CitiFinancial Credit Co. has agreed to pay a $907,000 settlement to resolve allegations that it illegally repossessed cars belonging to active duty service members, the Department of Justice announced Monday.
The Department of Justice alleges that CitiFinancial Credit Company, the legal successor to CitiFinancial Auto Corporation, repossessed 164 cars from active duty service members without first obtaining the required court orders, violating the Servicemembers Civil Relief Act (SCRA).
The company will be required to pay $5,000 to every impacted service member, as well as $500 to compensate borrowers for lost equity, with interest. It has also agreed to take steps to repair service members' damaged credit.
"Members of our armed forces make extraordinary sacrifices in order to protect and defend our nation, and they should be able to serve actively without fear that their legal rights will be violated," Associate Attorney General Rachel L. Brand said. "This settlement provides financial relief and credit repair assistance to the service members whose vehicles were repossessed by CitiFinancial. The enforcement of federal laws protecting current members of the armed services, veterans, and their families continues to be an important priority for this Department of Justice."
The suit, originally filed in the northern district of Texas, covered vehicle repossessions between 2007 and 2010. It followed from a 2015 settlement with Santander Consumer USA, which purchased many of CitiFinancial's assets. That settlement, which collected $10.5 million for service members, was spurred by the investigation that also turned up information about CitiFinancial.
The SCRA protects service members against certain kinds of civil litigation, including vehicle repossessions, while they are serving. It requires court review before any repossession if the loan was taken out before a service member began serving.
The Justice Department concluded that CitiFinancial had failed to obtain these required court orders, even conducting repossessions when it had documented evidence of borrowers being active duty. In more than one case, CitiFinancial had been notified that a borrower was active duty, but continued to pursue repossession and reclaimed a vehicle.
"The men and women who serve in the armed forces deserve to have us protect their backs while they selflessly protect us," U.S. Attorney John Parker said. "This conduct clearly fell short of that and I'm grateful we were able to repair some of that harm."