Washington, D.C. — On Monday, the U.S. Department of Justice revealed that New City Funding, an auto finance firm based in Stony Point, New York, will pay over $120,000 to resolve claims of illegally repossessing vehicles belonging to active-duty servicemembers, which breaches the Servicemembers Civil Relief Act (SCRA).
Federal investigators discovered that New City Funding had repossessed at least five vehicles from servicemembers without securing the necessary court orders mandated by the SCRA. In certain instances, the company reportedly proceeded with repossessions even after being informed that the vehicle owners were serving on active military duty. Additionally, the company neglected to take fundamental measures to confirm whether borrowers were in military service at the time of the repossession.
“By repossessing these vehicles, New City Funding disregarded the law and the duties it owed to members of our Armed Forces,” said Assistant Attorney General Harmeet K. Dhillon of the Justice Department’s Civil Rights Division. “We will hold accountable any business that does not respect the legal rights of U.S. servicemembers.”
“New Yorkers want our Office to stand up for the rights of our service members, particularly when they are deployed,” added U.S. Attorney Jay Clayton of the Southern District of New York. “The Servicemembers Civil Relief Act protects our troops from having their cars and other assets seized while serving, and our Office stands ready to enforce those protections.”
Settlement Details
Under the terms of the settlement:
- New City Funding will pay at least $60,000 in compensation to affected servicemembers.
- The company will forgive any remaining debt on the affected auto loans.
- New City will repair any credit damage caused by the illegal repossessions.
- An additional $60,000 civil penalty will be paid to the federal government.
The company is required to revise its policies and provide employee training to ensure future compliance with the SCRA.
About the Servicemembers Civil Relief Act
The SCRA offers a range of financial and legal protections for military servicemembers and their families, including safeguards against default judgments, evictions, and repossessions. In the case of auto loans, lenders must obtain a court order before repossessing a vehicle if the servicemember made at least one payment prior to entering military service.
This enforcement action was led by the Civil Rights Division’s Housing and Civil Enforcement Section and the U.S. Attorney’s Office for the Southern District of New York. Since 2011, the DOJ has secured over $483 million in monetary relief for more than 148,000 servicemembers through its enforcement of the SCRA.
Servicemembers and their dependents who believe their SCRA rights have been violated are encouraged to contact the nearest Armed Forces Legal Assistance Program Office. Locations can be found at legalassistance.law.af.mil
For more information on the Justice Department’s SCRA enforcement efforts, visit www.servicemembers.gov
