$7M Repossession Settlement Highlights Compliance Risks

Hughes Federal Credit Union has agreed to a $7 million class action settlement resolving allegations that it failed to provide legally required notices to Arizona borrowers after repossessing their vehicles.

The settlement covers borrowers who financed vehicles through the credit union, had an Arizona address at the time of repossession, and had their vehicles repossessed between May 18, 2019, and Aug. 4, 2023.

The lawsuit alleged that the credit union failed to provide proper notification letters informing borrowers of their rights following repossession. Hughes Federal Credit Union agreed to the settlement without admitting wrongdoing.

Although the allegations concern the lender's notification practices, the case highlights the importance of compliance throughout the vehicle repossession process. Tow companies and repossession contractors working with lenders should understand their contractual responsibilities, maintain accurate records and ensure their procedures align with applicable requirements.