WASHINGTON — The Department of Justice (DOJ) has reached a settlement with CarMax to resolve allegations that vehicles owned by members of the military were illegally repossessed, violating the Servicemembers Civil Relief Act (SCRA).
CarMax will pay at least $420,000 in damages to servicemembers and a civil penalty of $79,380 to the United States as part of the settlement, according to a news release from the DOJ.
“Federal law prohibits businesses from repossessing servicemembers’ vehicles without a court order,” said Assistant Attorney General Harmeet K. Dhillon of the Justice Department’s Civil Rights Division. “The Department of Justice is proud to defend the rights of those who serve in our military and will continue to vigorously enforce the laws that protect them.”
The DOJ alleges that CarMax repossessed servicemembers' vehicles without obtaining court orders, as required by federal law, as well as repossessing vehicles after owners told CarMax they were in the military.
CarMax also allegedly failed to extend SCRA protections to reservists who had received orders to report for active duty. The SCRA prevents an auto finance or leasing company from repossessing a servicemember's vehicle without obtaining a court order, as long as the servicemember made at least one payment on the vehicle before entering the service.
In addition to paying a civil penalty and compensating impacted servicemembers, CarMax will revise its policies and procedures to ensure this does not happen again, the news release states.
CarMax released the following statement regarding the settlement:
The U.S. Department of Justice has issued a release regarding CarMax Auto Finance and matters involving servicemembers’ protections under the federal Servicemembers Civil Relief Act (SCRA). CarMax Auto Finance has cooperated fully with the DOJ to reach a resolution to the allegations and has further strengthened our existing compliance program. The resolution between the DOJ and CarMax Auto Finance does not constitute an admission of wrongdoing by CarMax Auto Finance.
Supporting our nation’s military is rooted in CarMax’s culture, and we take these matters seriously given our long-standing commitment to servicemembers, veterans and their families. Our focus has been – and remains – on providing our customers with a fair, transparent and straightforward experience, and we are committed to serving our military community with care and respect. Since 2003, CarMax Auto Finance has provided relief to more than 26,000 servicemembers and dependents of servicemembers in accordance with the SCRA, in the form of finance charge reductions and protection from vehicle repossession.
Consistent with CarMax Auto Finance’s commitment to continuous improvement and supporting those who serve, we have enhanced our SCRA processes, expanded proactive screening and outreach, and reinforced employee training to help ensure all eligible servicemembers and their dependents receive the protections they deserve.
Customers seeking information about SCRA benefits with CarMax Auto Finance can submit a request via email to CAF_SCRA@carmax.com or over the phone at (800) 925-3612 x4077.
Servicemembers who believe their rights may have been violated should contact the nearest Armed Forces Legal Assistance Program Office. Click here for a list of locations.
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