Wells Fargo & Co. is facing a U.S. investigation into whether it improperly repossessed cars owned by members of the military, according to two people with knowledge of the probe.

In their review, the Justice Department and bank regulators are examining Wells Fargo’s compliance with the Servicemembers Civil Relief Act, which in most cases requires that firms obtain a court order before seizing vehicles from soldiers, sailors, airmen and Marines. The government and Wells Fargo have begun discussing how to compensate borrowers who might have been affected, said one of the people, who asked not to be named because the investigation isn’t public.

Shielding soldiers from financial stress has been a priority for lawmakers, and the Justice Department has recently stepped up enforcement actions against banks for taking assets illegally. Banco Santander SA’s U.S. unit agreed to pay $9 million last year over allegations that it improperly confiscated 1,112 vehicles from military members, the largest settlement ever obtained in a case involving repossessions of automobiles with delinquent loans.

Catherine Pulley, a spokeswoman for Wells Fargo, declined to comment. Spokesmen for the Justice Department and the Office of the Comptroller of the Currency, which regulates Wells Fargo’s banking unit, also declined to comment.

Outside Contractors

Lenders often hire contractors to resolve issues with unpaid loans, including taking back property from those who fail to meet their obligations. It couldn’t be determined whether Wells Fargo used a third-party in the cases the government is reviewing, how the bank’s actions might have violated the law or how many vehicles could be involved.

In a May regulatory filing, San Francisco-based Wells Fargo said it had $61 billion in outstanding auto loans, with $55 million of those at least 90 days past due.

Wells Fargo -- the world’s most valuable bank -- has branches on eight U.S. military bases, include Fort Bliss in Texas, Georgia’s Fort Benning, Fort Dix in New Jersey and Hill Air Force Base in Utah. On its website, the bank says it has “a history of making banking easier for our servicemen and servicewomen.”

The bank has previously been accused of not adhering to the military lending law, which Congress approved decades ago to protect soldiers from legal hassles while they’re on active duty.

Mortgage Settlement