General Motors’ financial services subsidiary will pay nearly $3.6 million to settle charges that it illegally repossessed 71 vehicles and wrongfully denied more than 1,000 requests from service members to terminate their breaching leases of the Servicemembers Civil Relief Act, or SCRA.
The Justice Department announced on Wednesday that it had reached an agreement with GM Financial over a case involving troops who asked to be released from their car rental contracts for deployment or relocation.
“The last thing members of the military should worry about while deployed is paying for vehicle rentals they don’t want and can’t use,” U.S. Attorney Chad E. Meacham of the Northern District of Texas said in a statement. Ministry of Justice press release.
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In a statement provided to Military.com. GM Financial said it has cooperated with the investigation since its launch in 2018 and has reached an agreement with the Department of Justice on a “subset” of service member accounts.
“Over our 30-year history, GM Financial has maintained a strong track record of fair lending practices and compliance with all regulatory requirements. We remain committed to ensuring the customer experience is managed in a responsibly, ethically and exceeds customer expectations,” the company said. .
The Servicemembers Civil Relief Act provides a variety of legal and financial protections for personnel and their families, including credit interest rates, mortgages, and housing tenancy agreements.
It also specifically prohibits auto finance or leasing companies from repossessing any vehicle without a court order from service members who have made at least one payment before joining and allows troops under certain commands to cancel or terminate an automobile lease without paying early termination fees or penalties.
The Department of Justice began investigating GM Financial after receiving a complaint from an army officer who said the company asked him to pay for a vehicle lease he had requested terminated when he deployment.
Chief Warrant Officer 3 Thomas Gorgeny asked GM Financial to terminate the lease in September 2017. He returned the car to the dealership, but months later after deployment received an invoice from GM Financial of $15,000 to cover the entire rental period and vehicle. costs.
According to a lawsuit filed with the United States District Court for the Northern District of Texas, the department found that since 2015 GM Financial had wrongly denied lease termination requests, charged early termination fees to troops or the full amount of the leases, and had not provided timely refunds to service members.
Under the settlement, GM Financial will pay more than $3.5 million to affected service members and a civil penalty of approximately $65,000. The 71 service members whose vehicles were improperly repossessed will each receive at least $10,000, and those who were charged abusive termination fees will receive that fee, plus additional damages of three times the fee or 500 $, whichever is greater.
Troops whose requests to terminate their leases have been denied will receive reimbursement of certain payments and up to $5,000 in damages. GM Financial must also help members repair their credit.
The company is also required to ensure that its employees are trained on the SCRA and that it has policies in place to ensure compliance.
– Patricia Kime can be contacted at Patricia.Kime@Military.com. Follow her on Twitter @patriciakime.
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