CarMax, the largest used car retailer in the U.S., will pay a minimum of $420,000 to settle claims that it seized vehicles from military personnel without a court order, as announced by the U.S. Department of Justice on Monday.
Besides compensating those affected, CarMax will also incur a civil penalty of $79,380 to the government. Federal authorities allege that the company breached the Servicemembers Civil Relief Act (SCRA) by taking cars belonging to military personnel without proper legal authorization.
Assistant Attorney General Harmeet K. Dhillon stated, “Federal law prohibits companies from seizing military personnel’s vehicles without a court order. The Department of Justice is committed to safeguarding the rights of those who serve in the military and will continue to rigorously enforce these laws.”
The violations reportedly took place between March 1, 2018, and at least October 24, 2023, impacting over 28 military members. Each affected individual is entitled to a minimum of $15,000, as well as compensation for the lost vehicle and any interest accrued.
In the interest of resolving the matter, CarMax did not admit to or deny the allegations but agreed to update its policies to better protect military service members’ rights. It’s worth noting that the SCRA is intended to protect the legal and financial interests of active-duty personnel and their families.
This federal law prohibits auto financing companies from repossessing a military member’s vehicle without a court’s approval, provided the borrower made at least one payment before their military service began. For reservists, these protections commence upon being called to active duty.
Those military members or their dependents who feel their rights have been infringed upon are encouraged to reach out to their local Armed Forces Legal Assistance Program for support.
