On February 25, 2014, the U.S. Department of Justice announced that it had reached a settlement with Santander Consumer USA in a case alleging that Santander had violated the Servicemembers Civil Relief Act (SCRA).
According to a Justice Department press release, “The settlement covers the improper repossessions of 1,112 motor vehicles between January 2008 and February 2013.”
The Servicemembers Civil Relief Act protects men and women who are on active duty from certain financial hardships. In the case of vehicle repossessions, a court must review and approve any repossession. Santander allegedly failed to obtain court orders before repossessing vehicles.
A recent Connecticut Law Tribune story highlighted the role that Sergei Lemberg, of Lemberg Law, played in the Santander case. Lemberg’s client, Sergeant Charles Beard, who was in the Army National Guard, purchased a Kia Sportage in September 2007 and began making payments. In August 2008, Sgt. Beard was ordered to active duty and was deployed abroad. Sgt. Beard’s vehicle was repossessed in February 2009, despite his wife telling them that her husband was on active duty and that a court order was required to repossess the car. A representative of the finance company told Mrs. Beard that she would go to jail for a stolen car if she did not return the vehicle. Although an Army legal assistance attorney advised the finance company that Sgt. Beard was protected under the SCRA, they nonetheless sold his Sportage at auction, and kept both the auction proceeds and Sgt. Beard’s payments.
The Connecticut Law Tribune reported that the case went to arbitration, and that Beard received $5,000 or $6,000. Lemberg wrote letters to those in the federal government about the SCRA violations. It turns out that the Justice Department was already investigating Santander. The article noted, “They claimed Santander illegally repossessed a car belonging to U.S. Army Specialist Joshua Davis in the middle of the night, even though the lender had been informed that the soldier was at basic training.”
According to the Justice Department press release, Santander agreed to pay $9.35 million to settle the lawsuit. “The agreement requires Santander to pay $12,000 plus compensation for any lost equity (with interest) to each of these service members,” the release said.
Lemberg said, “It’s gratifying to see that Santander was held accountable for their practices, and that servicemen and servicewomen who were victimized will be compensated.”
About the Author:
Sergei Lemberg is a lawyer whose practice focuses on consumer law, class actions and personal injury litigation. He has been repeatedly recognized as the “most active consumer attorney” in the country. In 2020, Mr. Lemberg represented Noah Duguid in the United States Supreme Court in the case entitled Duguid v. Facebook. He is the author of Defanging Debt Collectors, a book that teaches consumers how to battle debt collectors and win.