DALLAS (CN) – CitiFinancial Credit has agreed to pay $907,000 to settle claims it illegally repossessed cars belonging to active-duty service members, federal prosecutors said Monday.
The Department of Justice says at least 164 cars were repossessed between 2007 and 2010 in violation of the Servicemembers Civil Relief Act, which shields members of the military from certain civil actions while they are serving.
“During the investigation, the Department learned that CitiFinancial conducted repossessions without court orders even when CitiFinancial had evidence in its own records suggesting that a borrower could be a protected servicemember,” prosecutors said in a statement. “In several cases, loan servicing notes indicated that CitiFinancial was informed that the borrower was in military service or had received orders to report for military service. CitiFinancial, nevertheless, continued repossession efforts and eventually succeeded in repossessing the servicemembers’ vehicles.”
The repossessions took place before CitiFinancial Credit sold its car lending and servicing business to the U.S. subsidiary of Spanish banking giant Banco Santander.
Dallas-based Santander Consumer USA settled similar allegations with federal prosecutors in 2015, agreeing to pay $9.4 million for illegally repossessing over 1,100 between 2008 and 2013.
Prosecutors say a court may delay repossession or require the refund of all or part of prior installments or deposits that a service member has already made.
“The court may also appoint an attorney to represent the servicemember, require the lender to post a bond with the court and issue any other orders it deems necessary to preserve the interests of all parties,” according to an eight-page complaint filed Monday in Dallas federal court. “By failing to obtain court orders before repossessing automobiles owned by protected servicemembers, defendant denied servicemembers their rights to obtain a court’s review of whether their repossessions should be delayed or adjusted to account for their military service.”
Under the terms of the settlement, each member of the military impacted by the repossessions will receive $5,000 and an additional $500 for subsequent lost equity and accrued interest.
CitiFinancial also agreed to have adverse information relating to the repossessions removed from the service members’ credit records.
“The men and women who serve in the armed forces deserve to have us protect their backs while they selflessly protect us,” said John Parker, U.S. Attorney for the Northern District of Texas. “This conduct clearly fell short of that and I’m grateful we were able to repair some of that harm.”