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Santander Agrees to $9.35 Million DOJ Settlement

February 26, 2015

WASHINGTON, D.C. — Santander Consumer USA Inc. has agreed to pay at least $9.35 million to resolve a lawsuit filed by the U.S. Department of Justice (DOJ), which charged the auto finance source of violating the Servicemembers Civil Relief Act (SCRA). The complaint and the settlement, which is subject to court approval, were filed on Wednesday in the U.S. District Court for the Northern District of Texas.

The settlement covers repossessions of 1,112 motor vehicles between January 2008 and February 2013. According to the DOJ, the proposed consent order represents the largest settlement involving vehicle repossessions ever obtained by the United States under the SCRA.

“This is a just resolution that will provide service members with financial relief and help repair their bad credit caused by Santander’s improper repossessions and fee collections with respect to more than 1,100 cars,” read a statement from Acting Associate Attorney General Stuart Delery. “The Department of Justice will continue devoting time and resources to protect our service members and their families from such unjust actions and hold bad actors accountable."

The SCRA protects service members against certain civil proceedings that could affect their legal rights while they are in military service. It requires a court to review and approve any repossession if the service member took out the loan and made a payment before entering military service. The court may delay the repossession or require the lender to refund prior payments before repossessing. It can also appoint an attorney to represent the service member, require the lender to post a bond with the court and issue any other orders it deems necessary to protect the service member.

The DOJ charged Santander with failing to obtain court orders before repossessing motor vehicles owned by protected service members, preventing them from obtaining a court’s review on whether their repossessions should be delayed or adjusted in light of their military service.

The lawsuit alleges that Santander initiated and completed 760 repossessions without court orders. The agreement requires Santander to pay $10,000 plus compensation for any lost equity (with interest) to each of these service members. The lawsuit also alleges that Santander sought to collect fees arising from an additional 352 repossessions that unrelated finance sourced had conducted in violation of the SCRA before Santander acquired the loans. The agreement requires Santander to pay $5,000 to each of these service members. Santander is also required to repair the credit of all affected service members.

“The SCRA is an important protection for the men and women serving our country in the armed forces, and this settlement not only will rectify the past improper repossessions of service members’ vehicles, but will work to prevent such improper repossessions in the future,” said Acting U.S. Attorney John Parker of the Northern District of Texas.

For future repossessions, the settlement requires Santander to check the Defense Department’s automated database to see if a car’s owner is in military service prior to conducting a repossession.

The Department of Justice first learned of Santander’s repossession practices through a referral from the U.S. Army’s Legal Assistance Program. The referral involved a claim that Santander illegally repossessed the car of a service member, U.S. Army Specialist Joshua Davis, in the middle of the night, after having been informed that he was at basic training. The department also opened its investigation after learning that Santander used an arbitration clause included in its loan documents to prevent a second service member from pursuing systematic relief through a class action lawsuit he filed. It alleged that Santander had repossessed service members’ vehicles in violation of the SCRA.

As part of its investigation, the United States has already identified Santander’s illegal repossessions and efforts to collect unlawful repossession fees between January 2008 and February 2013. Service members identified based on that investigation will be contacted by an independent settlement administrator later this year. And according to the settlement, Santander must conduct a review and provide compensation for any additional unlawful repossessions that may have occurred since February 2013.

Comments

  1. 1. d mullins [ February 26, 2015 @ 12:24PM ]

    Couldn't happen to a worse company.

  2. 2. howell clark [ February 26, 2015 @ 03:25PM ]

    while i'm not going to defend santander for this, i'm not sure the do gooders at doj and other like minded governmental agencies understand the ramifications of this type of protection for service members. the net effect will be that it will be extremely hard for folks ,especially young ones , in the service to aquire funds in the future for a vehicle purchase . its already tough if a service oriented lender isn't being used. it will now become almost impossible for third party loans to help a member of the service if the government is basically going to put the service personel on the reservation so to speak ,and we know how that worked out for the original americans.

  3. 3. Alan [ February 26, 2015 @ 10:57PM ]

    Santander has helped millions of people from all walks of life get a vehicle when so many "other" lenders turn them down and couldn't give a hoot about them.

    Santander has rescued single mom's and returning service members into a vehicle.

    It's easy to say they are bad. But, I've been selling cars for 20 years. Believe me when I tell you the desperation in a single mom's eyes when she's been turned down everywhere and Santander steps in and she gets the car she needs.

    The relief I see in all men and women when they can get to work, get their kids to school.

    Most of will never know the difference this company has made in these people's lives. Maybe we shouldn't be so quick to condemn what we as individuals don't fully understand.

    Anyways, have a nice ride.
    alan

  4. 4. Anthony Lamantia [ March 08, 2015 @ 06:04AM ]

    Please remember Santander is not out for the good of the customer they are out for the good of Santander. As a consumer you probably heard this from a dealer " the bank is charging us a fee so we have to pass that on to you in order to make this deal work". As a rep for a auto finance lender that is untrue. Dealers by law cannot pass that fee to you the consumer. If you are ever in that position, call your local attorney general. Now, a lender that has no fees, and actually cares about its customers and offers a guaranteed credit approval to everyone is Credit Acceptance. When you see the big check mark at a dealership that's where you want to buy your vehicle.

  5. 5. Vic [ March 09, 2015 @ 06:38AM ]

    Anthony, Credit Acceptance has similar fees to Santander. Source- 12 years in F&I.

  6. 6. Khalid Hamed [ December 26, 2015 @ 02:46PM ]

    If Santander was practicing the lending procedure in a lawful and straightforward financial manner, they would not have been in this trouble with the Law. In addition to service men & women of this country that have been affected by misleading and unlawful fees and repositions orders so are thousands of UBER partners who had purchased and leased vehicles from Santander Consumer USA. Santander have been deducting double charges and adding taxes on each loan as they please creating a financial hardship on the hardworking Americans. Santander Consumer USA Bank should be prevented and stopped from practicing all financial business in the USA immediately. We are fed up and call for Justice.

  7. 7. Minnie christmas [ June 30, 2016 @ 08:05AM ]

    Santander is a horrible com. To deal with my contract is soon bogus I need to show it to a lawyer but can't afford one ,I purchased this car in2012. I also did a trade in in I purchased this car an a down payment ,at that time the car was priced at 13.000 here 3 years later I still owe the same amount paying 400.00 a month the finance charge was soon high.I am thinking about doing something about.

  8. 8. Kattie R Anderson [ September 13, 2016 @ 06:46PM ]

    I had a loan with Santander Consumer USA. I thought I was going to get my title back in January of 2014. They said I owed 5000 in interests. They did not release my title.

 

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