CarMax Fined $500,000 For SCRA Violations
WASHINGTON — The Department of Justice (DOJ) has reached a settlement with CarMax to resolve allegations that vehicles owned by members of the military were illegally repossessed, violating the Servicemembers Civil Relief Act (SCRA).
CarMax will pay at least $420,000 in damages to servicemembers and a civil penalty of $79,380 to the United States as part of the settlement, according to a news release from the DOJ.
“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 DOJ alleges that CarMax repossessed servicemembers’ vehicles without obtaining court orders, as required by federal law, as well as repossessing vehicles after owners told CarMax they were in the military.
CarMax also allegedly failed to extend SCRA protections to reservists who had received orders to report for active duty. The SCRA prevents an auto finance or leasing company from repossessing a servicemember’s vehicle without obtaining a court order, as long as the servicemember made at least one payment on the vehicle before entering the service.
In addition to paying a civil penalty and compensating impacted servicemembers, CarMax will revise its policies and procedures to ensure this does not happen again, the news release states.
