On February 23, DOJ announced it had reached a settlement to resolve allegations that a large used car retailer violated the Servicemembers Civil Relief Act (SCRA) by unlawfully repossessing vehicles from at least 28 servicemembers without obtaining court orders. According to DOJ, many of the alleged violations stemmed from company policies that did not require checking the “Defense Manpower Data Center” to confirm military status before repossession and failed to extend protections to reservists who had received orders for active duty. DOJ also claimed some vehicles were taken even after owners notified the company they were in military service.
Under the terms of the settlement, the retailer would pay a minimum of $420,000 in compensation to affected servicemembers and $79,380 in civil penalties to the Treasury. The agreement requires the retailer to adopt new safeguards, such as mandatory military status checks within two business days of repossession actions, prohibiting repossessions without court orders or valid waivers, correcting negative credit reporting tied to unlawful repossessions, and implementing annual employee training on SCRA compliance, among others. The retailer would also be barred from pursuing further balances on identified accounts and be required to notify impacted servicemembers and compensate borrowers for lost equity and accrued interest. Any settlement funds unclaimed after four years would be directed to the Treasury, under the terms of the agreement.
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