CarMax to pay $420,000 over alleged military vehicle repossessions

The nation’s largest retailer of used cars, CarMax, will pay at least $420,000 to resolve allegations that it repossessed vehicles from U.S. service members without court orders, the U.S. Department of Justice announced Monday.

In addition to compensating affected service members, the company will pay a $79,380 civil penalty to the U.S., according to the DOJ.

Federal officials accused CarMax of violating the Servicemembers Civil Relief Act (SCRA) by seizing vehicles owned by members of the armed forces without first obtaining court approval.

“Federal law prohibits businesses from repossessing service members’ vehicles without a court order,” Assistant Attorney General Harmeet K. Dhillon said. “The Department of Justice is proud to defend the rights of those who serve in our military and will continue to vigorously enforce the laws that protect them.”

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The violations allegedly occurred between March 1, 2018, and at least Oct. 24, 2023, affecting at least 28 service members. Each is entitled to a minimum payment of $15,000, plus lost equity in the vehicle and interest on that amount.

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As part of the settlement, CarMax – which did not admit or deny the allegations – agreed to revise its policies and procedures to better protect the rights of U.S. service members. FOX Business has reached out to CarMax for comment.

The SCRA is a federal statute designed to safeguard the legal and financial interests of U.S. service members and their families while they are on active duty.

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It bars auto lenders and leasing companies from repossessing a service member’s vehicle without a court order if the borrower made at least one payment before entering military service.

For reservists, those protections begin when they receive official orders to report for active duty.

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Service members or their dependents who believe their rights were violated are encouraged to contact their nearest Armed Forces Legal Assistance Program office.