Are you familiar with The Servicemembers’ Civil Relief Act (SCRA) and the risk associated to repossessing a vehicle from a customer who is listed as “Active Duty?” If not, you may want to take a moment and familiarize yourself and how it could negatively affect your bottom line. There are a number of items covered by the SCRA, including Foreclosure, Divorce Proceedings, Default Judgements and Repossessions.
As it relates to repossessions, the SCRA prohibits repossessions performed without a court order (such as those done by merchants or “repo” specialists) of goods purchased by installment contract, such as consumer items or cars, as long as the purchase was made before active duty began.
If you have customers that are Active Duty you must get a court order before you can repossess an item. Once in court, an Active Duty service member may apply for a stay of repossession proceedings. The judge will grant the stay if the service person’s ability to pay the debt has been materially affected by entering active service, in the judge’s view.
For an auto lender, SCRA compliance is important since the landscape is very competitive and you can’t afford wrongful repossessions due to lack of insight. The largest risk associated to wrongful repossessions is the reputation risk to your brand. Take the recent case involving a top 10 auto lender, according to reports, they illegally repossessed over 1,000 vehicles belonging to active duty military members. Those repossessions will now cost the organization more than $9 million dollars according to the Department of Justice (DOJ)the largest sum ever collected by the U.S. for car repossessions.
Let’s just say the public opinion of a lender that repossesses a soldier’s car from his/her family while they are deployed, will not be very high. With social media reaching far and wide, the negative impact to your earnings could severely damage your entire operation. Acting Assistant Attorney General of the Civil Rights Division of the DOJ Vanita Gupta said, “Those who answer this nation’s call to duty understandably have much on their minds while they are in military service. Whether their car will be seized and sold at auction should not be an additional worry.”
With that being said, you want to be sure you have a compliance plan in place to detect and alert you of Active Duty Military members. DRN’s Active Duty Alerts will do this for you and present you with actionable data. For your delinquent accounts this will help you avoid wrongful risks. As for the other accounts this may be an excellent marketing opportunity to embrace your customer and thank them for their service to our country, or sell them other product lines.
- DRN Discusses Location Data Trends Ahead of Virtual AIS - July 30, 2020
- Webinar Recap: Lenders Navigating COVID-19 - May 11, 2020
- DRN Statement on Coronavirus (COVID-19) Response Preparedness - March 25, 2020
- How Are You Staying Compliant with Active Duty Servicemembers - March 18, 2020
- Find DRN at Used Car Week 2019 - October 10, 2019
- Partner Profile: American Recovery Service (ARS) - June 6, 2019
- Lenders Speak Up at UCW Roundtable, Revealing Top Challenges - December 13, 2018
- Data Due Diligence: A Three-Pronged Approach to Risk Mitigation - October 29, 2018
- Three Takeaways from the Automotive Intelligence Summit - August 22, 2018
- Five Take Aways from the Collections and Recovery Solutions (CRS) Conference - May 31, 2017