The Department of Justice announced that Nissan Motor Acceptance Corporation (Nissan MAC) has agreed to pay $3 million to resolve allegations that it violated the Servicemembers Civil Relief Act (SCRA).
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The suit alleges that Nissan MAC repossessed 113 vehicles owned by SCRA-protected servicemembers without first obtaining the required court orders, and failed to refund up-front capitalized cost reduction (CCR) amounts to servicemembers who lawfully terminated their motor vehicle leases early after receiving military orders.
The SCRA prohibits repossessing a motor vehicle from a servicemember during military service without a court order if the individual made a deposit or installment payment on the loan before entering military service.
The SCRA also permits servicemembers to terminate motor vehicle leases early without penalty after entering military service or receiving qualifying military orders for a permanent change of station or to deploy.
When servicemembers lawfully terminate motor vehicle leases, the SCRA requires that they be refunded all lease amounts paid in advance for a period after the effective date of the termination.
Nissan MAC is a Tennessee-based auto financing company that provides auto loans and leases for customers of Nissan and Infiniti.
Individuals who lease vehicles from Nissan MAC often contribute an up-front monetary amount at lease signing, in the form of a cash payment, credit for a trade-in vehicle, rebate, or other credit.
A portion of this up-front amount can be applied to the first-month’s rent and certain up-front costs such as licensing and registration fees.
The remainder, which is called the CCR amount, reduces the monthly payment the lessee must make over the term of the lease.
The Department’s investigation revealed that when servicemembers terminated their motor vehicle leases early pursuant to the SCRA, Nissan MAC retained the entire CCR amount.
The agreement resolves a suit filed today by the Department of Justice in the United States District Court for the Middle District of Tennessee.
It covers all repossessions of servicemembers’ vehicles and leases terminated by
ervicemembers since Jan.
1, 2008.
The agreement requires Nissan MAC to create a $2,937,971 settlement fund to compensate servicemembers whose rights were violated under the SCRA.
Additionally, Nissan MAC must pay $62,029 to the United States Treasury.
The agreement also requires Nissan MAC to revise its policies and procedures to prevent future unlawful repossessions of servicemembers’ vehicles and ensure that servicemembers who terminate their auto leases early receive a full refund of all eligible pre-paid CCR amounts.
NMAC must also provide training to its employees and representatives. ■