ALEXANDRIA, Virginia — The Justice Department announced a settlement with CarMax, Inc., resolving allegations that the nation’s largest used-car retailer illegally repossessed vehicles owned by U.S. servicemembers in violation of federal law.
Under the agreement, CarMax will pay at least $420,000 in damages to affected servicemembers and a civil penalty of $79,380 to the United States.
Federal officials alleged that CarMax repossessed vehicles without first obtaining court orders as required under the Servicemembers Civil Relief Act, or SCRA. The law prohibits auto finance or leasing companies from repossessing a servicemember’s vehicle without a court order if the servicemember made at least one payment before entering military service.
The department also alleged that some vehicles were repossessed even after owners informed CarMax they were in military service, and that the company failed to extend SCRA protections to reservists who had received orders to report for active duty. For reservists, SCRA protections begin when they receive orders to military service.
As part of the settlement, CarMax agreed to revise its policies and procedures to ensure compliance with the law.
The case was handled by the U.S. Attorney’s Office for the Eastern District of Virginia and the Justice Department’s Civil Rights Division.
Since 2011, the department said it has obtained more than $484 million in monetary relief for more than 149,000 servicemembers through enforcement of the SCRA.
The civil claims resolved in the settlement are allegations only, and there has been no determination of civil liability.