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GM military settlement overview:
- Who: GM Financial has agreed to pay more than $3.5 million in a settlement with certain military service members.
- Why: The settlement will end claims GM Financial illegally repossessed vehicles owned by members of the military.
- Where: The GM military settlement was filed in a Texas federal court.
GM Financial has agreed to a more-than $3.5 million settlement with members of the military to end claims it illegally repossessed service members’ vehicles and mishandled their lease termination requests.
In a press release issued Oct. 5 by the U.S. Department of Justice (DOJ), the department said GM Financial had agreed to pay the settlement to resolve allegations that it violated the Servicemembers Civil Relief Act (SCRA).
The DOJ alleged GM Financial, which is the financial services arm of General Motors, illegally repossessed 71 servicemembers’ vehicles and improperly denied or mishandled over 1,000 vehicle lease termination requests.
The SCRA prevents an auto finance or leasing company from repossessing a servicemember’s vehicle without first obtaining a court order, as long as the servicemember made at least one payment on the vehicle before entering military service, the DOJ said.
The SCRA also allows servicemembers to terminate a vehicle lease early after entering military service or receiving certain qualifying military orders.
If a servicemember terminates a vehicle lease under the SCRA, the leasing company may not impose any early termination charges and must refund, within 30 days, any rent or lease amounts paid in advance.
DOJ opened GM Financial investigation after complaint
The DOJ began investigating GM Financial after receiving a complaint about a potential violation involving U.S. Army Chief Warrant Officer 3 Thomas Gorgeny.
After investigating the claims, the DOJ filed a complaint in a Texas federal court, alleging that GM Financial had been breaching the SCRA since 2015.
Under the settlement, GM Financial has agreed to pay $3.53 million to the affected servicemembers and a $65,480 civil penalty to the United States.
GM Financial will pay at least $10,000 to each of the 71 servicemembers who had their vehicles unlawfully repossessed.
Servicemembers whose requests to terminate their vehicle leases were improperly denied will receive a refund of certain payments plus up to $5,000 in additional damages.
Last year, General Motors was hit with a class action lawsuit by a California consumer who says she was flooded with unwanted and abusive prerecorded calls from the automaker.
What do you think of this GM Financial settlement? Let us know your thoughts in the comments!
The government is represented by Chad E. Meacham and Lisa R. Hasday of the U.S. Attorney’s Office for the Northern District of Texas and Kristen Clarke, Sameena Shina Majeed, Elizabeth A. Singer, Alan A. Martinson and Audrey M. Yap of the U.S. Department of Justice’s Civil Rights Division.
The GM Financial settlement is U.S. v. AmeriCredit Financial Services Inc., Case No. 4:22-cv-00887, in the U.S. District Court for the Northern District of Texas.
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