DOJ Settles $2 Million SCRA Action with Auto Lender

On February 22, 2018, the Department of Justice (“DOJ”) announced that it had entered into a settlement with an auto financial services company for alleged violations of the Servicemembers Civil Relief Act (“SCRA”), 50 U.S.C. § 3955(f) relating to upfront leases.  In its complaint, filed the same day in the United States District Court for the District of New Jersey, the DOJ alleged certain violations of the SCRA’s requirements to rebate upfront expenses for servicemembers who are deployed abroa​​d.  The DOJ claimed that servicemembers had paid upfront fees or received credits for traded-in vehicles, and that those funds would be applied to reduce their overall monthly payments.  However, according to the DOJ, when the servicemembers were deployed abroad, the financial services company cancelled the lease as required under the SCRA, but refused to refund the prorated upfront fees and credits paid by the servicemembers as required under the statute.  According to the DOJ, it conducted an investigation that uncovered a total of 492 servicemembers for whom these funds had not been refunded.

Under the terms of the settlement agreement, the financial services company neither admitted nor denied liability, but it agreed to pay $2,165,518 in consumer relief.  This amount is equal to the amount allegedly withheld from the servicemembers, plus a $500 civil damage amount, or treble the amount allegedly withheld, whichever was higher.  The company also agreed to pay the United States $60,788 and to change its policies to comply with the SCRA and conduct additional training of its employees on compliance with the statute.