America’s Largest Used Car Dealer, CarMax, Agrees to Pay Nearly $500K for Illegally Repossessing Vehicles From US Troops
The largest used car dealer in the country, CarMax, has agreed to pay close to $500,000 to resolve claims that it unlawfully repossessed U.S. military personnel’s cars. Each impacted military member will receive $15,000 in addition to any lost car equity, according to the U.S. Department of Justice.
CarMax will pay a minimum of $420,000 in damages to “at least 28 service members” as part of the settlement. It is also liable for a $79,380 civil penalty.
“Federal law prohibits businesses from repossessing servicemembers’ vehicles without a court order,” said Assistant Attorney General Harmeet K. Dhillon of the Justice Department’s Civil Rights Division. “The Department of Justice is proud to defend the rights of those who serve in our military and will continue to vigorously enforce the laws that protect them.”
The charges made by the DOJ against CarMax
The Department of Justice claims that CarMax repossessed several vehicles even after the owners informed CarMax that they were in military service. The DOJ also alleges that CarMax repossessed service member vehicles without obtaining court orders as required by federal law. Additionally, it is alleged that CarMax neglected to provide reservists who had been ordered to report for active duty with SCRA [Servicemembers Civil Relief Act] protections.
As long as the servicemember makes at least one payment on the vehicle before to enlisting in the military, the SCRA law prohibits an auto finance or leasing firm from taking back a servicemember’s vehicle without first getting a court order.
Additional remedies CarMax must follow
As a result of the ruling, CarMax will update its policies and procedures to guarantee that it safeguards the rights of U.S. servicemembers going forward. Additionally, it must provide the Justice Department with revised SCRA policies, including how it will utilize the Defense Department database to confirm military status.
Under the four-year deal with the DOJ, CarMax must also ask credit bureaus to remove negative notations associated with the repossessions, contact impacted service members within 30 days, and offer free communication channels.
CarMax statement about the settlement
“The U.S. Department of Justice has issued a release regarding CarMax Auto Finance and matters involving servicemembers’ protections under the federal Servicemembers Civil Relief Act (SCRA),” reads a statement from CarMax. “CarMax Auto Finance has cooperated fully with the DOJ to reach a resolution to the allegations and has further strengthened our existing compliance program. The resolution between the DOJ and CarMax Auto Finance does not constitute an admission of wrongdoing by CarMax Auto Finance.
“Supporting our nation’s military is rooted in CarMax’s culture, and we take these matters seriously given our long-standing commitment to servicemembers, veterans and their families. Our focus has been – and remains – on providing our customers with a fair, transparent and straightforward experience, and we are committed to serving our military community with care and respect. Since 2003, CarMax Auto Finance has provided relief to more than 26,000 servicemembers and dependents of servicemembers in accordance with the SCRA, in the form of finance charge reductions and protection from vehicle repossession.
“Consistent with CarMax Auto Finance’s commitment to continuous improvement and supporting those who serve, we have enhanced our SCRA processes, expanded proactive screening and outreach, and reinforced employee training to help ensure all eligible servicemembers and their dependents receive the protections they deserve.
“Customers seeking information about SCRA benefits with CarMax Auto Finance can submit a request via email to CAF_SCRA@carmax.com or over the phone at (800) 925-3612 x4077.”
