On March 6, 2019, a California subprime auto lender, California Auto Finance, agreed to enter into a consent order with the Justice Department related to allegations that it repossessed vehicles in violation of the Servicemembers Civil Relief Act (SCRA). Under the terms of the consent order, which is still subject to court approval, California Auto Finance must pay $50,000 in civil penalties to the government and $30,000 in compensation to one individual servicemember – the highest amount the Department has ever recovered for one servicemember. The lender also agreed to implement procedures to ensure SCRA compliance in the future.
The Justice Department initiated the investigation after receiving a complaint in November 2016 from United States Army Private Andrea Starks alleging that California Auto Finance repossessed her vehicle without a court order from her grandmother’s home on the first day of her military training. As a result of the investigation, the Justice Department determined that California Auto Finance did not have SCRA compliance policies in place and had also improperly repossessed the vehicle of another servicemember, U.S. Army Specialist Omar Martinez, during his first month of military training. Because of the repossession’s impact on Specialist Martinez’ credit, he was unable to purchase a new car and had to rely on rideshares and taxis for over a year. According to a Justice Department press release, California Auto Finance reached a private settlement with Private Starks. As part of the consent order, it agreed to pay Specialist Martinez $30,000.
The Consent Order signals the Justice Department’s continued interest in enforcing the SCRA and safeguarding the rights of military members under the Trump Administration. Since 2011, the Justice Department has obtained over $469 million in monetary relief for over 119,000 servicemembers through its enforcement of the SCRA. Attorney General Eric Dreiband for the Department of Justice’s Civil Rights Division stated: “We will continue to vigorously pursue lenders who fail to take the simple steps necessary to determine, before repossessing a car, whether it belongs to a servicemember. Servicemembers who are going through basic training or another kind of military service should not have to worry that their cars will be repossessed with no court supervision during their time of service to our country.