SOUTHFIELD, Mich., Feb. 2, 2012 (GLOBE NEWSWIRE) — Credit Acceptance Corporation (Nasdaq:CACC) (referred to as the “Company”, “we”, “our”, or “us”) announced consolidated net income of $50.0 million, or $1.91 per diluted share, for the three months ended December 31, 2011 compared to consolidated net income of $47.0 million, or $1.69 per diluted share, for the same period in 2010. For the year ended December 31, 2011, consolidated net income was $188.0 million, or $7.07 per diluted share, compared to consolidated net income of $170.1 million, or $5.67 per diluted share, for the same period in 2010.

Adjusted net income, a non-GAAP financial measure, for the three months ended December 31, 2011 was $51.3 million, or $1.96 per diluted share, compared to $43.6 million, or $1.57 per diluted share, for the same period in 2010. For the year ended December 31, 2011, adjusted net income was $194.1 million, or $7.30 per diluted share, compared to adjusted net income of $160.5 million, or $5.35 per diluted share, for the same period in 2010.

Webcast Details

We will host a webcast on February 2, 2012 at 5:00 p.m. Eastern Time to discuss fourth quarter and full year 2011 results. The webcast can be accessed live by visiting the “Investor Relations” section of our website at creditacceptance.com or by dialing 877-303-2904. Additionally, a replay and transcript of the webcast will be archived in the “Investor Relations” section of our website.

Consumer Loan Performance

At the time a consumer loan is submitted to us for assignment, we forecast future expected cash flows from the consumer loan. Based on the amount and timing of these forecasts and expected expense levels, an advance or one-time purchase payment is made to the related dealer-partner at a price designed to achieve an acceptable return on capital. If consumer loan performance equals or exceeds our original expectation, it is likely our target return on capital will be achieved.

We use a statistical model to estimate the expected collection rate for each consumer loan at the time of assignment. We continue to evaluate the expected collection rate of each consumer loan subsequent to assignment. Our evaluation becomes more accurate as the consumer loans age, as we use actual performance data in our forecast. By comparing our current expected collection rate for each consumer loan with the rate we projected at the time of assignment, we are able to assess the accuracy of our initial forecast. The following table compares our forecast of consumer loan collection rates as of December 31, 2011, with the forecasts as of September 30, 2011, as of December 31, 2010, and at the time of assignment, segmented by year of assignment:
Forecasted Collection Percentage as of Variance in Forecasted Collection Percentage from
Consumer Loan
Assignment Year December 31,
2011 September 30,
2011 December 31,
2010 Initial
Forecast September 30,
2011 December 31,
2010 Initial
Forecast
2002 70.5% 70.5% 70.5% 67.9% 0.0% 0.0% 2.6%
2003 73.7% 73.7% 73.7% 72.0% 0.0% 0.0% 1.7%
2004 73.0% 73.0% 73.0% 73.0% 0.0% 0.0% 0.0%
2005 73.6% 73.6% 73.7% 74.0% 0.0% -0.1% -0.4%
2006 70.0% 70.1% 70.2% 71.4% -0.1% -0.2% -1.4%
2007 68.1% 68.1% 67.9% 70.7% 0.0% 0.2% -2.6%
2008 70.0% 69.9% 69.9% 69.7% 0.1% 0.1% 0.3%
2009 79.4% 79.2% 78.5% 71.9% 0.2% 0.9% 7.5%
2010 76.8% 76.5% 75.8% 73.6% 0.3% 1.0% 3.2%
2011 (1) 73.2% 73.3% – 72.5% -0.1% – 0.7%

(1) The forecasted collection rate for 2011 consumer loans as of December 31, 2011 includes both consumer loans that were in our portfolio as of September 30, 2011 and consumer loans assigned during the most recent quarter. The following table provides forecasted collection rates for each of these segments:
Forecasted Collection Percentage as of
2011 Consumer Loan Assignment Period December 31, 2011 September 30, 2011 Variance
January 1, 2011 through September 30, 2011 73.8% 73.3% 0.5%
October 1, 2011 through December 31, 2011 71.2% – –

Consumer loans assigned in 2002, 2003, 2009 and 2010 have yielded forecasted collection results materially better than our initial estimates, while consumer loans assigned in 2006 and 2007 have yielded forecasted collection results materially worse than our initial estimates. For all other assignment years presented, actual results have been very close to our initial estimates. For the three months ended December 31, 2011, forecasted collection rates improved for consumer loans assigned during 2009, 2010, and 2011 and were generally consistent with expectations at the start of the period for all other assignment years presented. For the year ended December 31, 2011, forecasted collection rates improved for consumer loans assigned during 2007, 2009, 2010, and 2011 and declined for consumer loans assigned during 2006. The forecasted collection rates were generally consistent with expectations at the start of the period for all other assignment years presented.

Forecasting collection rates precisely at loan inception is difficult. With this in mind, we establish advance rates that are intended to allow us to achieve acceptable levels of profitability, even if collection rates are less than we currently forecast.

The following table presents forecasted consumer loan collection rates, advance rates, the spread (the forecasted collection rate less the advance rate), and the percentage of the forecasted collections that had been realized as of December 31, 2011. All amounts, unless otherwise noted, are presented as a percentage of the initial balance of the consumer loan (principal + interest). The table includes both dealer loans and purchased loans.
As of December 31, 2011
Consumer Loan Assignment Year Forecasted Collection % Advance % (1) Spread % % of Forecast Realized (2)
2002 70.5% 42.2% 28.3% 99.6%
2003 73.7% 43.4% 30.3% 99.5%
2004 73.0% 44.0% 29.0% 99.4%
2005 73.6% 46.9% 26.7% 99.2%
2006 70.0% 46.6% 23.4% 98.3%
2007 68.1% 46.5% 21.6% 96.6%
2008 70.0% 44.6% 25.4% 92.0%
2009 79.4% 43.9% 35.5% 82.6%
2010 76.8% 44.7% 32.1% 53.4%
2011 73.2% 45.5% 27.7% 18.0%

(1) Represents advances paid to dealer-partners on consumer loans assigned under our portfolio program and one-time payments made to dealer-partners to purchase consumer loans assigned under our purchase program as a percentage of the initial balance of the consumer loans. Payments of dealer holdback and accelerated dealer holdback are not included.
(2) Presented as a percentage of total forecasted collections.

The risk of a material change in our forecasted collection rate declines as the consumer loans age. For 2008 and prior consumer loan assignments, the risk of a material forecast variance is modest, as we have currently realized in excess of 90% of the expected collections. Conversely, the forecasted collection rates for more recent consumer loan assignments are less certain as a significant portion of our forecast has not been realized.

The spread between the forecasted collection rate and the advance rate declined during the 2004 through 2007 period as we increased advance rates during this period in response to a more difficult competitive environment. During 2008 and 2009, the spread increased as the competitive environment improved, and we reduced advance rates. In addition, during 2009, the spread was positively impacted by better than expected consumer loan performance. During 2010 and 2011, the spread decreased as we increased advance rates during this period in an attempt to maximize the amount of economic profit we generate in response to an increase in the amount of capital available to fund new loans.

The following table presents forecasted consumer loan collection rates, advance rates, and the spread (the forecasted collection rate less the advance rate) as of December 31, 2011 for dealer loans and purchased loans separately. All amounts are presented as a percentage of the initial balance of the consumer loan (principal + interest).
Consumer Loan Assignment Year Forecasted Collection % Advance % (1) Spread %
Dealer loans 2007 68.0% 45.8% 22.2%
2008 70.5% 43.3% 27.2%
2009 79.5% 43.5% 36.0%
2010 76.8% 44.4% 32.4%
2011 73.1% 45.1% 28.0%

Purchased loans 2007 68.3% 49.1% 19.2%
2008 69.1% 46.7% 22.4%
2009 79.3% 45.4% 33.9%
2010 76.8% 46.7% 30.1%
2011 74.0% 49.3% 24.7%

(1) Represents advances paid to dealer-partners on consumer loans assigned under our portfolio program and one-time payments made to dealer-partners to purchase consumer loans assigned under our purchase program as a percentage of the initial balance of the consumer loans. Payments of dealer holdback and accelerated dealer holdback are not included.

The advance rates presented for each consumer loan assignment year change over time due to the impact of transfers between dealer and purchased loans. Under our portfolio program, certain events may result in dealer-partners forfeiting their rights to dealer holdback. We transfer the dealer-partner’s consumer loans from the dealer loan portfolio to the purchased loan portfolio in the period this forfeiture occurs.

