The Department of Justice (“DOJ”) has brought the Servicemembers Civil Relief Act (“SCRA”) back into the spotlight with a recent settlement agreement entered into with Hudson Valley Federal Credit Union. The settlement, requiring the credit union to pay $65,000 to seven harmed service members whose vehicles were unlawfully repossessed, comes on the coattails of the DOJ’s first ever landlord tenant SCRA action earlier this year.
In the automotive arena, SCRA requires a court order known as a “replevin” to be obtained before the vehicle of an active duty service member can be repossessed based on a default under a retail installment sales contract. Hudson Valley’s violations of this provision were discovered during an investigation by the DOJ after two private lawsuits alleging the same harm were filed against the credit union.
In the past, SCRA has comprised such a small part of the many rules and regulations governing financial institutions that many automotive dealers and banks don’t even have formal policies in place to comply with its various tenants. Hudson Valley was one such institution. Automotive dealers offering financial tools to consumers should seek experienced counsel to help update or create their formal SCRA policies and ensure their compliance.