GM Financial to pay $3.5M to U.S. service members for repossessing vehicles

Oct. 5 (UPI) — GM Financial, a subsidiary of General Motors, has agreed to pay more than $3.5 million to dozens of U.S. service members who had their vehicles illegally repossessed, and hundreds of others whose requests to terminate their auto leases were denied, the Department of Justice announced Wednesday.

GM Financial’s payout is expected to resolve repeated violations of the Servicemembers Civil Relief Act after the auto loan company repossessed 71 service members’ vehicles and denied more than 1,000 vehicle lease termination requests, according to a statement from the Justice Department.

The SCRA is a federal law that, in part, prohibits auto finance companies from repossessing a service member’s vehicle without first obtaining a court order, as long as that service member made at least one payment on the vehicle before entering military service. It also allows service members to terminate a vehicle lease early, without termination fees, if they receive qualifying military orders.

“Members of our Armed Forces should not have to suffer financial hardship as a result of their service to our nation,” Assistant Attorney General Kristen Clarke, of the Justice Department’s Civil Rights Division, said in a statement.

“The Civil Rights Division remains steadfast in its commitment to enforcing laws that safeguard the rights of our service members so that they can devote their energy and attention to the defense of our country,” Clarke added.

The Justice Department started investigating GM Financial following numerous complaints from service members that date back to 2015. In one case, GM Financial demanded a U.S. Army officer pay more than $15,000 to cover the remaining cost of his auto lease, after he requested to terminate it early when he received orders to deploy overseas.

The Justice Department alleges GM Financial’s failure to properly handle service members’ lease termination requests resulted in more than 1,000 SCRA violations.

Under Wednesday’s consent order, GM Financial has agreed to pay $3,534,171 to the affected service members and a $65,480 civil penalty to the United States. GM Financial will also pay at least $10,000 to each of the 71 service members who had their vehicles illegally repossessed.

“The last thing service members should be worried about while deployed is paying off vehicle leases they don’t want and can’t use,” said U.S. Attorney Chad Meacham for the Northern District of Texas. “As members of our armed forces put their lives on the line for our country, we are determined to protect their rights here at home.”