CarMax to Pay for Illegal Servicemember Repossessions

CarMax will pay nearly $500,000 to resolve allegations that it illegally repossessed vehicles from active-duty servicemembers, according to the U.S. Department of Justice. The settlement covers at least 28 servicemembers whose vehicles were repossessed between March 2018 and October 2023.

Federal investigators found that CarMax repossessed vehicles without first obtaining court orders, a requirement under the Servicemembers Civil Relief Act (SCRA). The law protects military personnel from certain financial actions, including vehicle repossession, if they made at least one payment before entering active duty. Investigators also alleged that CarMax failed to extend these protections to reservists who had received orders for active duty.

Under the agreement, affected servicemembers will receive $15,000 each plus any lost vehicle equity. CarMax will also pay a $79,380 civil penalty to the federal government.

The company must notify affected customers, correct negative credit reports related to the repossessions, and strengthen its policies for verifying military status.

CarMax said it will revise its procedures but did not admit wrongdoing under the settlement agreement. Source: https://www.carscoops.com