Consumer Fraud

Lender To Pay Service Members For Wrongfully Repossessed Vehicles

iraq soldier Lender To Pay Service Members For Wrongfully Repossessed VehiclesA Los Angeles-based consumer auto financing company has agreed to pay nearly $800,000 to resolve allegations that the companies violated the Servicemembers Civil Relief Act (SCRA) by wrongfully repossessing SCRA-protected vehicles belonging to service members without obtaining the required court orders.

According to the U.S. Department of Justice (DOJ), Westlake Services LLC and its subsidiary, Wilshire Consumer Capital LLC, agreed to pay the U.S. $760,788, which will provide relief to 70 service members who had their vehicles repossessed by Westlake.

Westlake, which does business as Westlake Financial Services, specializes in purchasing and servicing subprime and near-subprime retail installment sales contracts. Wilshire, which does business as Wilshire Consumer Credit, originates and services vehicle title loans.

Both Westlake and Wilshire are known to prey upon junior enlisted service members for their loans and products. In light of this business practice, both companies failed to adopt policies and procedures necessary to ensure that their motor vehicle repossessions complied with the SCRA, federal prosecutors said.

“The members of our armed forces should be able to devote their full attention to their duties without having to worry about whether their legal rights will be violated by creditors,” said Acting Assistant Attorney General John M. Gore. “We honor all service members for their sacrifice and service to our nation, and this settlement signals our ongoing commitment to protecting the rights of our men and women in uniform.”

The agreement requires Westlake and Wilshire to provide $10,000 in compensation to each of the 70 affected service members, plus any lost equity in the vehicle with interest.

Westlake and Wilshire also must repair the credit of all affected service members, pay a $60,788 civil penalty to the U.S. government, and determine, in the future, whether any vehicle it is planning to repossess is owned by an SCRA-protected service member and take the proper course of action as required by the SCRA.

The agreement also contains provisions ensuring that all eligible service members will receive the benefit of the SCRA’s 6 percent interest rate cap on their auto loans.

According to the DOJ, the U.S. initiated an action against the companies after the Consumer Financial Protection Bureau’s Office of Servicemember Affairs notified the department that it had received a complaint that Westlake and Wilshire were conducting motor vehicle repossessions in violation of the SCRA.