Justice Department, auto lender in Orange reach settlement over improper repossession of military servicemembers’ cars

An Orange County auto financing company has agreed to an $80,000 settlement to resolve a lawsuit accusing the business of illegally repossessing vehicles from military service members without a court order, the U.S. Attorney’s Office announced Wednesday.

A U.S. District Judge must still sign off on the court-enforced order between the justice department and California Auto Finance, a subprime auto lender based in the city of Orange, according to a U.S. Attorney’s Office statement.

California Auto Finance was accused of violating the Servicemembers Civil Relief Act, which requires a court to approve any repossession as long as someone took out the loan and made a payment prior to entering military service. The proposed agreement requires California Auto Finance to adopt new repossession policies, to pay a servicemember $30,000, and to pay a $50,000 civil penalty to the government.

“Individuals who take up the call to protect our nation by serving in the armed forces make an enormous sacrifice for us all,” said United States Attorney Nick Hanna in a written statement. “We have a legal and moral duty to safeguard the rights of our men and women in uniform. California Auto Finance failed to uphold this duty through its repossession practices. Today’s consent order demonstrates that we will tolerate no abuses of servicemembers’ rights in our district.”

Officials with California Auto Finance could not be reached for comment.

According to the U.S. Attorneys Office, California Auto Finance in May 2016 repossessed a car belonging to a United States Army private during her first day of active military training. The vehicle was parked at the Cedar Rapids, Iowa home of the woman’s grandmother.

The woman had notified California Auto Finance that she was entering the military, according to the lawsuit. She reached a private, unspecified settlement with the company, according to the U.S. Attorney’s Office.

Another servicemember, a U.S. Army specialist, also had his vehicle repossessed during his first month of military service, severely damaging his credit and leaving him reliant on ride-shares and taxis during his time at Fort Benning, Georgia, according to the U.S. Attorneys Office. He is expected to receive the $30,000 payment outlined in the settlement.