Consumer Finance Insights
July 26, 2016

DOJ Files Lawsuit Against Regional Credit Union Over Alleged SCRA Violations

On July 26, the Department of Justice (DOJ) announced that it filed a lawsuit against a regional credit union over alleged violations of the Servicemembers Civil Relief Act (SCRA). The SCRA prohibits lenders from repossessing servicemembers’ vehicles without a court order while servicemembers are on activity military duty.

The DOJ alleged in its complaint that the lender repossessed a vehicle from at least one servicemember while he was on active military duty. After the repossession, the servicemember’s family contacted the DOJ and the DOJ initiated an investigation. The credit union purportedly failed to check the servicemember’s name against the Defense Manpower Data Center database — a database of active duty servicemembers DOJ provides to lenders to assist with SCRA compliance — before repossessing his vehicle. The DOJ also alleged the credit union failed to maintain alternative systems for determining their customer’s military status prior to repossessing vehicles, and had no written policies regarding compliance with the SCRA. The DOJ noted the credit union “may have” repossessed additional motor vehicles in violation of the SCRA.

The DOJ seeks declaratory and injunctive relief prohibiting the credit union from future violations of the SCRA, compensatory damages for all victims, and civil penalties as permitted by the SCRA. The SCRA provides for civil penalties ranging from $60,000 to $120,000 per offense.

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