Although the advance rate on purchased loans is higher as compared to the advance rate on dealer loans, purchased loans do not require us to pay dealer holdback.

Consumer Loan Volume

The following table summarizes changes in consumer loan assignment volume in each of the last eight quarters as compared to the same period in the previous year:
Year over Year Percent Change
Three Months Ended Unit Volume Dollar Volume (1)
March 31, 2010 11.2% 21.6%
June 30, 2010 22.7% 42.2%
September 30, 2010 26.9% 51.5%
December 31, 2010 37.7% 66.9%
March 31, 2011 36.7% 59.3%
June 30, 2011 28.7% 41.3%
September 30, 2011 28.6% 40.5%
December 31, 2011 25.3% 32.1%

(1) Represents advances paid to dealer-partners on consumer loans assigned under our portfolio program and one-time payments made to dealer-partners to purchase consumer loans assigned under our purchase program. Payments of dealer holdback and accelerated dealer holdback are not included.

Consumer loan assignment volumes depend on a number of factors including (1) the overall demand for our product, (2) the amount of capital available to fund new loans, and (3) our assessment of the volume that our infrastructure can support. Our pricing strategy is intended to maximize the amount of economic profit we generate, within the confines of capital and infrastructure constraints. Unit and dollar volumes were positively impacted by an increase in active dealer-partners and advance rate increases made during the first and fourth quarters of 2010 and the second and third quarters of 2011. Dollar volumes were also positively impacted by an increase in the size of the average consumer loan assignment. While the advance rate increases reduced the return on capital we expect to earn on new assignments, we believe it is very likely the advance increases had a positive impact on economic profit. Unit volume for the one month ended January 31, 2012 increased by 19.5% as compared to the same period in 2011.

The following table summarizes the changes in consumer loan unit volume and active dealer-partners:
For the Three Months Ended December 31,
2011 2010 % Change
Consumer loan unit volume 40,482 32,299 25.3%
Active dealer-partners (1) 3,203 2,546 25.8%
Average volume per active dealer-partner 12.6 12.7 -0.8%

(1) Active dealer-partners are dealer-partners who have received funding for at least one dealer loan or purchased loan during the period.

The following table provides additional information on the changes in consumer loan unit volume and active dealer-partners:
For the Three Months Ended December 31,
2011 2010 % Change
Consumer loan unit volume from dealer-partners active both periods 30,994 28,971 7.0%
Dealer-partners active both periods 1,943 1,943 –
Average volume per dealer-partners active both periods 16.0 14.9 7.0%

Consumer loan unit volume from new dealer-partners 1,713 1,397 22.6%
New active dealer-partners (1) 382 274 39.4%
Average volume per new active dealer-partners 4.5 5.1 -11.8%

Attrition (2) -10.3% -15.0%

(1) New active dealer-partners are dealer-partners who enrolled in our program and have received funding for their first dealer loan or purchased loan from us during the period.
(2) Attrition is measured according to the following formula: decrease in consumer loan unit volume from dealer-partners who have received funding for at least one dealer loan or purchased loan during the comparable period of the prior year but did not receive funding for any dealer loans or purchased loans during the current period divided by prior year comparable period consumer loan unit volume.

Consumer loans are assigned to us as either dealer loans through our portfolio program or purchased loans through our purchase program. The following table summarizes the portion of our consumer loan volume that was assigned to us as dealer loans:
For the Three Months Ended
December 31, For the Years Ended
December 31,
2011 2010 2011 2010
Dealer loan unit volume as a percentage of total unit volume 92.6% 91.8% 92.5% 90.9%
Dealer loan dollar volume as a percentage of total dollar volume (1) 90.4% 89.9% 90.4% 88.7%

(1) Represents advances paid to dealer-partners on consumer loans assigned under our portfolio program and one-time payments made to dealer-partners to purchase consumer loans assigned under our purchase program. Payments of dealer holdback and accelerated dealer holdback are not included.

For the three months and year ended December 31, 2011, dealer loan unit and dollar volume as a percentage of total unit and dollar volume were generally consistent with the same periods in 2010.

As of December 31, 2011 and 2010, the net dealer loans receivable balance was 85.4% and 79.5%, respectively, of the total net loans receivable balance.

Adjusted Financial Results

Adjusted financial results are provided to help shareholders understand our financial performance. The financial data below is non-GAAP, unless labeled otherwise. We use adjusted financial information internally to measure financial performance and to determine incentive compensation. The table below shows our results following adjustments to reflect non-GAAP accounting methods. Material adjustments are explained in the table footnotes and the subsequent “Floating Yield Adjustment” section. Measures such as adjusted average capital, adjusted net income, adjusted net income per diluted share, adjusted net income plus interest expense after-tax, adjusted return on capital, adjusted revenue, operating expenses, and economic profit are all non-GAAP financial measures. These non-GAAP financial measures should be viewed in addition to, and not as an alternative for, our reported results prepared in accordance with GAAP.

Adjusted financial results for the three months and year ended December 31, 2011, compared to the same periods in 2010, include the following:
For the Three Months Ended December 31, For the Years Ended December 31,
(Dollars in thousands, except per share data) 2011 2010 % Change 2011 2010 % Change
Adjusted average capital $1,512,825 $1,129,721 33.9% $1,371,102 $1,074,210 27.6%
Adjusted net income $ 51,348 $ 43,639 17.7% $ 194,084 $ 160,488 20.9%
Adjusted interest expense after-tax $ 9,490 $ 7,398 28.3% $ 36,059 $ 30,084 19.9%
Adjusted net income plus interest expense after-tax $ 60,838 $ 51,037 19.2% $ 230,143 $ 190,572 20.8%
Adjusted return on capital 16.1% 18.1% -11.0% 16.8% 17.7% -5.1%
Cost of capital 5.8% 6.8% -14.7% 6.4% 7.2% -11.1%
Economic profit $ 38,889 $ 31,765 22.4% $ 143,143 $ 112,685 27.0%
GAAP diluted weighted average shares outstanding 26,259 27,865 -5.8% 26,601 29,985 -11.3%
Adjusted net income per diluted share $ 1.96 $ 1.57 24.8% $ 7.30 $ 5.35 36.4%

Economic profit increased 22.4% and 27.0% for the three months and year ended December 31, 2011, respectively, as compared to the same periods in 2010. Economic profit is a function of the return on capital in excess of the cost of capital and the amount of capital invested in the business. The following table summarizes the impact each of these components had on the increase in economic profit for the three months and year ended December 31, 2011, as compared to the same periods in 2010:
Year over Year Change in Economic Profit
(In thousands) For the Three Months Ended
December 31, 2011 For the Year Ended
December 31, 2011
Increase in adjusted average capital $ 10,772 $ 31,144
Decrease in cost of capital 3,858 12,413
Decrease in adjusted return on capital (7,506) (13,099)
Increase in economic profit $ 7,124 $ 30,458

The increase in economic profit for the three months ended December 31, 2011, as compared to the same period in 2010, was the result of the following:

* An increase in adjusted average capital of 33.9% due to growth in our loan portfolio as a result of increases in active dealer-partners, the size of the average consumer loan assignment, and advance rates.
* A decrease in our cost of capital of 100 basis points primarily due to a decline in the average cost of equity resulting from a decline in the average 30 year treasury rate.
* A decrease in our adjusted return on capital of 200 basis points primarily as a result of the following:

* Finance charges decreased as a percentage of adjusted average capital primarily as a result of a decrease in the yield on our loan portfolio due to higher advance rates on consumer loans assigned in 2010 and 2011. The decrease in finance charges negatively impacted the adjusted return on capital by 310 basis points.
* Operating expenses decreased as a percentage of adjusted average capital primarily as a result of decreased support and origination expenses. The decline in support expenses was mainly due to lower expenses related to information technology and finance activities. The decline in origination expenses was primarily due to consumer loan unit volume growing at a slower rate than adjusted average capital. The decrease in operating expenses positively impacted the adjusted return on capital by 120 basis points.

