The auto finance sector may be in the Department of Justice’s line of fire for enforcement of the Servicemembers Civil Relief Act, after settlements with two towing companies for SCRA violations.
According to law firm Ballard Spahr, the DOJ would likely crack down on the following actions:
– Failing to reduce a servicemember’s interest rate as required;
– Repossessing property purchased by a servicemember under an installment contract without a court order;
– Failing to comply with SCRA requirements related to a lease termination requested by a servicemember.
Indeed, the Consumer Financial Protection Bureau — through its Office of Servicemember Affairs — has identified the SCRA as a focus for its own examinations and enforcement actions, which could be a sign of whats to come.
In 2009, after an amended complaint against two towing companies was filed in federal court in Virginia, the DOJ alleged that the two companies towed the cars of servicemembers who were on active duty and sold the cars at auction without obtaining a court order, as prescribed by the SCRA.
From jdsupra.com: The DOJ’s consent order provides relief to 26 servicemembers whose cars were alleged to have been towed and sold by the defendants in violation of the SCRA. It requires the defendants to pay $75,000 in damages and request that all major credit bureaus remove any negative entries resulting from information reported by the defendants.
