HOUSTON – GM Financial has agreed to pay over $3.5 million to resolve allegations that it violated the Servicemembers Civil Relief Act by illegally repossessing 71 servicemembers’ vehicles and by improperly denying or mishandling over 1,000 vehicle lease termination requests, the Justice Department announced Wednesday.
“Members of our Armed Forces should not have to suffer financial hardship as a result of their service to our nation,” said assistant attorney General Kristen Clarke of the Justice Department’s Civil Rights Division. “The Civil Rights Division remains steadfast in its commitment to enforcing laws that safeguard the rights of our servicemembers so that they can devote their energy and attention to the defense of our country.”
“The last thing servicemembers should be worried about while deployed is paying off vehicle leases they don’t want and can’t use,” said U.S. Attorney Chad E. Meacham for the Northern District of Texas. “As members of our armed forces put their lives on the line for our country, we are determined to protect their rights here at home.”
The Justice Department began investigating GM Financial after receiving a complaint about a potential violation involving U.S. Army Chief Warrant Officer 3 (CW3) Thomas Gorgeny, according to a release. In September 2017, CW3 Gorgeny received orders to deploy overseas for 10 months and requested that GM Financial allow him to terminate his vehicle lease early pursuant to the SCRA. Although GM Financial told CW3 Gorgeny that his early termination request was approved and he returned his vehicle to the dealer, months later, while he was deployed overseas, CW3 Gorgeny received a letter from GM Financial demanding that he pay over $15,000 to cover the entire remaining period of the lease, as well as costs associated with the sale of the vehicle.
The department alleges that, since 2015, GM Financial has improperly denied servicemembers’ lease termination requests, charged servicemembers improper early termination fees or lease amounts after the date of termination, and failed to provide servicemembers timely refunds of lease amounts they paid in advance. The department alleges that GM Financial’s failure to properly handle servicemembers’ lease termination requests resulted in over 1,000 SCRA violations. The complaint also alleges that, since 2015, GM Financial has unlawfully repossessed 71 vehicles owned by SCRA-protected servicemembers.
GM Financial agreed to pay $3,534,171 to the affected servicemembers and a $65,480 civil penalty to the United States. GM Financial will pay at least $10,000 to each of the 71 servicemembers who had their vehicles unlawfully repossessed, according to a release. For the servicemembers who were charged an improper fee when they terminated their vehicle leases, GM Financial will refund the fee and will pay additional damages of three times the fee or $500, whichever is greater. Servicemembers whose requests to terminate their vehicle leases were improperly denied will receive a refund of certain payments plus up to $5,000 in additional damages. The order also requires GM Financial to repair the servicemembers’ credit, provide SCRA training to its employees, and implement policies and procedures that comply with the SCRA.