The increase in economic profit for the year ended December 31, 2011, as compared to the same period in 2010, was the result of the following:

* An increase in adjusted average capital of 27.6% due to growth in our loan portfolio as a result of increases in active dealer-partners, the size of the average consumer loan assignment, and advance rates.
* A decrease in our cost of capital of 80 basis points primarily due to a decline in the average cost of debt resulting from a reduction in fixed fees as a percentage of average outstanding debt and a change in the mix of our outstanding debt.
* A decrease in our adjusted return on capital of 90 basis points primarily as a result of the following:

* Finance charges decreased as a percentage of adjusted average capital primarily as a result of a decrease in the yield on our loan portfolio due to higher advance rates on consumer loans assigned in 2010 and 2011. The decrease in finance charges negatively impacted the adjusted return on capital by 190 basis points.
* Operating expenses decreased as a percentage of adjusted average capital primarily as a result of decreased support expenses mainly due to lower expenses related to information technology and finance activities. The decrease in operating expenses positively impacted the adjusted return on capital by 110 basis points.

The following table shows adjusted revenue and operating expenses as a percentage of adjusted average capital, the adjusted return on capital, and the percentage change in adjusted average capital for each of the last eight quarters, compared to the same periods in the prior year:
For the Three Months Ended
Dec. 31, 2011 Sept. 30, 2011 Jun. 30, 2011 Mar. 31, 2011 Dec. 31, 2010 Sept. 30, 2010 Jun. 30, 2010 Mar. 31, 2010
Adjusted revenue as a percentage of adjusted average capital 33.2% 33.9% 35.0% 37.9% 38.1% 38.0% 38.7% 37.8%
Operating expenses as a percentage of adjusted average capital 7.6% 7.8% 8.2% 9.3% 9.5% 10.4% 9.3% 10.9%
Adjusted return on capital 16.1% 16.4% 16.9% 18.0% 18.1% 17.4% 18.5% 17.0%
Percentage change in adjusted average capital compared to the same period in the prior year 33.9% 30.6% 26.0% 19.2% 14.1% 8.7% 6.0% 1.4%

The adjusted return on capital for the three months ended December 31, 2011, as compared to the three months ended September 30, 2011, decreased 30 basis points primarily as a result of a decrease in finance charges as a percentage of adjusted average capital due to lower yields on more recent consumer loan assignments, which was the result of the advance rate increases we made during the fourth quarter of 2010 and the second and third quarters of 2011.

The following tables show how non-GAAP measures reconcile to GAAP measures. All after-tax adjustments are calculated using a 37% tax rate as we estimate that to be our long term average effective tax rate. Certain amounts do not recalculate due to rounding.
For the Three Months Ended
(Dollars in thousands, except per share data) Dec. 31, 2011 Sept. 30, 2011 Jun. 30, 2011 Mar. 31, 2011 Dec. 31, 2010 Sept. 30, 2010 Jun. 30, 2010 Mar. 31, 2010
Adjusted net income
GAAP net income $ 50,049 $ 49,960 $ 44,844 $ 43,191 $ 46,980 $ 42,047 $ 49,040 $ 32,010
Floating yield adjustment (after-tax) 810 (449) 2,817 3,822 (10) (1,526) (330) 2,349
Program fee yield adjustment (after-tax) 228 33 35 43 49 61 79 115
Loss from discontinued United Kingdom segment (after-tax) – – – – – – 25 5
Adjustment to record taxes at 37% (1) 261 (399) (344) (817) (3,380) (974) (7,085) 1,033
Adjusted net income $ 51,348 $ 49,145 $ 47,352 $ 46,239 $ 43,639 $ 39,608 $ 41,729 $ 35,512

Adjusted net income per diluted share $ 1.96 $ 1.88 $ 1.81 $ 1.68 $ 1.57 $ 1.39 $ 1.32 $ 1.12
Diluted weighted average shares outstanding 26,259 26,136 26,111 27,489 27,865 28,452 31,601 31,584

Adjusted revenue
GAAP total revenue $ 137,976 $ 133,739 $ 129,965 $ 123,512 $ 115,433 $ 111,661 $ 111,779 $ 103,262
Floating yield adjustment 1,286 (712) 4,472 6,067 (16) (2,423) (524) 3,729
Program fee yield adjustment 361 53 56 67 77 97 125 182
Provision for credit losses (6,569) (4,565) (8,953) (8,921) (1,978) 24 (1,782) (6,433)
Provision for claims (7,666) (8,363) (7,771) (6,599) (5,823) (6,112) (6,282) (5,212)
Adjusted revenue $ 125,388 $ 120,152 $ 117,769 $ 114,126 $ 107,693 $ 103,247 $ 103,316 $ 95,528

Adjusted average capital
GAAP average debt $ 985,668 $ 941,531 $ 918,153 $ 723,781 $ 676,978 $ 645,383 $ 509,867 $ 492,069
GAAP average shareholders’ equity 516,806 467,290 418,402 476,281 448,825 437,288 553,297 514,364
Floating yield adjustment 10,530 11,139 9,549 6,294 4,280 5,230 5,485 5,619
Program fee yield adjustment (179) (244) (278) (317) (362) (417) (486) (583)
Adjusted average capital $ 1,512,825 $ 1,419,716 $ 1,345,826 $ 1,206,039 $ 1,129,721 $1,087,484 $1,068,163 $1,011,469

Adjusted revenue as a percentage of adjusted average capital 33.2% 33.9% 35.0% 37.9% 38.1% 38.0% 38.7% 37.8%

Adjusted interest expense
GAAP interest expense $ 15,063 $ 14,600 $ 14,950 $ 12,623 $ 11,742 $ 12,038 $ 12,267 $ 11,705
Adjustment to record tax effect at 37% (5,573) (5,402) (5,531) (4,671) (4,344) (4,454) (4,539) (4,331)
Adjusted interest expense (after-tax) $ 9,490 $ 9,198 $ 9,419 $ 7,952 $ 7,398 $ 7,584 $ 7,728 $ 7,374

For the Three Months Ended
(Dollars in thousands, except per share data) Dec. 31, 2011 Sept. 30, 2011 Jun. 30, 2011 Mar. 31, 2011 Dec. 31, 2010 Sept. 30, 2010 Jun. 30, 2010 Mar. 31, 2010
Adjusted return on capital
Adjusted net income $ 51,348 $ 49,145 $ 47,352 $ 46,239 $ 43,639 $ 39,608 $ 41,729 $ 35,512
Adjusted interest expense (after-tax) 9,490 9,198 9,419 7,952 7,398 7,584 7,728 7,374
Adjusted net income plus interest expense (after-tax) $ 60,838 $ 58,343 $ 56,771 $ 54,191 $ 51,037 $ 47,192 $ 49,457 $ 42,886

Adjusted return on capital (2) 16.1% 16.4% 16.9% 18.0% 18.1% 17.4% 18.5% 17.0%

Economic profit
Adjusted return on capital 16.1% 16.4% 16.9% 18.0% 18.1% 17.4% 18.5% 17.0%
Cost of capital (3) 5.8% 6.2% 6.5% 7.1% 6.8% 6.7% 7.7% 7.9%
Adjusted return on capital in excess of cost of capital 10.3% 10.2% 10.4% 10.9% 11.3% 10.7% 10.8% 9.1%
Adjusted average capital $ 1,512,825 $ 1,419,716 $ 1,345,826 $ 1,206,039 $ 1,129,721 $1,087,484 $1,068,163 $1,011,469
Economic profit $ 38,889 $ 36,374 $ 34,985 $ 32,895 $ 31,765 $ 29,085 $ 28,799 $ 23,036

Operating expenses
GAAP salaries and wages $ 15,636 $ 15,929 $ 15,402 $ 16,071 $ 15,034 $ 16,133 $ 14,050 $ 16,110
GAAP general and administrative 7,439 6,044 6,509 5,633 6,762 7,208 5,920 6,542
GAAP sales and marketing 5,752 5,587 5,772 6,409 5,045 4,972 4,834 4,810
Operating expenses $ 28,827 $ 27,560 $ 27,683 $ 28,113 $ 26,841 $ 28,313 $ 24,804 $ 27,462

Operating expenses as a percentage of adjusted average capital 7.6% 7.8% 8.2% 9.3% 9.5% 10.4% 9.3% 10.9%

Percentage change in adjusted average capital compared to the same period in the prior year 33.9% 30.6% 26.0% 19.2% 14.1% 8.7% 6.0% 1.4%

For the Years Ended December 31,
(In thousands, except per share data) 2011 2010

Adjusted net income
GAAP net income $ 188,044 $ 170,077
Floating yield adjustment (after-tax) 7,000 483
Program fee yield adjustment (after-tax) 339 304
Loss from discontinued United Kingdom segment (after-tax) – 30
Adjustment to record taxes at 37% (1,299) (10,406)
Adjusted net income $ 194,084 $ 160,488

