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Press Release

Justice Department Reaches Settlement to Resolve Allegations Against HSBC for Illegally Repossessing Servicemembers’ Cars

For Immediate Release
Office of Public Affairs

The Justice Department announced today that HSBC Finance Corporation, as successor to HSBC Auto Finance Inc., has agreed to pay $434,500 to resolve allegations that it violated the Servicemembers Civil Relief Act (SCRA) by repossessing 75 cars owned by protected servicemembers without obtaining the necessary court orders.  The settlement is subject to approval by the U.S. District Court of the Northern District of Illinois.

During the investigation, the department learned that HSBC conducted repossessions without court orders even when it had evidence in its own records suggesting that a borrower could be a protected servicemember.  In one such case, HSBC continued with a repossession after learning that an initial attempt was unsuccessful because guards would not allow the “repo truck” to enter a “secured military post” in Indiana, where the car was located.

“HSBC repossessed cars without taking into account their owners’ ongoing service to our country,” said Principal Deputy Associate Attorney General Bill Baer.  “This settlement rights this wrong, compensates the affected servicemembers and honors our commitment to making sure military members are treated fairly at all times.”

“Servicemembers should never have to worry that they will lose their cars while they answer our nation’s call to duty,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Justice Department’s Civil Rights Division.  “HSBC should have heeded these concerns before repossessing vehicles.  I commend the company for working cooperatively to reach an appropriate resolution once the department raised the issue.”

The settlement covers repossessions that occurred between 2008 and 2010.  HSBC Auto Finance Inc. originated and serviced car loans until 2010, when HSBC sold its car lending operations and assets to Santander Consumer USA Inc.  In February 2015, the department entered a settlement with Santander that provides servicemembers with more than $10.5 million in compensation for repossessions that violated the SCRA.  As part of the investigation of Santander’s repossession practices, the department learned that HSBC sold to Santander the right to collect debts owed by servicemembers after their cars had been repossessed by HSBC without court orders.

The SCRA protects servicemembers against certain civil proceedings that could affect their legal rights while they are in military service.  It requires a court to review and approve any repossession if the servicemember took out the loan and made a payment before entering military service.  The court may delay the repossession or require the lender to refund prior payments before repossessing.  The court may also appoint an attorney to represent the servicemember, require the lender to post a bond with the court and issue any other orders it deems necessary to protect the servicemember.  By failing to obtain court orders before repossessing motor vehicles owned by protected servicemembers, HSBC prevented servicemembers from obtaining a court’s review of whether their repossessions should be delayed or adjusted to account for their military service.

Most of the servicemembers compensated through this settlement received partial compensation through the settlement with Santander, and this agreement requires HSBC to pay $5,500 to each of these servicemembers.  HSBC must pay $11,000 to affected servicemembers who did not receive payments from the Santander settlement.  HSBC also must repair the credit of all affected servicemembers.  An independent settlement administrator will contact servicemembers to be compensated through this settlement in the upcoming months.  The independent administrator will locate victims and distribute payments at no cost to the servicemembers.

The department’s enforcement of the SCRA and other fair lending laws is conducted by the Civil Rights Division’s Housing and Civil Enforcement Section.  Since 2010, the division has provided over $1.4 billion in monetary relief for individual borrowers and affected communities through its enforcement of the Fair Housing Act, the Equal Credit Opportunity Act and the SCRA.

The SCRA provides protections for active duty servicemembers in areas such as evictions, rental agreements, security deposits, prepaid 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 SCRA have been violated should contact the nearest Armed Forces Legal Assistance Program Office.  Office locations may be found at

HSBC Complaint

HSBC Proposed Consent Order

Updated November 10, 2016

Civil Rights
Servicemembers Initiative
Press Release Number: 16-912