General Motors’ finance arm, GM Financial, has agreed to pay over $3.5 million to settle allegations that it breached a US federal law that provides protections and benefits to eligible servicemembers.
The Justice Department has alleged that GM Financial violated the Servicemembers Civil Relief Act by illegally repossessing 71 vehicles and by mishandling over 1,000 vehicle lease termination requests.
GM Financial is to pay $3.5 million to the affected servicemembers and a $65,480 civil penalty to the government. In addition, $10,000 will be paid directly to each of the 71 servicemembers who had their vehicles unlawfully repossessed.
GM Financial has acknowledged the Justice Departments statement and says it’s cooperated throughout the entire investigation. The department alleges that GM Financial has improperly denied lease termination requests, charged illegitimate early termination fees, and failed to provide timely refunds of lease amounts since 2015.
This isn’t the first repossession related legal trouble GM has been through this year. GM Authority reported last March that the company was to pay over $1.8 million after it allegedly violated Massachusetts consumer protection laws. This lawsuit alleged that GM Financial did not pay the interest required after it failed to provide consumers with refunds of guaranteed asset protection enrollment fees, as well as did not provide sufficient information to consumers after repossessing their vehicles. “We hope this settlement provides relief to the thousands of borrowers who have been affected by GM Financial’s alleged actions,” said Massachusetts Attorney General Healey.
These lawsuits come after a profitable year for GM Financial, which made $2 billion during the 2021 calendar year through re-selling used vehicles that were either returned through lease expirations or through repossessions. The profits helped to grow total GM Financial revenue to over $13 billion, with a profit of $5 billion, as compared to $2.7 billion profit the year prior.