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Press Release

Justice Department Obtains Over $2 Million for Servicemembers Who Terminated Their Motor Vehicle Leases With BMW Financial Services

For Immediate Release
Office of Public Affairs

The Justice Department today announced that BMW Financial Services, N.A. (BMW FS) has agreed to pay over $2 million to resolve allegations that it violated the Servicemembers Civil Relief Act (SCRA) by failing to refund a type of up-front lease payment to 492 servicemembers who lawfully terminated their motor vehicle leases early.  This is the first case brought by the Department involving a motor vehicle lessor’s failure to refund lease amounts to servicemembers who exercised their SCRA rights to terminate their leases.

The SCRA provides servicemembers with protections that permit them to terminate motor vehicle leases early without penalty after entering military service or receiving qualifying military orders for a permanent change of station or to deploy.  When servicemembers lawfully terminate motor vehicle leases, the SCRA requires that they be refunded all lease amounts paid in advance.

BMW FS is a New Jersey-based auto financing company that provides auto leasing for customers of BMW, MINI, and Rolls-Royce.  Individuals who lease vehicles from BMW FS, including servicemembers, often contribute an up-front monetary amount at lease signing, in the form of a cash payment, credit for a trade-in vehicle, or rebates or other credits.  A portion of this up-front amount can be applied to the first month of the lease and certain up-front costs such as licensing and registration fees.  The remainder, which is called the capitalized cost reduction (CCR) amount, operates to reduce the monthly payment the lessee must make over the term of the lease. 

The Department received complaints from two servicemembers who were denied refunds of pre-paid CCR amounts by BMW FS.  In October 2014, Kristi Steck, then a Senior Master Sergeant (SMSgt) in the U.S. Air Force stationed at Andrews Air Force Base in Maryland, leased a vehicle from BMW FS.   Through the trade in of her previous car and a dealer rebate, she paid BMW FS an up-front CCR amount of approximately $4,000.  SMSgt Steck made regular monthly lease payments for the next ten months.  After receiving orders from the Air Force ordering her to relocate to Japan, SMSgt Steck terminated her lease.  BMW FS refused to refund any of the $4,000 she paid when entering into the lease. 

Similarly, in February 2015, Technical Sergeant (TSgt) A. Menard, who was also stationed at Andrews Air Force Base, leased a vehicle from BMW FS.  TSgt Menard, through a trade in and rebate, paid an up-front CCR amount of approximately $5,000.  After making regular monthly lease payments for seven months, TSgt Menard received orders from the Air Force to deploy to Afghanistan.  BMW FS refused to refund Tsgt Menard any part of the $5,000 he had paid at the lease signing. 

After learning about SMSgt Steck’s and TSgt Menard’s stories, the Department launched an investigation, which was handled jointly by the Department’s Civil Rights Division and the U.S. Attorney’s Office for the District of New Jersey.  The Department’s investigation revealed that BMW FS had failed to refund any portion of the pre-paid CCR amounts to 492 servicemembers who had lawfully terminated their auto leases.

“We ask a great deal of those who serve our nation, including asking them to drop their affairs to deploy or serve in a new location, sometimes at a moment’s notice,” said Acting Assistant Attorney General John Gore of the Civil Rights Division.  “Our men and women in uniform should be able to devote their entire energy to their service and defense of our nation, and the Justice Department is committed to protecting these rights when their obligations to the American people force them to change their plans.”

“The men and women who serve in the armed forces have made enormous sacrifices while selflessly protecting our nation from danger,” said U.S. Attorney Craig Carpenito. “We must honor their sacrifice by ensuring that their rights are protected when duty calls for their relocation or deployment overseas. Through this agreement, we are pleased that hundreds of service members will be compensated for the damages they suffered when they were not refunded pre-paid car lease payments after they were deployed.”

The agreement resolves a suit filed today by the United States in the United States District Court for the District of New Jersey.  It covers all leases terminated by servicemembers since August 24, 2011.

The agreement requires BMW FS to refund to each servicemember portions of the pre-paid CCR amount based on how many days were remaining in the lease.  In addition, BMW FS will pay indirect damages to each servicemember of three times the refund or $500, whichever is larger.  The agreement requires BMW FS to deposit $2,165,518.84 into an escrow account to compensate the 492 servicemembers whose rights were violated under the SCRA.  BMW FS also must pay $60,788 to the United States Treasury.

The agreement also requires BMW FS to revise its policies and procedures to ensure that servicemembers who terminate their auto leases early receive a full refund of all eligible pre-paid CCR amounts. 

The Department’s enforcement of the SCRA is conducted by the Civil Rights Division’s Housing and Civil Enforcement Section and U.S. Attorney’s Offices throughout the country.  The SCRA provides protections for servicemembers in areas such as evictions, rental agreements, security deposits, pre-paid rent, civil judicial proceedings, installment contracts, credit card interest rates, mortgage interest rates, mortgage foreclosures, automobile leases, life insurance, health insurance and income tax payments.  For more information about the Department’s SCRA enforcement, please visit

Servicemembers and their dependents who believe that their rights under the SCRA have been violated should contact the nearest Armed Forces Legal Assistance Program Office.  Office locations may be found at

Individuals who believe their civil rights have been violated may also file a complaint with the U.S. Attorney’s Office for the District of New Jersey at: or may call the U.S. Attorney’s Office’s Civil Rights Complaint Hotline at (855) 281-3339.

Updated February 22, 2018

Servicemembers Initiative
Press Release Number: 18-223