Allegedly not handling vehicles correctly with members of the military on active duty landed CarMax in trouble with the Justice Department to the tune of nearly $500,000.

On Monday, Justice Department officials announced that they have reached a settlement with CarMax to resolve allegations that the retailer and its finance company violated the Servicemembers Civil Relief Act (SCRA) by illegally repossessing vehicles owned by members of the military.

The DOJ alleged that CarMax repossessed servicemember vehicles without obtaining court orders as required by federal law, as well as repossessed some vehicles even after owners told CarMax that they were in military service.

Officials said CarMax also allegedly failed to extend SCRA protections to reservists who had received orders to report for active duty.

As part of the settlement, CarMax will pay at least $420,000 in damages to servicemembers and a civil penalty of $79,380 to the United States.

In addition to paying a civil penalty and compensation to harmed individuals, DOJ officials said CarMax will revise its policies and procedures to ensure that the rights of U.S. servicemembers are protected in the future.

A CarMax spokesperson sent this statement to Cherokee Media Group on Wednesday.

The U.S. Department of Justice has issued a release regarding CarMax Auto Finance and matters involving servicemembers’ protections under the federal Servicemembers Civil Relief Act (SCRA). CarMax Auto Finance has cooperated fully with the DOJ to reach a resolution to the allegations and has further strengthened our existing compliance program. The resolution between the DOJ and CarMax Auto Finance does not constitute an admission of wrongdoing by CarMax Auto Finance.

Supporting our nation’s military is rooted in CarMax’s culture, and we take these matters seriously given our long-standing commitment to servicemembers, veterans and their families. Our focus has been — and remains — on providing our customers with a fair, transparent and straightforward experience, and we are committed to serving our military community with care and respect. Since 2003, CarMax Auto Finance has provided relief to more than 26,000 servicemembers and dependents of servicemembers in accordance with the SCRA, in the form of finance charge reductions and protection from vehicle repossession. 

Consistent with CarMax Auto Finance’s commitment to continuous improvement and supporting those who serve, we have enhanced our SCRA processes, expanded proactive screening and outreach, and reinforced employee training to help ensure all eligible servicemembers and their dependents receive the protections they deserve.

Customers seeking information about SCRA benefits with CarMax Auto Finance can submit a request via email to [email protected] or over the phone at (800) 925-3612 x4077.

DOJ reiterated the SCRA is a federal law that provides legal and financial protections for servicemembers and their families. The law prevents an auto finance or leasing company from repossessing a servicemember’s vehicle without first obtaining a court order, as long as the servicemember made at least one payment on the vehicle before entering military service.

For members of a reserve component, the protections begin on the date the member receives orders for military service, according to the Justice Department.

This case was handled by the Civil Rights Division’s Housing and Civil Enforcement Section and the U.S. Attorney’s Office for the Eastern District of Virginia.

“Federal law prohibits businesses from repossessing service members’ vehicles without a court order,” said assistant attorney general Harmeet Dhillon of the Justice Department’s Civil Rights Division.

“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,” Dhillon continued in a news release.

Since 2011, DOJ said it has obtained more than $484 million in monetary relief for more than 149,000 servicemembers through its enforcement of the SCRA.

For more information about the department’s SCRA enforcement efforts, visit www.servicemembers.gov.