Santander Consumer USA Holdings Inc. will pay at least $9.35 million to resolve charges that it improperly repossessed the cars of members of the U.S. military, the U.S. Department of Justice said. As a supporter of the military, I wish it had been three times that amount.
The settlement covers the repossessions of 1,112 motor vehicles the lender carried out between January 2008 and February 2013 without obtaining a court order, in violation of the Servicemembers Civil Relief Act.
Santander neither admitted nor denied any wrongdoing, and a spokeswoman said the lender has already set aside funds to cover the cost of the settlement. Santander is the tenth largest U.S. auto lender, according to data provider Experian Automotive.
The rapid growth of the auto finance market has prompted U.S. law enforcement officials to examine lending practices more closely. The amount of outstanding auto loans reached an all time high of $866 billion as of the end of 2014, according to Experian Automotive.
The Justice Department is investigating whether auto lenders’ policies have resulted in overcharging minority borrowers for loans and whether issuers of securities backed by subprime auto loans have made appropriate disclosures to investors.
Santander received a subpoena in 2014 as part of prosecutors’ subprime auto probe, but the company spokeswoman said the settlement was unrelated to that matter.
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