Adjusted net income per diluted share $ 7.30 $ 5.35
Diluted weighted average shares outstanding 26,601 29,985

Adjusted average capital
GAAP average debt $ 892,283 $ 581,074
GAAP average shareholders’ equity 469,695 488,444
Floating yield adjustment 9,379 5,154
Program fee yield adjustment (255) (462)
Adjusted average capital $1,371,102 $1,074,210

Adjusted interest expense
GAAP interest expense $ 57,236 $ 47,752
Adjustment to record tax effect at 37% (21,177) (17,668)
Adjusted interest expense (after-tax) $ 36,059 $ 30,084

Adjusted return on capital
Adjusted net income $ 194,084 $ 160,488
Adjusted interest expense after-tax 36,059 30,084
Adjusted net income plus interest expense after-tax $ 230,143 $ 190,572

Adjusted return on capital (2) 16.8% 17.7%

Economic profit
Adjusted return on capital 16.8% 17.7%
Cost of capital (3) 6.4% 7.2%
Adjusted return on capital in excess of cost of capital 10.4% 10.5%
Adjusted average capital $1,371,102 $1,074,210
Economic profit $ 143,143 $ 112,685

(1) The adjustment for the three months ended June 30, 2010 is primarily related to the reversal of reserves for uncertain tax positions and associated interest as a result of the completion of the IRS audit during the period, which reduced our effective tax rate under GAAP.

(2) Adjusted return on capital is defined as annualized adjusted net income plus adjusted interest expense after-tax divided by adjusted average capital.

(3) The cost of capital includes both a cost of equity and a cost of debt. The cost of equity capital is determined based on a formula that considers the risk of the business and the risk associated with our use of debt. The formula utilized for determining the cost of equity capital is as follows: (the average 30 year treasury rate + 5%) + [(1 — tax rate) x (the average 30 year treasury rate + 5% — pre-tax average cost of debt rate) x average debt/(average equity + average debt x tax rate)]. For the periods presented, the average 30 year treasury rate and the adjusted pre-tax average cost of debt were as follows:
For the Three Months Ended
Dec. 31,
2011 Sept. 30,
2011 Jun. 30,
2011 Mar. 31,
2011 Dec. 31,
2010 Sept. 30,
2010 Jun. 30,
2010 Mar. 31,
2010
Average 30 year treasury rate 3.0% 3.8% 4.4% 4.5% 4.1% 3.8% 4.4% 4.6%
Adjusted pre-tax average cost of debt 6.1% 6.2% 6.5% 7.0% 6.9% 7.5% 9.6% 9.5%
For the Years Ended December 31,
2011 2010
Average 30 year treasury rate 3.9% 4.2%
Adjusted pre-tax average cost of debt 6.4% 8.2%

Floating Yield Adjustment

The purpose of this adjustment is to modify the calculation of our GAAP-based finance charge revenue so that favorable and unfavorable changes in expected cash flows from loans receivable are treated consistently. To make the adjustment understandable, we must first explain how GAAP requires us to account for finance charge revenue, our primary revenue source.

The finance charge revenue we will recognize over the life of the loan equals the cash inflows from our loan portfolio less cash outflows to acquire the loans. Our GAAP finance charge revenue is based on estimates of future cash flows and is recognized on a level-yield basis over the estimated life of the loan. With the level-yield approach, the amount of finance charge revenue recognized from a loan in a given period, divided by the loan asset, is a constant percentage. Under GAAP, favorable changes in expected cash flows are treated as increases to the yield and are recognized over time, while unfavorable changes are recorded as a current period expense. The non-GAAP methodology that we use (the “floating yield” method) is identical to the GAAP approach except that, under the “floating yield” method, all changes in expected cash flows (both positive and negative) are treated as yield adjustments and therefore impact earnings over time. The GAAP treatment always results in a lower carrying value of the loan receivable asset, but may result in either higher or lower earnings for any given period depending on the timing and amount of expected cash flow changes.

We believe adjusted earnings, which include the floating yield adjustment, are a more accurate reflection of the performance of our business, since both favorable and unfavorable changes in estimated cash flows are treated consistently.

Cautionary Statement Regarding Forward-Looking Information

We claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 for all of our forward-looking statements. Statements in this release that are not historical facts, such as those using terms like “may,” “will,” “should,” “believe,” “expect,” “anticipate,” “assume,” “forecast,” “estimate,” “intend,” “plan,” “target” and those regarding our future results, plans and objectives, are “forward-looking statements” within the meaning of the federal securities laws. These forward-looking statements represent our outlook only as of the date of this release. Actual results could differ materially from these forward-looking statements since the statements are based on our current expectations, which are subject to risks and uncertainties. Factors that might cause such a difference include, but are not limited to, the factors set forth in Item 1A to our Form 10-K for the year ended December 31, 2010, filed with the Securities and Exchange Commission on February 24, 2011, other risk factors discussed herein or listed from time to time in our reports filed with the Securities and Exchange Commission and the following:

* Our inability to accurately forecast and estimate the amount and timing of future collections could have a material adverse effect on results of operations.

* We may be unable to execute our business strategy due to current economic conditions.

* We may be unable to continue to access or renew funding sources and obtain capital needed to maintain and grow our business.

* The terms of our debt limit how we conduct our business.

* A violation of the terms of our asset-backed secured financing facilities or revolving secured warehouse facilities could have a materially adverse impact on our operations.

* The conditions of the U.S. and international capital markets may adversely affect lenders with which we have relationships, causing us to incur additional costs and reducing our sources of liquidity, which may adversely affect our financial position, liquidity and results of operations.

* Our substantial debt could negatively impact our business, prevent us from satisfying our debt obligations and adversely affect our financial condition.

* Due to competition from traditional financing sources and non-traditional lenders, we may not be able to compete successfully.

* We may not be able to generate sufficient cash flows to service our outstanding debt and fund operations and may be forced to take other actions to satisfy our obligations under such debt.

* Interest rate fluctuations may adversely affect our borrowing costs, profitability and liquidity.

* Reduction in our credit rating could increase the cost of our funding from, and restrict our access to, the capital markets and adversely affect our liquidity, financial condition and results of operations.

* We may incur substantially more debt and other liabilities. This could exacerbate further the risks associated with our current debt levels.

* The regulation to which we are or may become subject could result in a material adverse effect on our business.

* Adverse changes in economic conditions, the automobile or finance industries, or the non-prime consumer market could adversely affect our financial position, liquidity and results of operations, the ability of key vendors that we depend on to supply us with services, and our ability to enter into future financing transactions.

* Litigation we are involved in from time to time may adversely affect our financial condition, results of operations and cash flows.

* Changes in tax laws and the resolution of uncertain income tax matters could have a material adverse effect on our results of operations and cash flows from operations.

* Our operations are dependent on technology.

* Reliance on third parties to administer our ancillary product offerings could adversely affect our business and financial results.

* We are dependent on our senior management and the loss of any of these individuals or an inability to hire additional team members could adversely affect our ability to operate profitably.

* Our reputation is a key asset to our business, and our business may be affected by how we are perceived in the marketplace.

* The concentration of our dealer-partners in several states could adversely affect us.

* Failure to properly safeguard confidential consumer information could subject us to liability, decrease our profitability and damage our reputation.

* Our Chairman and founder controls a significant percentage of our common stock, has the ability to control matters requiring shareholder approval and has interests which may conflict with the interests of our other security holders.

* Reliance on our outsourced business functions could adversely affect our business.

* Natural disasters, acts of war, terrorist attacks and threats or the escalation of military activity in response to these attacks or otherwise may negatively affect our business, financial condition and results of operations.

Other factors not currently anticipated by management may also materially and adversely affect our results of operations. We do not undertake, and expressly disclaim any obligation, to update or alter our statements whether as a result of new information, future events or otherwise, except as required by applicable law.

Description of Credit Acceptance Corporation

Since 1972, Credit Acceptance has provided auto loans to consumers, regardless of their credit history. Our product is offered through a nationwide network of automobile dealers who benefit from sales of vehicles to consumers who otherwise could not obtain financing; from repeat and referral sales generated by these same customers; and from sales to customers responding to advertisements for our product, but who actually end up qualifying for traditional financing.

