DOJ resolves SCRA violations with credit union

0

On March 11, the DOJ announcement a settlement with a credit union resolving allegations that the credit union violated the Service Member Civil Assistance Act (SCRA) by charging excessive interest on service member loans and repossessing cars service members without first obtaining a court order. According to the DOJ complaint, which was filed along with the proposed settlement, the credit union would have charged interest in excess of 6% to 21 service members eligible for SCRA interest rate benefits. Under the SCRA, creditors are required to reduce the interest rate on retail installment contracts to 6% under certain circumstances. However, the DOJ claimed that in at least one case, a serviceman was told that “reducing the interest rate would increase his monthly payment.” The DOJ also alleged that the credit union repossessed the vehicles of three military personnel without a court order, including one instance where the vehicle was repossessed from a military base.

the consent order, which is pending court approval, requires the credit union to pay nearly $70,000 to the service members involved, as well as a civil penalty of $40,000. The credit union is also prohibited from (i) charging interest rates greater than 6% during a period of military service; (ii) re-amortize any retail installment sales contract related to a claim for SCRA interest rate benefits; (iii) “failing or refusing to credit early warning periods of military service when applying for these benefits”; and (iv) repossess SCRA-protected military vehicles without first obtaining a valid court order or SCRA waiver. The settlement also requires the credit union to review and update its SCRA policies and procedures to prevent future violations and to provide SCRA compliance training to its employees.

Share.

About Author

Comments are closed.