DOJ Reaches $1.5 Million Settlement with Auto Lender Resolving Alleged SCRA Violation

On September 29, 2021, the Department of Justice (DOJ) announced that it reached a settlement with a California-based auto lender, resolving allegations that the lender violated the Servicemembers Civil Relief Act (SCRA).

In a simultaneously-filed complaint filed in the United States District Court for the Central District of California, the DOJ alleged that the auto lender violated SCRA by failing to refund lease amounts that were paid in advance by servicemembers who lawfully terminated their leases upon receipt of military orders.  Under SCRA, once a servicemember receives a deployment or reassignment order, the servicemember may terminate his or her lease agreement and is entitled to a refund of any lease amounts that the servicemember paid to cover a period occurring after the effective date of the lease termination.  The DOJ alleged that from July 2014 until July 2019, the auto lender regularly failed to timely refund advance lease amounts paid by at least 714 servicemembers.

The consent order notes that the auto lender has already modified its policies and procedures to address the concerns raised by the DOJ.  In addition, the auto lender must provide SCRA compliance training to its employees and pay up to $1,585,803.89 in compensation to the 714 identified servicemembers.  Finally, the settlement requires the auto lender to pay $64,715 in a civil money penalty to the United States treasury.