On February 25, 2015, the Department of Justice (“DOJ”) announced a settlement with a national motor vehicle lender over allegations that the company repossessed over 1,1000 cars in violation of the Servicemembers Civil Relief Act, 50 U.S.C. Sections 501-597b. A consent order was filed in the U.S. District Court for the Northern District of Texas, and is subject to court approval. The Justice Department’s complaint alleged that the company failed to obtain the required court orders before repossessing service members’ vehicles, or collected fees in connection with repossessions by other lenders that violated the Act. The DOJ identified 1,112 illegal repossessions. The company has agreed to pay $9.35 million that will be deposited in escrow and ultimately distributed to the affected service members and a $55,000 civil penalty. The company also agreed to complete credit restoration services for affected service members and provide the DOJ with monthly accounting for all credit entries that were repaired. To prevent future violations, the company agreed to check the Department of Defense Database for service member status before conducting a repossession and to ask the consumer about military service before repossessing a vehicle.
Blog Enforcement Watch February 25, 2015