

 Those elected officials, however, have taken a decidedly different approach with Exeter. In fact, in 12 states that participated in the Santander agreement, officials have taken little or no action in dozens of cases alleging nearly identical behavior, according to a ProPublica investigation.

The news organization reviewed nearly 200 consumer complaints filed with state regulators over the past five years and found they rarely pressed Exeter about its practices. In Washington, they asked Exeter to participate in a voluntary mediation process, then closed the case when the company didn’t respond. In New Jersey, they just forwarded complaints to their counterparts in Texas, where the company is based, and did nothing more. In Kentucky, an office sat on a complaint for months while the borrower’s car was repossessed.

Some attorneys general declined to answer questions for this story, while others — such as those in Pennsylvania, Georgia and California — did not release documents in response to our public records requests. But Prentiss Cox, a University of Minnesota law professor who spent years in charge of consumer protection at the Minnesota attorney general’s office, said attorneys general often have limited staff and money to bring cases against companies, “and you bet players like subprime auto lenders know that.”

At least two states now appear to be scrutinizing Exeter. Georgia has acknowledged investigating the company, and Louisiana recently signaled potential action after ProPublica published the first part of its series last month. In response to questions about Exeter, the state attorney general’s office said it “cannot comment on ongoing investigations.”

Enforcement from attorneys general is particularly significant for auto borrowers, given how little recourse they have for legal action, said Chris Peterson, a law professor at the University of Utah and a former senior official at the Consumer Financial Protection Bureau. Many car loan contracts explicitly limit borrrowers’ right to bring cases in civil courts by forcing them into arbitration. Consumer rights lawyers “often give indirect auto finance companies and car dealers a free pass because it’s so difficult to get them into court anymore,” he said.

That makes state attorneys general one of the few official checks on the country’s trillion-dollar auto lending industry.

Over the past decade, Exeter has grown to become one of the largest players in the business, with more than 500,000 active loans worth $10 billion. As ProPublica reported last month, extensions are fundamental to its business model. The company routinely grants borrowers several extensions, which typically add thousands of dollars in new interest charges to the loan. Dozens of customers told ProPublica that Exeter didn’t clearly disclose the charges, even as the extensions drove them deeper into debt.

The news organization reached out to Exeter’s executives for this story and they either declined to comment or did not return calls. In response to written questions, the company issued a statement defending its extension practice, which it said “has been heavily reviewed by its regulators and is fully compliant with all applicable laws.” It did not answer questions about which regulators had reviewed its practices.

“Extensions are granted to customers who request them so that they can remain in their vehicles and provide for their families,” the company said.

ProPublica’s investigation found these payment deferments can do the opposite though, with borrowers losing their cars even after paying the equivalent of the original loan or more.

At the start of 2016, Exeter was headed toward failure. Financial disclosures show it had lost about $50 million over the previous two years. Its turnaround coincided with the arrival of a new leadership team that had a long history in subprime auto loans — and in aggressively granting financially shaky borrowers multiple extensions.

 The new CEO, Jason Grubb, had just spent more than a decade at Santander, ultimately becoming its president. Exeter’s operations chief, Brad Martin, had been working for Santander in a similar capacity. The two joined Exeter while their former employer was embroiled in state and federal investigations into allegedly deceptive and unfair lending practices. A slew of other Santander staffers — from the company’s human resources, compliance and executive arms — followed them. Jason Kulas, who was Santander’s CEO until 2017, joined Exeter’s board of directors in 2019 and today is also its chief financial officer.

“We went ahead and kind of got the gang back together again,” said a former executive at Exeter and Santander who asked to not be named for fear of professional repercussions.

There was little stopping them. Neither a federal settlement with Santander in 2018 nor the subsequent one from state attorneys general named the bank’s individual executives. While regulators have the power to do so when they bring legal actions against companies, they rarely use it with major lenders like Santander, said Dalié Jiménez, a professor of consumer law at the University of California, Irvine.

In such cases, the government’s chief aim is getting a settlement that results in fines and reforms for consumers, she said, and the people running those financial institutions “are going to fight really hard” against cases that target them directly.

