Hudson Valley Federal Credit Union in Poughkeepsie, N.Y., has agreed to pay $95,000 to resolve allegations that it incorrectly repossessed vehicles owned by service members.
The U.S. Attorney’s Office claimed that the credit union violated the Servicemembers Civil Relief Act by repossessing the vehicles without first obtaining the required court orders. SCRA provides certain protections for active duty members of the military. It covers issues such as rental agreements, security deposits, foreclosures, and credit card and mortgage interest rates.
The $4.8 billion-asset credit union entered into an agreement with Geoffrey Berman, the U.S. Attorney for the Southern District of New York, and John Gore, Acting Assistant Attorney General. Hudson Valley agreed to pay $65,000 to compensate seven service members whose cars it unlawfully repossessed and a civil penalty of $30,000 to the U.S., according to a press release on Friday.
The agreement requires Hudson Valley to provide $10,000 in compensation to each of the six affected service members, plus any lost equity in the vehicle with interest. An additional service member, whose vehicle was repossessed but returned within 24 hours, will receive $5,000.
Hudson Valley said it has taken steps to repair the credit of the affected service members, adding it “has committed to protecting service members’ rights in the future.”
The U.S. Attorney’s Office said it launched an investigation into Hudson Valley’s repossession practices after learning of two private lawsuits filed in the Southern District of New York. In both lawsuits, the plaintiffs alleged Hudson Valley violated the SCRA by repossessing the plaintiffs’ vehicles after they had entered military service. The subsequent investigation reportedly identified seven additional violations and revealed that prior to August 2014, Hudson Valley did not have any written policies or procedures that addressed the SCRA’s protections against non-judicial auto repossessions.
“Financial institutions must recognize and honor their responsibilities to our men and women in uniform,” Gore said in the press release. “Our nation depends upon the selfless devotion and sacrifice of our service members and we must ensure that they receive all rights and protections afforded to them by law.”