Without our product, consumers are often unable to purchase a vehicle or they purchase an unreliable one. Further, as we report to the three national credit reporting agencies, an important ancillary benefit of our program is that we provide a significant number of our consumers with an opportunity to improve their lives by improving their credit score and move on to more traditional sources of financing. Credit Acceptance is publicly traded on the NASDAQ under the symbol CACC. For more information, visit creditacceptance.com.
CREDIT ACCEPTANCE CORPORATION
CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share data) For the Three Months Ended
December 31, For the Years Ended
December 31,
2011 2010 2011 2010
(Unaudited) (Unaudited)
Revenue:
Finance charges $ 122,384 $ 103,583 $ 460,622 $ 388,050
Premiums earned 10,824 8,083 40,019 32,659
Other income 4,768 3,767 24,551 21,426
Total revenue 137,976 115,433 525,192 442,135
Costs and expenses:
Salaries and wages 15,636 15,034 63,038 61,327
General and administrative 7,439 6,762 25,625 26,432
Sales and marketing 5,752 5,045 23,520 19,661
Provision for credit losses 6,562 1,819 28,956 10,037
Interest 15,063 11,742 57,236 47,752
Provision for claims 7,666 5,823 30,399 23,429
Total costs and expenses 58,118 46,225 228,774 188,638
Income from continuing operations before provision for income taxes 79,858 69,208 296,418 253,497
Provision for income taxes 29,809 22,228 108,374 83,390
Income from continuing operations 50,049 46,980 188,044 170,107
Loss from discontinued United Kingdom operations – – – (30)
Net income $ 50,049 $ 46,980 $ 188,044 $ 170,077

Net income per share:
Basic $ 1.92 $ 1.72 $ 7.15 $ 5.79
Diluted $ 1.91 $ 1.69 $ 7.07 $ 5.67

Income from continuing operations per share:
Basic $ 1.92 $ 1.72 $ 7.15 $ 5.79
Diluted $ 1.91 $ 1.69 $ 7.07 $ 5.67

Loss from discontinued United Kingdom operations per share:
Basic $ — $ — $ — $ —
Diluted $ — $ — $ — $ —

Weighted average shares outstanding:
Basic 26,022 27,351 26,302 29,393
Diluted 26,259 27,865 26,601 29,985

CREDIT ACCEPTANCE CORPORATION
CONSOLIDATED BALANCE SHEETS

(In thousands, except per share data) As of December 31,
2011 2010
(Unaudited)
ASSETS:
Cash and cash equivalents $ 4,657 $ 3,792
Restricted cash and cash equivalents 104,679 66,536
Restricted securities available for sale 810 805

Loans receivable (including $4,949 and $9,031 from affiliates as of December 31, 2011 and December 31, 2010, respectively) 1,752,891 1,344,881
Allowance for credit losses (154,318) (126,868)
Loans receivable, net 1,598,573 1,218,013

Property and equipment, net 18,472 16,311
Income taxes receivable 506 12,002
Other assets 30,901 26,056
Total Assets $1,758,598 $1,343,515

LIABILITIES AND SHAREHOLDERS’ EQUITY:
Liabilities:
Accounts payable and accrued liabilities $ 95,858 $ 75,297
Revolving secured line of credit 43,900 136,700
Secured financing 599,281 300,100
Mortgage note 4,288 4,523
Senior notes 350,378 244,344
Deferred income taxes, net 123,449 108,077
Income taxes payable 1,493 –
Total Liabilities 1,218,647 869,041

Shareholders’ Equity:
Preferred stock, $.01 par value, 1,000 shares authorized, none issued – –
Common stock, $.01 par value, 80,000 shares authorized, 25,624 and 27,304 shares issued and outstanding as of December 31, 2011 and December 31, 2010, respectively 256 273
Paid-in capital 38,801 30,985
Retained earnings 500,888 443,326
Accumulated other comprehensive income (loss) 6 (110)
Total Shareholders’ Equity 539,951 474,474
Total Liabilities and Shareholders’ Equity $1,758,598 $1,343,515

CREDIT ACCEPTANCE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands) For the Years Ended December 31,
2011 2010
(Unaudited)
Cash Flows From Operating Activities:
Net income $ 188,044 $ 170,077
Adjustments to reconcile cash provided by operating activities:
Provision for credit losses 28,956 10,037
Depreciation 4,145 4,437
Amortization 5,904 6,643
Loss on retirement of property and equipment 28 65
Loss on impairment of software – 1,362
Provision for deferred income taxes 15,309 13,863
Stock-based compensation 1,881 4,127
Change in operating assets and liabilities:
Increase (decrease) in accounts payable and accrued liabilities 20,737 (730)
Decrease (increase) in income taxes receivable 11,496 (8,046)
Increase in income taxes payable 1,493 –
Increase in other assets (2,345) (1,137)
Net cash provided by operating activities 275,648 200,698
Cash Flows From Investing Activities:
(Increase) decrease in restricted cash and cash equivalents (38,143) 15,920
Purchases of restricted securities available for sale (532) (1,063)
Proceeds from sale of restricted securities available for sale 76 2,111
Maturities of restricted securities available for sale 454 1,256
Principal collected on loans receivable 996,927 785,947
Advances to dealer-partners (1,152,537) (786,909)
Purchases of consumer loans (122,197) (100,430)
Accelerated payments of dealer holdback (47,411) (32,629)
Payments of dealer holdback (85,184) (44,220)
Net decrease in other loans 886 207
Purchases of property and equipment (6,334) (3,440)
Net cash used in investing activities (453,995) (163,250)
Cash Flows From Financing Activities:
Borrowings under revolving secured line of credit 2,384,900 1,097,900
Repayments under revolving secured line of credit (2,477,700) (1,058,500)
Proceeds from secured financing 1,164,500 327,700
Repayments of secured financing (865,319) (432,197)
Principal payments under mortgage note and capital lease obligations (235) (559)
Proceeds from sale of senior notes 106,000 243,738
Payments of debt issuance costs (8,370) (15,171)
Repurchase of common stock (130,886) (202,247)
Proceeds from stock options exercised 2,921 2,903
Tax benefits from stock-based compensation plans 3,401 610
Net cash provided by (used in) financing activities 179,212 (35,823)
Effect of exchange rate changes on cash – (3)
Net increase in cash and cash equivalents 865 1,622
Cash and cash equivalents, beginning of period 3,792 2,170
Cash and cash equivalents, end of period $ 4,657 $ 3,792

Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for interest $ 51,360 $ 42,548
Cash paid during the period for income taxes $ 76,458 $ 81,750

CREDIT ACCEPTANCE CORPORATION
SUMMARY FINANCIAL DATA

Loans Receivable

A summary of changes in Loans receivable is as follows:

(Unaudited)
(In thousands) For the Year Ended December 31, 2011
Dealer Loans Purchased Loans Total
Balance, beginning of period $1,082,039 $ 262,842 $1,344,881
New consumer loan assignments (1) 1,152,537 122,197 1,274,734
Principal collected on loans receivable (843,100) (153,827) (996,927)
Accelerated dealer holdback payments 47,411 – 47,411
Dealer holdback payments 85,184 – 85,184
Transfers (2) (15,493) 15,493 –
Write-offs (3,055) (433) (3,488)
Recoveries 1,902 80 1,982
Net change in other loans (886) – (886)
Balance, end of period $1,506,539 $ 246,352 $1,752,891

(In thousands) For the Year Ended December 31, 2010
Dealer Loans Purchased Loans Total
Balance, beginning of period $ 869,603 $ 297,955 $1,167,558
New consumer loan assignments (1) 786,909 100,430 887,339
Principal collected on loans receivable (632,616) (153,331) (785,947)
Accelerated dealer holdback payments 32,629 – 32,629
Dealer holdback payments 44,220 – 44,220
Transfers (2) (17,807) 17,807 –
Write-offs (3,043) (143) (3,186)
Recoveries 2,318 124 2,442
Net change in other loans (207) – (207)
Currency translation 33 – 33
Balance, end of period $1,082,039 $ 262,842 $1,344,881

(1) The dealer loans amount represents advances paid to dealer-partners on consumer loans assigned under our portfolio program. The purchased loans amount represents one-time payments made to dealer-partners to purchase consumer loans assigned under our purchase program.
(2) Under our portfolio program, certain events may result in dealer-partners forfeiting their rights to dealer holdback. We transfer the dealer-partner’s outstanding dealer loan balance to purchased loans in the period this forfeiture occurs.

