Washington, D.C. — The U.S. Department of Justice announced today that it has reached a settlement with CarMax Inc., the nation’s largest retailer of used vehicles, to resolve allegations that the company violated the Servicemembers Civil Relief Act (SCRA) by illegally repossessing vehicles owned by military servicemembers.
Under the settlement agreement, CarMax will pay at least $420,000 in damages to affected servicemembers and a $79,380 civil penalty to the United States.
Federal law prohibits auto lenders and leasing companies from repossessing a servicemember’s vehicle without first obtaining a court order, provided the servicemember made at least one payment before entering military service. For members of reserve components, SCRA protections begin when they receive orders to report for active duty.
According to the Justice Department, CarMax repossessed vehicles without obtaining required court orders and, in some cases, repossessed vehicles after owners had informed the company of their active military status. The department also alleged that CarMax failed to extend SCRA protections to certain reservists who had received active-duty orders.
“Federal law prohibits businesses from repossessing service members’ 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.”
In addition to paying damages and the civil penalty, CarMax has agreed to revise its policies and procedures to ensure compliance with the SCRA and to better protect servicemembers’ rights in the future.
The case was handled by the Justice Department’s Civil Rights Division Housing and Civil Enforcement Section and the U.S. Attorney’s Office for the Eastern District of Virginia.
Since 2011, the Justice Department has secured more than $484 million in monetary relief for over 149,000 servicemembers through enforcement of the SCRA.
Servicemembers and their dependents who believe their SCRA rights may have been violated are encouraged to contact their nearest Armed Forces Legal Assistance Program Office.
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