CitiFinancial Credit Co. has agreed to pay a $907,000 settlement to conclude a court case with the Department of Justice which accused Citi of illegally repossessing property belonging to active duty service members. The settlement was announced Monday.
CitiFinancial Credit Company, formerly the CitiFinancial Auto Corporation, illegally obtained – through repossession –more than 160 cars from active duty service members without having obtained the necessary legal or court orders required for a repo action against active duty citizens. This was a violation of the Service Members Civil Relief Act (SCRA).
The company would now be required to pay $5,000 to all impacted service members, alongside an additional $500 as compensation to borrowers for the lost equity (including lost interest). The company also agreed to supply credit repair services to all involved servicemen whose credit was damaged as a result of the event.
The Associate Attorney General, Rachel L. Brand, announced on Monday that, “Members of our armed forces make extraordinary sacrifices in order to protect and defend our nation, and they should be able to serve actively without fear that their legal rights will be violated … This settlement provides financial relief and credit repair assistance to the service members whose vehicles were repossessed by CitiFinancial. The enforcement of federal laws protecting current members of the armed services, veterans, and their families continues to be an important priority for this Department of Justice.”
U.S. Attorney, John Parker, also commented on the case, saying, “the men and women who serve in the armed forces deserve to have us protect their backs while they selflessly protect us … This conduct clearly fell short of that and I’m grateful we were able to repair some of that harm.”
The suit was originally filed in the Northern districts of Texas, and covered the vehicle’s repossession between years 2007 and 2010. The case followed after a 2015 settlement with Santander Consumer USA, which had purchased most of CitiFinancial’s assets. The settlement also collected $10.5 million for the service members was brought in the action by the investigations that further brought in more information on the CitiFinancial.
The Service Members Civil Relief Act (SCRA), which Citi violated, protects the service members against similar kind of the civil legal proceedings, which might also include the vehicle repossessions during their service periods. The repossession requires a court review and the court looks into the fact that whether the loan was taken out before a service member began their service.
The Department of Justice concluded that the CitiFinancial had failed to obtain any such required court orders and even while conducting the repossession procedures wen it had a documented evidence of the borrowers doing their active duty. CitiFinancial had been notified, more than once, that the borrower was on active duty, but they still chose to pursue the repossession and reclaimed the vehicles.