A summary of changes in the Allowance for credit losses is as follows:

(Unaudited)
(In thousands) For the Year Ended December 31, 2011
Dealer Loans Purchased Loans Total
Balance, beginning of period $ 113,227 $ 13,641 $ 126,868
Provision for credit losses 29,638 (682) 28,956
Write-offs (3,055) (433) (3,488)
Recoveries 1,902 80 1,982
Balance, end of period $ 141,712 $ 12,606 $ 154,318

(In thousands) For the Year Ended December 31, 2010
Dealer Loans Purchased Loans Total
Balance, beginning of period $ 108,792 $ 8,753 $ 117,545
Provision for credit losses 5,130 4,907 10,037
Write-offs (3,043) (143) (3,186)
Recoveries 2,318 124 2,442
Currency translation 30 – 30
Balance, end of period $ 113,227 $ 13,641 $ 126,868

CONTACT: Investor Relations: Douglas W. Busk

Senior Vice President and Treasurer

(248) 353-2700 Ext. 4432

IR@creditacceptance.com

Telecommunications companies, including phone companies, topped the list of complaints filed with Washington Attorney General’s Office last year with 1,581 complaints. Second is collection agencies, which ranked No. 1 in 2010, with 1,577 complaints. Broadband companies captures third place with 1,363 complaints.

The agency’s Consumer Protection Division has two Regional Consumer Resource Centers, which handle about 40,000 calls, greet nearly 450 walk-in consumers, and process 23,000 written consumer complaints each year.

Here’s the top 20 list of complaints from 2011:

1. Telecommunications – 1,581
2. Collections –1,577
3. Broadband service providers –1,363
4. Retail – 1,116
5. Auto sales – 985
6. Commercial banking – 914
7. Mortgage lending – 893
8. Books/magazines and directories – 759
9. Electronic shopping – 623
10. Health care – 500
11. Contractors – 470
12. Travel – 416
13. Advance fee fraud – 408
14. Consumer lending – 374
15. Auto repair – 359
16. Government agencies – 336
17. Financing – 331
18. Residential landlord/tenet – 330
19. Manufactured home landlords – 328
20. Credit card issuers – 311

Complaints filed with the agency are analyzed to help staff identify classes of industries or specific companies that may deserve extra scrutiny. DISH Network, for example, racked up more than 300 complaints over a three-year period. In 2009, a case led by the Attorney General’s Office resulted in DISH paying a nearly $6 million national settlement.

Complaints regarding mortgage lending and foreclosure practices are currently receiving extra scrutiny, as the agency works to correct industry procedures that hurt struggling homeowners, Consumer Protection Division Chief Doug Walsh said in a statement.

“Complaints coming into our CRCs can be an early warning system, focusing us on areas that demand attention,” Walsh said. “Other times, complaints help bolster current cases targeted at stopping the greatest harm to the marketplace.”

The Consumer Protection Division doesn’t have the resources to file suits against every wrongdoer but instead promotes deterrence by focusing actions in areas where there is the greatest harm to the marketplace, Walsh said. Complaints are helpful in determining those targets.

Consumers can file a complaint online at www.atg.wa.gov.

For more information for boomer consumers, see my blog The Survive and Thrive Boomer Guide.
By Rita R. Robison
©1996-2011 Hearst Seattle Media, LLC

Last year, California State Senator Lou Correa (D-Orange County) was sued for a $4,000 debt owed by an unrelated “Luis Correa,” and learned of the lawsuit only after his wages had been garnished. Sear’s billing department had handed the original debt off to LVNV Funding LLC, a debt-collection clearinghouse, which in turn hired the Brachfield Law Group to collect the actual debt. Brachfield sent numerous letters to Luis Correa that went unanswered. The company then apparently decided to stick it to Lou Correa instead. The senator sent numerous letters to Sears and Brachfield explaining they had the wrong Correa. Those letters went unanswered, too. Then came the order to garnish the senator’s wages.

Senator Correa shared his horror story with his Senate seat mate Mark Leno, the San Francisco Democrat, who drafted Senate Bill 890, “The Fair Debt Buyers Act,” aimed at helping those in the same predicament as Senator Correa.

Collection agencies and their attorneys file hundreds of thousands of lawsuits every year in California, many of which are filed against debt-free individuals such as Senator Correa with no connection to the original creditor. Incredibly, these lawsuits rarely include the information needed to prove the claim is legitimate, because current law doesn’t require it. Consequently, innocent Californians wind up with a judgment on their record or have their wages garnished because they were sued for someone else’s debt.

SB 890was introduced by Senator Leno in the 2011-2012 session, which, among other things, would prohibit a debt buyer from making any written statement in an attempt to collect a consumer debt unless the debt buyer has valid evidence in the form of business records that the debt buyer is the sole owner of the specific debt at issue, the amount of the debt, and the name of the creditor at the time the debt was charged off. This is a commonsense reform that will protect Californians.

As a volunteer for Consumer Action and ABC-TV Channel 7, 7 On Your Side consumer hotline, and as a former attorney for the Federal Trade Commission, I can attest that many complaints concern the abusive tactics by debt collectors, especially during the current downturn in the economy. In fact, in 2010, the FTC, which enforces the Fair Debt Collection Practices Act (FDCPA), received over 33,000 complaints alleging that debt collectors attempted to collect a debt that the consumer did not owe, or was larger than the amount the consumer actually owed. These errors are not always due to honest mistakes by collectors. Instead, they too often are the conscious decision made by many debt-buying companies to save money by not bothering to obtain the necessary documentation about the alleged debt. They then sign documents they haven’t read and use fake signatures to provide phony verification when the legitimacy of a debt is challenged by consumers under the FDCPA. In this way, debt buyers can enhance their profits at the expense of many innocent consumers who are harassed or even endure frivolous lawsuits by collection attorneys.

Creditors sell or assign debts to collection companies because they simply don’t have the time or resources to hunt down all of their severely overdue accounts. Collection agencies have cheap labor and a streamlined system to pursue such accounts. If a collection agency is successful at collecting the money on the account, they usually keep a percentage of what is collected as payment for their services.

Sometimes original creditors sell debts in large portfolios to collection agencies. Several of these companies, called Junk Debt Buyers (JDBs), are now being traded on Wall Street. The companies do not spend much money at all for these debts, sometimes paying cents on the dollar. Even if the debt is not a large debt, they often hire attorneys to send out mass form letters to debtors on the attorney’s letterhead in hopes of collecting. Thus, even if they get a small percentage of the debtors to pay, profits can be very lucrative.

SB 890 would introduce commonsense reforms that will protect all Californians, and level the playing field for responsible collection agencies. On January 31, 2012, the State Senate passed SB 890. SB 890 now goes to the Assembly.

By Ralph E. Stone
Copyright FogCityJournal.com, 2006-2012. All Rights Reserved.

In January the State Senate in California passed legislation aimed at debt buyers like Midland Funding, LVNV Funding, and Portfolio Recovery who sue people over debts without adequate documentation to prove that they own the debt or that they are even suing the right person. This new legislation would prohibit debt buyers from obtaining a judgment in a debt collection lawsuit unless the debt buyer can prove that they own the debt, what the balance is, the date of default or last payment, the identity of the owners, and the name and address of the person on the original records. Further, the debt buyer must have the original contract that was provided to the consumer while the account was active.

While this is a significant piece of legislation that will help protect consumers, in reality the Rules of Evidence the govern civil lawsuits already require most if not all of these documents. The trouble is many of these types of lawsuits go unanswered, resulting in a default judgment, or judges simply ignore the rules and grant judgment without the supporting documents.

This new legislation will help those living in California, but what if you have been sued by Midland Funding, LVNV or one of the other debt buyers and you live in Arizona? Arizona does not have a similar consumer protection law. You are left to defend yourself in court. The good news is, in many cases there are strong legal defenses you can raise in court and many times people are successful in defending such lawsuits. The debt buyer has the burden of proving that they own the debt and that you are responsible. If they can’t do that they can’t win.

In the past I believe that many people, including judges (they are people too!) believed that if a person was sued on a credit card debt or some similar type debt that they probably owed it. With the dramatic increase in lawsuits by debt buyers that are filed with little to no documented support this assumption is no more. I have represented clients that literally had no connection with a debt they were being sued on other than their name being similar to someone who actually owed the debt.

When people are wrongfully sued they are put in the difficult situation of having to prove they didn’t do something. This can be more difficult that it seems. If you have been sued by Midland Funding, LVNV, Portfolio Recovery or one of the other debt buyers it is important to seek out legal representation immediately. Failing to respond – or just as bad- responding but failing to do so in a proper manner can result in garnishment of wages, bank accounts and damage to your credit score. If you have been sued, act. Don’t delay.

