On August 8, the Department of Justice (DOJ) announced that an auto financing company agreed to pay $434,500 to settle alleged violations of the Servicemembers Civil Relief Act (SCRA). The DOJ alleged in its complaint that the company illegally repossessed 75 automobiles from service members during their service between 2008 and 2010, when the company sold its automobile lending business to a national motor vehicle lender.
In February 2015, Enforcement Watch reported that the DOJ settled SCRA claims with that national lender. The lender agreed to pay $5000 to each service member whose account the lender had acquired after the defendant in the present action arranged for an allegedly illegal repossession. That settlement did not release any of DOJ’s present claims against the auto financing company.
The SCRA provides for court review and approval of any lender’s repossession of a service member’s motor vehicle if the service member took out the loan and made a deposit or payment prior to entering the military. DOJ alleged that the company failed to obtain court orders before repossessing service members’ automobiles, thereby depriving them of their rights pursuant to the SCRA.
Pursuant to the proposed consent order, the defendant agreed to notify the United States if it ever reenters the business of originating or servicing and to deposit $434,500 into an escrow account to fund compensation payments to affected service members.