Despite constant reassurance from the media and politicians, it sure seems like the average American is facing tough financial times at the moment. An estimated 1.73 million vehicles were repossessed in 2024 alone, a feat which hasn’t happened since the fateful year 2009, and nearly 20% of new-vehicle buyers are spending over $1,000 each month on their car payments. In a rare bit of good news about car loans though, the Department of Justice announced that last week, CarMax agreed to pay at least $15,000 in a settlement to each of the 28 service members whose cars it allegedly repossessed illegally while they were called to military service.
The service members Civil Relief Act (SCRA) states that “active service members are protected from foreclosure and repossession under certain circumstances, including the common requirement that lenders must obtain a court order before taking such actions.” According to Al.com, “According to the consent agreement, between March 1, 2018, and Oct. 24, 2023, the used car dealer repossessed the vehicles of at least 28 service members who were in active military service or had been called to military service.”
CarMax isn’t the only company to face penalties for repossessing service members’ assets
The U.S. Department of Justice said that the Civil Rights Division’s Housing and Civil Enforcement Section and U.S. Attorney’s Office for the Eastern District of Virginia have obtained over $484 million in monetary relief for over 149,000 servicemembers through its enforcement of the SCRA. Assistant Attorney General Harmeet K. Dhillon of the Justice Department’s Civil Rights Division said, “Federal law prohibits businesses from repossessing service members’ vehicles without a court order.” CarMax allegedly repossessed some vehicles even after owners told the company that they were in military service.
According to the settlement, CarMax will pay at least $420,000 in damages to service members and a civil penalty of $79,380 to the United States. In a statement regarding the settlement, CarMax said, “Consistent with CarMax Auto Finance’s commitment to continuous improvement and supporting those who serve, we have enhanced our SCRA processes, expanded proactive screening and outreach, and reinforced employee training to help ensure all eligible servicemembers and their dependents receive the protections they deserve.” CarMax also said that the resolution and settlement payments do not constitute an admission of wrongdoing by CarMax Auto Finance. Which, sure.
