The U.S. Department of Justice (DOJ) announced last week that it reached an agreement with Michigan-based COPOCO Community Credit Union to settle a lawsuit alleging that the credit union violated the Servicemembers Civil Relief Act (SCRA) when it repossessed a service member’s vehicle. The lawsuit—originally filed in July 2016—alleged that the credit union did not have an SCRA compliance policy and that it had unlawfully repossessed the vehicle despite the fact that its owner was actively engaged in military training. After the lawsuit was filed, the DOJ learned of three additional service members whose vehicles were illegally repossessed.

The settlement requires COPOCO to develop policies and procedures for SCRA compliance that specifically include Section 3952, which concerns vehicle repossessions, and Section 3937, which is focused on interest-rate relief. It also requires that COPOCO provide its employees with SCRA training, compensate any service members whose vehicles were repossessed in violation of the SCRA, and pay a $5,000 civil penalty to the United States.

This settlement demonstrates the DOJ’s willingness to bring an SCRA enforcement action, even when only a single service member is affected by non-compliant lending and collection practices. In light of this low bar, financial services companies of all stripes should take steps to ensure compliance with all aspects of the SCRA.

Ballard Spahr's Consumer Financial Services Group is nationally recognized for its guidance in structuring and documenting new consumer financial services products, its experience with the full range of federal and state consumer credit laws, and its skill in litigation defense and avoidance (including pioneering work in pre-dispute arbitration programs).


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