In the Santander case, the Justice Department was tipped off by the U.S. Army’s legal assistance program that vehicles might have been repossessed illegally. In one allegation, the bank was said to take a soldier’s car in the middle of the night after being told that he was at basic training. Santander didn’t admit or deny the department’s claims.
More recently, the Justice Department fined HSBC Holdings Plc $434,500 last month in a small case involving the improper repossessions of 75 cars. And in 2012, Capital One Financial Corp. agreed to pay $12 million over a wider range of allegations that also included improper vehicle seizures. The bank acknowledged that it might not have been in compliance with the law.
A frequent problem in investigations involving asset repossessions is that lenders don’t understand servicepeople’s eligibility for protections. While the Department of Defense maintains a database accessible to banks, studies by the U.S. Government Accountability Office found that loan servicers often didn’t check military status. Thousands of people haven’t received proper benefits under the law and oversight by regulators “has been limited,” the GAO has said.
This article was provided by Bloomberg News.