When you finance a car, understanding the terms of your loan, especially repossession policies, is crucial. For service members, these concerns are amplified by the protections afforded by the Servicemembers Civil Relief Act (SCRA). Recent news highlights a significant case involving Santander Consumer USA Inc. and allegations of improper car repossessions. This article delves into the details of this case, exploring the question “does Santander consumer repo cars?” and what rights service members have under the SCRA.
Santander Consumer USA Inc., a major auto lender, faced a lawsuit by the Department of Justice (DOJ) for allegedly violating the Servicemembers Civil Relief Act. The core issue? Improper repossession of vehicles from service members. The DOJ contended that Santander repossessed cars without following the legal procedures mandated by the SCRA, which is designed to protect those serving in the military from civil proceedings that could unfairly impact their legal rights while they are on duty.
The lawsuit culminated in a settlement where Santander agreed to pay at least $9.35 million. This substantial settlement aims to resolve claims related to the illegal repossession of 1,112 motor vehicles between January 2008 and February 2013. This landmark agreement is recognized as the largest settlement ever achieved by the U.S. government for illegal automobile repossessions under the SCRA, underscoring the seriousness of the violations and the commitment to protecting service members.
Santander’s SCRA Violations and the Settlement Details
The heart of the issue was Santander’s failure to adhere to the SCRA’s requirements before repossessing vehicles. The SCRA mandates that lenders must obtain a court order before repossessing a vehicle from a service member if that service member took out the loan and made at least one payment before entering military service. This crucial step ensures judicial oversight to determine if the repossession should be delayed or adjusted due to the service member’s military obligations.
According to the lawsuit, Santander initiated and completed 760 repossessions of vehicles owned by SCRA-protected service members without obtaining the necessary court orders. As part of the settlement, Santander is required to provide $10,000 to each of these service members, in addition to compensating them for any lost equity in the vehicle, plus interest.
Furthermore, the lawsuit addressed an additional 352 repossessions where Santander sought fees even though the initial repossession was carried out illegally by other lenders before Santander acquired the loans. For these cases, Santander will pay $5,000 to each affected service member. Beyond financial compensation, Santander is also obligated to repair the credit scores of all service members impacted by these improper actions, addressing the long-term financial harm caused by wrongful repossession and damaged credit.
Understanding the Servicemembers Civil Relief Act (SCRA)
The Servicemembers Civil Relief Act (SCRA) is a federal law enacted to provide a wide range of protections to individuals serving in the United States military. These protections cover various civil proceedings, aiming to alleviate some of the legal and financial burdens that can arise when individuals are called to duty and are unable to manage their civilian affairs.
Regarding vehicle repossession, the SCRA is clear: if a service member entered into a loan agreement before starting their military service, lenders cannot simply repossess their vehicle without first going through the court. This judicial review process is designed to protect service members from potentially unfair repossessions and allows a court to consider the impact of military service on the service member’s ability to meet their financial obligations. The court can then decide to postpone the repossession or order the lender to refund prior payments before proceeding. The SCRA even allows for the appointment of legal counsel for the service member and may require the lender to post a bond, further safeguarding the service member’s rights.
By bypassing this court order requirement, Santander prevented service members from having their cases reviewed and potentially avoiding or mitigating the impact of repossession during their service.
What This Means for Service Members and Future Practices
This settlement sends a strong message to lenders about the importance of respecting the rights of service members under the SCRA. For service members, it reinforces the protections available to them and highlights the serious consequences for lenders who fail to comply.
Looking ahead, the settlement agreement mandates that Santander implement measures to prevent future violations. Crucially, Santander is now required to check the Department of Defense’s automated database to verify if a vehicle owner is a service member before initiating any repossession proceedings. This proactive step is designed to ensure compliance with the SCRA and prevent similar illegal repossessions from occurring in the future.
The DOJ’s investigation into Santander’s practices originated from a referral from the U.S. Army’s Legal Assistance Program, demonstrating the critical role of military support systems in identifying and addressing such issues. 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 in basic training, served as a stark example of the real-world impact of these violations.
Service members who believe they may have been affected by similar illegal repossession practices by Santander should know that the settlement administrator will be contacting identified individuals. There is no need for service members to individually contact the Department of Justice at this time, as the process for identifying and compensating affected individuals is already underway.
Why This Settlement Matters: Protecting Those Who Serve
This settlement is significant not just for the financial relief it provides to affected service members, but also as a powerful reminder of the importance of the Servicemembers Civil Relief Act. It underscores the commitment of the Department of Justice and the U.S. government to vigorously enforce the SCRA and protect the rights of those who serve in the armed forces.
As Acting Associate Attorney General Stuart Delery stated, this resolution provides “financial relief and help repair their bad credit caused by Santander’s improper repossessions,” emphasizing the tangible benefits for service members. Acting Assistant Attorney General Vanita Gupta highlighted the peace of mind service members deserve, stating, “Whether their car will be seized and sold at auction should not be an additional worry.”
For service members and anyone seeking to understand auto loan practices, the answer to “does Santander consumer repo cars?” is yes, like any lender, Santander Consumer USA does repossess cars when loan terms are not met. However, this case emphasizes that they, and all lenders, must adhere to the law, especially the SCRA, when dealing with service members. This settlement serves as a critical step towards ensuring that the financial rights of military personnel are respected and protected.
For more information about the Servicemembers Civil Relief Act and its protections, service members can visit www.servicemembers.gov or call 1-800-896-7743, Mailbox 91.
