DOJ & OCC Enter Consent Order with National Bank Over Debt Collection from Servicemembers

DOJ  •  OCC  •  SCRA

Toy CarOn September 29, the U.S. Department of Justice (DOJ) announced that it had entered into a consent order with a national bank over allegations that the bank had engaged in unlawful debt collection practices, in violation of the Servicemembers Civil Relief Act (SCRA).  The SCRA extends additional protections from certain debt collection activities to military servicemembers.  The DOJ’s complaint, filed with the consent order in the U.S. District Court for the Central District of California, alleged that between January 1, 2008 and July 1, 2015, the bank illegally repossessed 413 vehicles from servicemembers during their military service.  These repossessions allegedly violated the SCRA because the bank failed to acquire a court order prior to repossession of the military servicemembers’ vehicles.  Under the terms of the consent order, the bank agreed to provide $10,000 in restitution to each affected servicemember (plus any lost equity), repair servicemembers’ credit, and pay a $60,000 civil money penalty.

In a related action, the Office of the Comptroller of the Currency (OCC) announced that it had entered into a consent order with the same bank, resolving allegations that the bank not only failed to obtain court orders before repossessing servicemembers’ vehicles, but also failed to provide the 6% interest rate limit to servicemember obligations incurred before military service, and failed to accurately disclose servicemembers’ active duty status in court filings.  The consent order imposes a $20 million penalty against the bank.

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