Car repossession is a stressful situation for anyone, but it can be particularly devastating for service members who are already facing unique challenges due to their military duties. Recently, Santander Consumer USA Inc. faced legal action for violating the Servicemembers Civil Relief Act (SCRA) by improperly repossessing vehicles from service members. This case highlights the importance of understanding a car repo settlement and the protections available to those in uniform.
What Happened with Santander and the Car Repo Settlement?
In a significant move to protect the rights of military personnel, the Department of Justice (DOJ) reached a settlement with Santander Consumer USA Inc. for a minimum of $9.35 million. This settlement resolves allegations that Santander illegally repossessed 1,112 motor vehicles belonging to service members between January 2008 and February 2013. This landmark car repo settlement is the largest of its kind ever achieved by the U.S. government under the SCRA, underscoring the seriousness of these violations.
Acting Associate Attorney General Stuart Delery emphasized the importance of this resolution, stating it will provide “financial relief and help repair their bad credit caused by Santander’s improper repossessions.” This case sends a clear message that lenders will be held accountable for failing to protect service members from unjust actions related to vehicle repossession.
Why Were These Car Repossessions Illegal? Understanding the SCRA
The Servicemembers Civil Relief Act (SCRA) is a federal law designed to protect service members from certain civil liabilities while they are on active duty. One key protection under the SCRA relates to vehicle repossessions. If a service member takes out a car loan before entering military service and makes at least one payment, the lender is required to obtain a court order before repossessing the vehicle.
This legal process is crucial because it allows a court to review the situation and determine if the repossession should be delayed or adjusted due to the service member’s military obligations. The court can also order the lender to refund prior payments and may appoint legal representation for the service member.
Santander’s violation of the SCRA involved repossessing vehicles without obtaining these mandatory court orders. By bypassing the legal process, Santander prevented service members from having their cases reviewed and potentially avoiding wrongful car repo settlement situations.
Details of the Car Repo Settlement: Who is Affected?
The lawsuit against Santander detailed two main categories of SCRA violations:
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Illegal Repossessions: Santander initiated and completed 760 repossessions of vehicles owned by SCRA-protected service members without the required court orders. Under the settlement, each of these service members is entitled to receive $10,000, plus compensation for lost equity with interest. This part of the car repo settlement directly addresses the most egregious violations.
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Fees from Prior Illegal Repossessions: In another 352 cases, Santander attempted to collect fees related to repossessions that other lenders had illegally conducted before Santander acquired the loans. Even though Santander wasn’t the original wrongdoer in these cases, they still attempted to profit from these illegal actions. The car repo settlement mandates that Santander pay $5,000 to each of these affected service members.
In addition to financial compensation, Santander is also required to repair the credit of all service members impacted by these illegal repossessions. This credit repair is vital as wrongful repossessions can severely damage a service member’s credit score, affecting their ability to secure loans, housing, and even employment in the future.
Preventing Future Illegal Car Repossessions
Beyond compensating service members for past wrongdoings, the car repo settlement also includes measures to prevent future violations. Santander is now required to utilize the Department of Defense’s automated database to verify if a car owner is a service member before initiating any repossession proceedings. This proactive step will help ensure compliance with the SCRA and prevent similar illegal repossessions from occurring in the future.
How the Investigation Unfolded
The Department of Justice’s investigation into Santander’s repossession practices began following a referral from the U.S. Army’s Legal Assistance Program. This referral involved the case of U.S. Army Specialist Joshua Davis, whose car was illegally repossessed by Santander in the middle of the night while he was at basic training, despite the company being aware of his military status.
Further investigation revealed that Santander had also used arbitration clauses in their loan documents to prevent service members from pursuing class-action lawsuits related to illegal repossessions, further hindering their ability to seek justice.
What Service Members Need to Do
The good news for service members potentially affected by Santander’s actions between January 2008 and February 2013 is that they do not need to take any immediate action. An independent settlement administrator will contact identified service members later this year. Santander is also obligated to review repossessions that occurred after February 2013 and provide compensation for any additional unlawful repossessions.
If you believe you may have been affected by an illegal car repossession while serving in the military, it’s important to be aware of your rights under the SCRA. For more information and assistance, you can contact the Department of Justice directly or visit www.servicemembers.gov or call 1-800-896-7743, Mailbox 91.
Understanding a car repo settlement like this one is crucial for service members to be aware of their protections and to ensure that their rights are upheld while they serve our nation.