By: John Skiba
Copyright © 2012 JD Supra, LLC

In an effort to encourage more businesses to locate their customer service operations in the United States, Rep. Tim Bishop (D-N.Y.) has introduced a bill in Congress that would penalize companies that place customer call centers offshore.

“We believe we’ve lost 500,000 good paying jobs” to offshore call centers, Bishop said Wednesday during a conference call with reporters. Bishop’s U.S. Call Center Worker and Consumer Protection Act (H.R. 3596) would prohibit companies that place call centers offshore from receiving federal grants or guaranteed loans.

The bill also requires the Department of Labor to maintain a publicly available list of companies–many of which are tech vendors–that operate offshore call centers. And it forces offshore call center workers to disclose their location to consumers and transfer them to a U.S.-based agent on request.

Along with job losses, the bill’s sponsors blame offshore call centers for placing consumers at risk of identity theft. “We lose a certain amount of control over identity” when data is offshored, said co-sponsor Rep. Dave McKinley (R-W.Va.), during the call. McKinley did not cite any actual examples of consumer data being compromised at an offshore call center.

The bill also has union backing from Communications Workers of America, which represents more than 150,000 domestic call center and customer service workers.

“Americans are fed up with good call center jobs here in the United States being shipped overseas,” said CWA chief of staff Ron Collins. “The bill does not prevent a corporation from moving, if they want, but it prevents them from gaining access to our tax dollars while they do that.”

Bishop singled out India and the Philippines as the biggest threats to the U.S. call center industry. “The fact that the Indian government and the Filipino government are both mobilizing their lobbying forces so as to fight this bill underlines for me just how important it is that we pass this bill,” said Bishop. “If the amount of work they’re getting from the United States is that important to their economy then it obviously is going to be very important to our economy as well.”

Earlier this week, Indian finance minister Pranab Mukherjee said anti-outsourcing initiatives such as Bishop’s bill and President Obama’s call for insourcing could end up hurting the U.S. economy more than they help. “Protectionism ultimately does not help the country that resorts to protectionism,” said Mukherjee, during a visit to Chicago.

The bill is currently in the House Energy and Commerce committee’s subcommittee on Commerce, Manufacturing, and Trade. Bishop said he’s confident that it will make it to the House floor for a vote and pick up a counterpart in the Senate. “The effort we have to be engaged in right now is building co-sponsors,” said Bishop.

“Once we can show the leadership that we have bi-partisan support, that it’s important to a great many of us in terms of our districts, and it’s important to our country then the chances of us getting a hearing dramatically improve,” he said.

Even if the bill does make it to the floor for a vote, it could have a tough time gaining passage in the Republican-dominated House. Of its 25 co-sponsors, only three are GOP members.

Nominate your company for the 2012 InformationWeek 500–our 24rd annual ranking of the nation’s very best business technology innovators. Deadline is April 27. Organizations with $250 million or more in revenue may apply for the 2012 InformationWeek 500 now.

By Paul McDougall InformationWeek
Copyright © 2012 UBM TechWeb, All rights reserved.

Equifax Analysis Reveals 44% Decrease in Commercial Bankruptcy Petitions

ATLANTA, Feb. 2, 2012 /PRNewswire/ — According to Equifax Commercial Information Solutions analysis, bankruptcy petition rates have nearly returned to pre-recession index levels. Commercial petitions for bankruptcy decreased 44% since their peak in Q2 2009 through Q4 2011; while consumer petitions peaked a year later in Q2 2010 and declined 26% through the end of 2011.

“The belt tightening in the commercial, small business sector resulted in a decline in business failures and speaks to the improving health of today’s small business market,” said Dr. Reza Barazesh, senior vice president, Equifax Commercial Information Solutions.

While both consumer and commercial petitions for bankruptcy declined steadily from the second quarter of 2011 through year end, commercial bankruptcy filings still remained lower declining 28%. Consumer bankruptcy filings have declined 22% since Q2 2011.

“Our latest analysis of bankruptcy rates appears to show some signs of stabilization,” said Barazesh. “The downward trend in the number of bankruptcies is an indication of the improvement in economic conditions.”

Equifax analyzed Chapter 7, 11 and 13 filings, as part of its comparative study on bankruptcy petitions quarter over quarter. Equifax classifies a small business as a commercial entity of fewer than 100 employees.

To learn more about Equifax Small Business Solutions, visit www.equifaxsmallbusiness.com.

Equifax Commercial Information Solutions

Equifax Commercial Information Solutions is the leading provider of small business intelligence. We provide the information and expertise necessary for companies to best understand and manage their dealings with small business customers, prospects and suppliers. Our best-in-class commercial credit risk data, combined with highly predictive scoring, corporate linkage, and innovative technology, enables companies to make quick, confident credit decisions and minimize potential losses. Leveraging our EFX ID(R) keying and linkage technology, companies can also gain greater visibility into their supply chain as well as improve the precision of their sales and marketing efforts – from customer acquisition to retention and expansion.

About Equifax

Equifax is a global leader in consumer, commercial and workforce information solutions, providing businesses of all sizes and consumers with information they can trust. We organize and assimilate data on more than 500 million consumers and 81 million businesses worldwide, and use advanced analytics and proprietary technology to create and deliver customized insights that enrich both the performance of businesses and the lives of consumers.

Headquartered in Atlanta, Equifax operates or has investments in 17 countries and is a member of Standard & Poor’s (S&P) 500® Index. Its common stock is traded on the New York Stock Exchange (NYSE) under the symbol EFX. For more information, please visit www.equifax.com.

SOURCE Equifax

CONTACT: Demitra Wilson, Equifax, +1-404-885-8907, demitra.wilson@equifax.com

The American Bankers Association submitted a comment letter to the Consumer Financial Protection Bureau on Monday regarding the agency’s policy statement on its disclosure of credit card complaint data.

The letter raises many concerns, including the expansive role of the bureau. The ABA’s dominating concern, however, is that data collected by the agency regarding consumer complaints is unreliable and not representative of the whole.

“Given the limitations and shortcomings of the data that are likely to mislead rather than enlighten consumers and policy makers, releasing data with links to specific fields as proposed will be a disservice rather than assistance to consumers, public policy makers, and others,” the letter said.

The CFPB receives complaints from consumers regarding credit cards and plans to release the data according to number and percentage of complaints, type of complaint, and percentage of complaints resolved.

The ABA emphasized the importance of the bureau in consumer protection and education but ultimately asked the agency to reconsider its data collection techniques to provide an accurate report of consumer credit card complaints.

“We agree with the [CFPB] that reliable and accurate data are important in fulfilling the [CFPB]’s missions and goals in ensuring that consumer receive ‘timely and understandable information to make responsible decisions about financial transactions’ and helping the credit card market to ‘operate transparently and efficiently,’” the letter said. “We urge the [CFPB] to obtain that analytically sound, fair, accurate, and meaningful data that can withstand peer review.”

IRVINE, Calif.–(BUSINESS WIRE)–Persolvo Data Systems, a leading provider of web-based settlement software and analytics tools designed to locate, identify and settle accounts enrolled in debt settlement programs, announced today that the company achieved a number of record milestones in 2011. For the year ending December 31, 2011, Persolvo grew revenues by 278% over 2010 and increased the amount of debt settled by 237%. In addition to successfully deploying their first top 5 credit card issuer in 2011, the company more than doubled the number of debt buyers, collection agencies and legal recovery firms utilizing Persolvo’s technology.

In addition to the growth attributed to its client base of creditors, collectors and debt buyers, Persolvo also saw strong demand from debt settlement companies that, for the first time, find themselves operating under a regulated model banning advanced fees and outlining strict guidelines on how companies can market their services to consumers. Being forced to operate in a strictly performance-based manner, debt settlement companies are looking for every advantage to settle more debt for their customers and do so in the most secure, efficient and cost effective manner possible.

“With Persolvo’s extensive relationships throughout the accounts receivable management industry, and its growing client list of creditors, collection agencies and debt buyers, Persolvo has created an entirely new channel of settlement opportunities for our consumers enrolled in a debt settlement program,” said Dave Leuthold, CEO of Century Negotiations. “Furthermore, with the recent enhancements now available through CONCERTO 3.0, the latest release of Persolvo’s web-based settlement system, a single debt negotiator can settle hundreds of accounts monthly, or typically 8-10 times the volume of a negotiator utilizing manual processes.”

