Justice Department reached a $4 million settlement with Wells Fargo Bank for illegally repossessing service members’ cars, officials announced Thursday.
Wells Fargo illegally repossessed 413 cars owned by service members over seven years without getting a court order, violating the Service Members Civil Relief Act, officials said.
The settlement, which is still subject to court approval, was filed in the U.S. District Court in California.
The department launched an investigation after it received a complaint in March 2015 from the U.S. Army’s Legal Assistance Program alleging that Wells Fargo had repossessed Army National Guardsman Dennis Singleton’s used car in Hendersonville, North Carolina, while he was preparing to deploy to Afghanistan to fight in Operation Enduring Freedom.
After Wells Fargo repossessed the car, it sold it at a public auction and then tried to collect a deficiency balance of over $10,000 from Singleton and his family.
In October 2014, while seeking assistance with debt consolidation, Army National Guardsman Singleton met with a National Guard attorney, who informed him of his rights under the Servicemembers Civil Relief Act.
The attorney requested information from Wells Fargo about the original loan and repossession, and asked for copies of the correspondence and payment history. The attorney never received a response from Wells Fargo.
The department’s subsequent investigation corroborated Singleton’s complaint and found a pattern of unlawful repossessions spanning over more than seven years.
“Wells Fargo Bank unlawfully repossessed hundreds of servicemembers’ cars without the proper process, and the bank will now rightfully pay for its violations,” said Principal Deputy Associate Attorney General Bill Baer. “The Justice Department is committed to protecting our country’s servicemembers as they continue to fight for our freedom.”
“Auto lenders cannot repossess the cars of the brave men and women who risk their lives to defend our freedom without providing them the required legal protections under the SCRA,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Justice Department’s Civil Rights Division. “I commend Wells Fargo for owning up to its shortcomings and providing all the information we requested after learning of our investigation. This settlement should help ensure that servicemembers are not penalized financially for protecting our nation.”
The Civil Relief Act protects servicemembers against certain civil proceedings that could affect their legal rights while they are in military service. It requires a court to review and approve any repossession if the servicemember took out the loan and made a payment before entering military service.
The court may delay the repossession or require the lender to refund prior payments before repossessing. The court may also appoint an attorney to represent the service member, require the lender to post a bond with the court and issue any other orders it deems necessary to protect the servicemember.
By failing to obtain court orders before repossessing motor vehicles owned by protected service members,
Wells Fargo prevented service members from obtaining a court’s review of whether their repossessions should be delayed or adjusted to account for their military service, according to officials.
The settlement covers repossessions that occurred between Jan. 1, 2008 and July 1, 2015.
The agreement requires Wells Fargo to pay $10,000 to each of the affected servicemembers, plus any lost equity in the vehicle with interest. Wells Fargo also must repair the credit of all affected servicemembers, officials said.
Wells Fargo sent payments to many of the affected servicemembers in August 2016. Wells Fargo will locate additional victims and distribute payments through this settlement in the upcoming months, at no cost to the servicemembers.
The agreement also requires Wells Fargo to pay a $60,000 civil penalty to the United States and to determine, in the future, whether any vehicle it is planning to repossess is owned by an active duty servicemember, according to authorities.
If so, Wells Fargo will not repossess the vehicle without first obtaining a court order.
The agreement also contains provisions ensuring that all eligible servicemembers will receive the benefit of the Servicemembers Civil Relief Act’s six percent interest rate cap on their auto loans.
Click Here to Read: Wells Fargo Complaint
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