NMAC settles DOJ suit over unlawful repos with $3M payment

Nissan Motor Acceptance Corp. has agreed to pay the Department of Justice $3 million following allegations that the captive violated the Servicemembers Civil Relief Act (SCRA), a law designed by the DOJ to ease financial burdens on servicemembers during periods of active military service. 

The suit alleges that Franklin, Tenn.-based NMAC repossessed 113 vehicles owned by active-duty servicemembers without first obtaining the required court orders, according to court documents filed Aug. 1 by the District Court for the Middle District of Tennessee. 

Moreover, the DOJ claims the captive failed to refund lease amounts paid in advance — called “capitalized cost reduction” (CCR) — by servicemembers after lawfully terminating the leases early for those who received military orders. The suit alleges that NMAC did not refund any portion of CCR amounts to servicemembers. 

NMAC is looking to resolve the violations without admitting liability and has agreed to create a $2.9 million settlement fund to compensate servicemembers whose rights were violated under the SCRA. Additionally, NMAC must pay $62,029 to the U.S. Treasury. The agreement covers the amounts due on all repossessions of servicemembers’ vehicles and leases terminated by servicemembers since January 2008. 

The agreement requires NMAC to revise its policies and procedures to prevent future unlawful repossessions of servicemembers’ vehicles and ensure that servicemembers who terminate their auto leases early receive full refunds of eligible prepaid CCR amounts. NMAC must also provide training to its employees and representatives, the DOJ noted. 

The DOJ urged auto lenders to remain compliant with the SCRA. NMAC’s case marks the DOJ’s tenth settlement with an auto financier since 2015 and “exemplifies continued efforts to enforce the SCRA’s motor vehicle repossession and lease termination provisions,” according to the release. 

“We will aggressively hold those institutions and businesses accountable who are required to comply with the [SCRA],” said Don Cochran, U.S. Attorney for the Middle District of Tennessee. “Our military deserves no less.”

BMW Financial Services, California Auto Finance, and Hudson Valley Federal Credit Union have also reached settlements with the DOJ after allegedly violating SCRA.