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DOJ settles lawsuit alleging violations of service members’ rights

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The U.S. Department of Justice has reached a $2.9 million settlement with Nissan Motor Acceptance Corp. in a lawsuit alleging Nissan MAC violated the rights of military personnel by improperly repossessing vehicles and failing to refund money to service members.

The suit alleged that Nissan MAC, a Tennessee-based auto financing company which provides auto loans and leases for Nissan and Infiniti customers, repossessed 113 vehicles owned by military personnel protected by the Servicemembers Civil Relief Act without first obtaining required court orders. The suit also alleged that Nissan MAC failed to refund upfront capitalized cost reduction amounts to service members who lawfully terminated their automobile leases after receiving military orders, according to a news release from the U.S. Attorney’s Office Middle District of Tennessee office.

The SCRA prohibits repossessing a motor vehicle from a service member during military service without a court order if the service member made a deposit or installment payment on the vehicle loan before entering service. The SCRA also permits service members to terminate motor vehicle leases early without penalty after entering service or receiving orders for a permanent change of station or deployment. The act requires that service members be refunded all lease amounts paid in advance for a period after the effective date of the termination.

“Men and women in uniform risk their lives to serve our country, and Congress enacted the Servicemembers Civil Relief Act to protect them when they serve our nation,” Assistant Attorney General Eric Dreiband of the Justice Department’s Civil Rights Division said in the release. “The U.S. Department of Justice will continue to enforce the act vigorously in order to protect service members and to ensure that all covered industries comply fully with the law.”

The agreement requires Nissan MAC to create a $2,937,971 settlement fund to compensate affected service members and to pay $62,029 to the United States Treasury. The agreement covers all repossessions of service members’ vehicles and leases terminated by service members since Jan. 1, 2008.

Individuals who lease vehicles from Nissan MAC often contribute an upfront monetary amount at lease signing. A portion can be applied to first-month’s rent and costs such as licensing and registration fees. The remainder, called the capitalized cost reduction amount, reduces monthly payments. The justice department’s investigation found that when service members terminated their automobile leases early pursuant to the SCRA, Nissan MAC retained the entire CCR amount.

The settlement also requires Nissan MAC to revise its policies and provide training to its employees and representatives.

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