Exeter’s Texas headquarters are in a suburb just 15 minutes from Santander Tower. Under its new management, Exeter loosened its lending criteria: It began approving borrowers with a debt-to-income ratio of up to 70%, meaning they would spend as much as $7 of every $10 of their paychecks on the car loan and other debts each month. (Consumer advocates and lenders recommend borrowers keep their debt ratio around 35%.)

Exeter also accepted customers with lower credit scores than it had previously, lent them more money than before — as much as $50,000 per loan — and gave them more time to repay it. Some agreed to repayment schedules stretching longer than six years, meaning more costly loans over the course of the term.

Many borrowers had trouble fulfilling the terms. Financial disclosures show the number of Exeter loans with five or more payment extensions soared in the first three years after Grubb and Martin took over. As did the company’s revenue. Exeter went into the black in 2016 and stayed there, claiming $94 million in pretax profit in 2018, according to rating agency reports.

Exeter said in a statement that “extensions are not a profit strategy.” However, ProPublica found the company sometimes made more money on loans that defaulted than on ones in which borrowers paid on time.

Each time the company grants an extension, it resets the clock and reclassifies the delinquent loan as being on schedule. Exeter has done this in some cases as many as 12 times over the course of a 72-month loan, with borrowers continuing to make payments in hopes of catching up.

Some of them turned to their attorneys general for help even before the regulators had finalized their settlement with Santander. The consumers alleged that Exeter had added huge interest charges without clear explanation.

In early 2020, Deborahlyn Wells, a disabled Kentucky woman, sent such a complaint to state Attorney General Daniel Cameron. Wells was trying to prevent Exeter from seizing her 2008 GMC Acadia. She wrote that she’d taken multiple extensions with the understanding that Exeter had moved the payments “to the end of the loan to keep me current.” At the time, Wells had paid the company almost $13,000, but she was nevertheless on the verge of repossession. Nearly all of her payments had gone to interest.

Cameron’s office took months to contact Exeter about Wells’ complaint, records show. Even then, it simply forwarded her letter to the company, which confirmed it had given her five extensions. By that point, Exeter had already repossessed Wells’ car and auctioned it off.

 Records obtained by the attorney general’s office show Exeter’s extension notices did not explain that Wells’ payments would first be applied to the interest from extensions, which would delay repayment of the original loan balance. The notices only hinted at the financial consequences, saying “any payments you can make before they are due will help you minimize interest.”

The company has said that it updated its written disclosures in late 2021 — roughly 18 months after the Santander settlement — but declined to provide copies or details about the changes.

Notices from earlier this year, provided to ProPublica by borrowers, clarified how interest charges increase and payments are applied after extensions. However, they did not include the actual dollar amount of what the deferments would cost. If borrowers wanted to know more, the letter directed them to call a toll-free number.

Cameron, who left the attorney general’s office this year after an unsuccessful bid for governor, did not respond to requests for comment. Neither did his successor, Russell Coleman.

 Lawsuits and legal actions against Exeter Finance have continued into early 2026, primarily focused on alleged violations of consumer protection laws, improper debt collection, and issues surrounding repossession.Based on reports and legal records from early 2026:

• New Federal Lawsuit (January 2026): Wilford v. Exeter Finance LLC (6:26-cv-00017) was filed on January 5, 2026, in the U.S. District Court for the District of South Carolina, alleging violations of the Fair Debt Collection Practices Act (FDCPA).
• Ongoing Legal & Regulatory Scrutiny: As of January 2026, investigations into Exeter Finance’s subprime auto loan practices remain active in states like Georgia and Louisiana, following previous allegations of predatory lending, hidden fees, and unlawful repossession practices.
• Continued Complaints: Consumers have continued to file complaints in 2026, alleging that Exeter employs aggressive collection tactics, charges excessive fees, and mismanages loan extensions that create a "cycle of debt".
• Previous Major Actions: These 2026 developments follow a 2024 class action regarding a "hidden finance charge" scheme and a 2024 data breach incident affecting customer personal information.

These legal actions frequently allege that Exeter Finance uses "coercion and abusive collection tactics" and, in some cases, has been accused of altering figures regarding loan balances.