Wells Fargo Bank will pay a $4.1 million settlement as part of an agreement to settle allegations that the bank illegally repossessed 413 cars owned by members of the U.S. military, according to a press release issued Thursday.
“Auto lenders cannot repossess the cars of the brave men and women who risk their lives to defend our freedom without providing them the required legal protections under the SCRA,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Justice Department’s Civil Rights Division.
Gupta was referring to the Servicemembers Civil Relief Act, which protects service members from select civil proceedings, including a bank’s attempt to repossess a car that was purchased before a person entered military service.
As part of the agreement filed in the U.S. District Court for the Central District of California, the Wells Fargo Dealer Services has also agreed to change its policies in order to adhere to the Servicemembers Civil Relief Act.
Justice Department officials began investigating Wells Fargo in March after the U.S. Army’s Legal Assistance Program claimed the company had repossessed a car belonging to an Army National Guardsman who had been preparing to deploy to Afghanistan. Wells Fargo reclaimed the used vehicle and then tried to charge the service member $10,000.
Since opening the investigation, the Justice Department has discovered hundreds of similar cases dating back to 2008. The bank has been ordered to pay each of the affected service members $10,000, any lost equity in the vehicle with interest, and repair the credit score of each person. As of August, Wells Fargo has begun compensating service members and will also look into any pending repossessions that should be discontinued.
The court case is the latest scandal Wells Fargo & Co. has faced in recent months. Members of Congress have called for company chief John Stumpf to resign in two recent hearings, citing the organization’s forcing employees to open fake customer accounts in an attempt to inflate quarterly report numbers and pay out bonuses to executives.
