The U.S. Department of Justice recently filed a lawsuit in California federal court alleging that California Auto Finance, a subprime auto lender, violated the Servicemembers Civil Relief Act by repossessing the motor vehicle of an active military servicewoman on her first day of training.
The SCRA prohibits a lender from repossessing a motor vehicle from a servicemember during military service without a court order if the servicemember made a deposit or installment payment on the loan before entering into military service. The DOJ's complaint alleges that the auto lender violated the SCRA by repossessing the servicewoman's vehicle without a court order, even after she had provided the lender with her military orders advising of her relocation for active duty.
The DOJ's complaint alleges that California Auto Finance was aware that the servicewoman had completed at least one loan payment and was in the military at the time of repossession; accordingly, the lender violated the SCRA, which protects the legal rights of active servicemembers from certain civil proceedings. The Justice Department also claims that this auto lender has a stated practice of granting servicemembers repossession protections under the SCRA only if they provide deployment orders, which is actually not a federal requirement and could mean that other servicemembers may have also had their vehicles improperly repossessed.
The DOJ has made compliance with the SCRA a priority, including its enactment in 2016 of the Servicemembers Civil Relief Act Enforcement Support Pilot Program. The Program's goal is to support enforcement efforts related to protecting the rights of current and former military personnel as part of the DOJ's Servicemembers and Veterans Initiative. We expect the DOJ to remain active in this area.
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