The Department of Justice today announced that the American Honda Finance Corporation (AHFC) has agreed to settle a federal lawsuit alleging it violated the Servicemembers Civil Relief Act (SCRA) by failing to reimburse a type of upfront lease payment to service members who have legally terminated their motor vehicle hire early. Under the settlement agreement, AHFC is required to pay up to $ 1,585,803.89 in compensation to 714 service members who have been harmed by the alleged violations.
“This case illustrates the Department of Justice’s unwavering commitment to protecting the rights of the military,” said Deputy Attorney General Kristen Clarke of the Department of Justice’s Civil Rights Division. “We will continue to vigorously enforce federal law to ensure that no military personnel are subjected to unlawful treatment by car rental companies or other entities.”
“The military selflessly heed the call to duty, and their sacrifice should not subject them to unlawful economic harm,” said Acting United States Attorney General Tracy L. Wilkison of the Central District of California. “This settlement is the latest result of investigations my office has conducted in conjunction with Justice Department lawyers to ensure that our brave men and women in uniform can act without having to worry about unfair actions at home.”
The SCRA allows military members to terminate motor vehicle leases early without penalty after entering military service or receiving military orders qualifying for a permanent change of post or deployment. When the military legally terminates motor vehicle leases, the SCRA requires that they be reimbursed of all rental amounts paid in advance.
AHFC is a California-based, self-financing company that provides auto leasing to Honda and Acura customers. People who rent vehicles from AHFC, including service members, often pay an initial monetary amount upon signing the lease, in the form of cash payment, trade-in vehicle credit, discounts or other credits. A portion of this initial amount can be applied to the first month of the lease and some upfront costs such as license and registration fees. The balance, called the capitalized cost reduction amount, is used to reduce the monthly payment the tenant has to make over the term of the lease.
Today’s settlement, which must be approved by the United States District Court for the Central District of California, resolves a lawsuit filed today by the Department of Justice. The lawsuit alleges that while AHFC regularly reimbursed cash payments for capitalized cost reduction made by service members, AHFC failed to reimburse the vehicle trade credit applied to capitalized cost reduction, in violation of SCRA.
In addition to compensating 714 military personnel, the regulations require the AHFC to pay the US Treasury $ 64,715 to adopt new policies and implement new training requirements.
Service members and their dependents who believe their SCRA rights have been violated should contact the nearest Armed Forces Legal Assistance Program office. Office locations can be found at http://legalassistance.law.af.mil/.
The Department of Justice’s enforcement of the SCRA is conducted by the Housing and Civil Law Enforcement Section of the Civil Rights Division and US prosecutor’s offices nationwide. Since 2011, the department has obtained more than $ 476 million in monetary relief for more than 121,000 military personnel through the application of the SCRA. Additional information on the Department’s enforcement of SCRA and other laws protecting the military can be found at www.servicemembers.gov.