“2011 was a breakout year for Persolvo,” said Teresa Dodson, Persolvo’s COO. “We are now settling hundreds of millions of dollars of debt for consumers annually, and our business model has been validated by some of the largest credit card issuers, debt buyers and collection agencies in the industry.”

Dodson went on to note that Persolvo’s exceptional performance in 2011 appears to have laid the foundation for even greater success in 2012. “We’re already off to a great start with the addition of six large collection agencies and debt buyers during the month of January and face a growing number of new client deployments as we head to the Debt Buyers Association meeting in Las Vegas this month.”

For more information on Persolvo Data Systems, visit http://www.persolvo.com/. You can also learn more about how collection agencies, debt buyers and legal recovery firms are utilizing the debt settlement industry to increase collections by downloading a free copy of the Debt Settlement Industry Survey from Inside ARM.com, at http://www.insidearm.com/freemiums/debt-settlement-industry-collections/.

About Persolvo Data Systems

CONCERTO 3.0 from Persolvo Data Systems is the first patent-pending system to aggregate account information on debtors enrolled in debt relief programs with leading debt settlement companies and law firms. Persolvo’s web-based, PCI-compliant settlement application allows creditors and collectors to locate debtors, analyze their account information to uncover highly-liquid settlement opportunities, and settle large numbers of accounts online with hundreds of debt settlement companies. The Persolvo system is the largest database of aggregated debt settlement accounts available today and provides the most accurate and up-to-date information, including the settlement savings balances of debtors enrolled in debt settlement programs. For more information, visit our website at http://www.persolvo.com/.

Persolvo: Latin Verb – to unloose, explain, expound/pay off a debt, pay.

Contacts

Persolvo Data Systems
Teresa Dodson, (888) 881-0048 ext. 7033
Chief Operating Officer

Offers Free Copies of Business Book Payments Power

Phoenix, Ariz. – January 31, 2012 – BillingTree, one of the nation’s leading on-demand payment processors, today outlined 12 ideas that can help organizations improve their bottom line in 2012. The company believes all businesses should consider adopting one or more of these 12 payment and billing services to match more closely their customers’ changing needs, while generating more revenue from comparable business levels. In addition, many of these suggestions result in improved customer service.

1. Convenience Fees – consider either a “No Fee to Biller” model using pre-set flat convenience fees collected by your processor to retain 100% of your billable amounts, or a “Biller Keeps the Fee” model to create a new revenue stream and forecast the positive impact to your bottom line.

2. Account Verification – Verify the accuracy of the customer’s account information and likeliness of successful pay before establishing recurring payment plans to avoid costly and time consuming setups or repeated returned payments.

3. Virtual Agents – Let computer-based algorithms handle payment options on qualifying account balances leaving agents and customer service reps free for other tasks.

4. ACH – Accept payments via ACH and reduce your processing fees while increasing customer satisfaction through providing more efficient cash management capabilities compared to traditional paper payments.

5. Cash Payments – Help your underbanked customers make payments and settle debts by accepting electronic cash payments – plus eliminate the risk of managing cash at your locations.

6. E-Billing (EBPP) – Reduce paper and postage costs by introducing e-billing and payment processing so customers can see their bills and pay online while also reducing your Days Sales Outstanding (DSO) and operational costs.

7. Text payments – Customers like this emerging technology. It provides a convenient option for busy mobile-savvy people; they can receive bill reminders and authorize payment by text message.

8. PURLs for personalized payments – One-time-use personalized URLs encourage electronic payments from paper statements and invoices, so customers can quickly pay online while eliminating the need to create a profile or log into a public online payment portal.

9. Check 21 – Exchanging electronic images of checks means faster access to check payments and greater efficiency than physically transporting paper checks. Check 21 enables non-standard paper checks such as business checks to be converted to electronic images for processing.

10. Web Payment Forms & IVR – By providing a company branded web payment form or Interactive Voice Response (IVR) phone line for customers and debtors to self pay, the process of collecting on outstanding balances can be streamlined even further while offering 24 x 7 access.

11. Debit Cards Only – Consider the option of limiting payment card acceptance to validated debit cards only, effective for portfolios where access to credit is minimal or restricted.

12. Text Notifications – Bill and communicate with customers and debtors via SMS text for a quick, easy to set up, and low cost service outage notices or as a past due payment reminder service.

While supplies last, BillingTree is offering free copies of Payments Power – a primer on how to increase your net profit 10% or more and improve cash flow. Limited to one copy per mailing address, offer details available here http://tinyurl.com/6vpd8fa

BillingTree supplies the leading fully integrated, multi-channel electronic payment platform to a growing list of Industries, including Insurance, Utilities, such as power, cable, municipal, and phone, as well as Healthcare and Subscription-billed services. Benefits of electronic payment solutions include an accelerated availability of consumer funds, reduced costs associated with manual-payment processing, improved cash management, and integrated processing by managing all payments, returns, and corrections through a single portal.

About BillingTree
The proven leader in on-demand payment processing, BillingTree empowers customers with competitive advantage through a simplification of the billing and receivables process. By delivering the most innovative technology while making it as easy and inexpensive as possible to accept payments, BillingTree has revolutionized the payments landscape. Our software-as-a-service (SaaS) model delivers industry-leading payment solutions, proven integration, and point-and-click simplicity. BillingTree’s focus on innovation has allowed us to help more than 2,000 customers eliminate manual processes and automate their payment cycles. BillingTree – Growth is our Business. For more information, visit www.mybillingtree.com or call 877.4.BILLTREE.

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All trademarks are the property of their respective owners.

Grand Rapids, MI (January 31, 2012) – WebRecon LLC is about to change all of the rules.

On Monday, Feb 20, WebRecon will relaunch as WebRecon B.O.L.D.: The Bureau of Litigant Data. The first-of-its-kind consumer reporting agency (CRA) will focus on verifying the identities of consumers who threaten or initiate certain types of legal actions against collection agencies, including FDCPA, FCRA and TCPA.

The benefits of approaching litigant data in this way are many, according to WebRecon CEO Jack Gordon. “We have been tracking litigants for over three years now, but there have been some frustrating limitations,” said Gordon. “In order to truly have the freedom to provide the most useful client experience, it became obvious that we needed to do it as a CRA.”

Two of the major benefits of this move are the ability to confirm consumer data directly with the defendants in consumer litigation, and the ability to track consumers who send demand letters but do not actually file suit. In both cases, FDCPA’s prohibition on 3rd party disclosure has prevented collection agencies from being able to effectively cooperate. WebRecon’s Bureau of Litigant Data provides agencies a compliant pathway for both types of data to be provided, compiled and ultimately shared with other agencies.

Collection agencies have reported a 400-500% explosion in pre-litigation demands from consumers in recent years, according to Gordon. Viewed in the context of a declining growth rate in filed-FDCPA lawsuits, it seems clear many on the consumer side have shifted tactics to better stay under the radar.

“The industry has been demanding a better solution to these problems for years,” says Gordon. “As the only company with a 100% focus on consumer litigants, WebRecon is the natural choice to push the matter forward with a dedicated, comprehensive solution to tracking, compiling and disseminating this data in an accurate and responsible manner.”

WebRecon has introduced several litigant tracking innovations to the collection industry since its launch in January 2009. Among them…

Being the first to offer a comprehensive litigant batch processing service
Being the first to offer a litigant data warehousing service which alerts clients when any of their debtors sue another company
Being the only service to offer a fully indexed search engine of litigants, attorneys and defendants in consumer actions.
Being the only service to offer non-federal litigation in their database and search processes. WebRecon currently has almost 20,000 exclusive state, county, city and small claims lawsuits currently on file, in addition to over 70,000 federal lawsuits.
Being the only service to alert its clients of new activity by the most litigious consumers in the country through the semi-monthly “Litigant Hotsheet”

WebRecon will be exhibiting at next week’s DBA International conference at the Aria in Las Vegas, and will use that opportunity to introduce this exciting new service to the industry.

Collection agencies and law firms interested in more information on how to participate should contact WebRecon through its web site at www.webrecon.com/contact. More detailed information will be provided to interested participants as it becomes available.

About WebRecon LLC: Creditors and collection firms use WebRecon’s services to easily segregate predictably litigious consumers from their databases. A significant percentage of consumer litigation is initiated by the same consumers over and over again, and screening them out of the general population can reduce lawsuits significantly.

For more information, please contact:

Jack Gordon, CEO
WebRecon LLC, The Bureau of Litigant Data
Web: www.WebRecon.com
Email: admin@webrecon.net
Phone: (616) 682-5327 x0110

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