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.
CarMax statement regarding the U.S. Department of Justice announcement
The U.S. Department of Justice has issued a release regarding CarMax Auto Finance and matters involving servicemembers’ protections under the federal Servicemembers Civil Relief Act (SCRA). CarMax Auto Finance has cooperated fully with the DOJ to reach a resolution to the allegations and has further strengthened our existing compliance program. The resolution between the DOJ and CarMax Auto Finance does not constitute an admission of wrongdoing by CarMax Auto Finance.
Supporting our nation’s military is rooted in CarMax’s culture, and we take these matters seriously given our long-standing commitment to servicemembers, veterans and their families. Our focus has been – and remains – on providing our customers with a fair, transparent and straightforward experience, and we are committed to serving our military community with care and respect. Since 2003, CarMax Auto Finance has provided relief to more than 26,000 servicemembers and dependents of servicemembers in accordance with the SCRA, in the form of finance charge reductions and protection from vehicle repossession.
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.
Customers seeking information about SCRA benefits with CarMax Auto Finance can submit a request via email to [email protected] or over the phone at (800) 925-3612 x4077.
Editor’s Note: This article has been updated to include a statement from CarMax.