Servicemembers Receive Relief For Unlawful Repossession Of Their Cars

United States Attorney for the Southern District of New York, Jay Clayton, and Assistant Attorney General for Civil Rights for the United States Department of Justice, Harmeet K. Dhillon, announced today that NEW CITY FUNDING CORP. (“NEW CITY”) has agreed to pay at least $120,000 to resolve allegations that it violated the Servicemembers Civil Relief Act (“SCRA”) by repossessing vehicles owned by SCRA-protected servicemembers without first obtaining the required court orders. Under the agreement, NEW CITY has agreed to pay $60,000 to compensate four servicemembers whose cars it unlawfully repossessed and will also pay a civil penalty of $60,000 to the United States.  NEW CITY has further agreed to provide information regarding additional repossessions and will compensate any additional servicemembers whose cars were repossessed in violation of the SCRA.  

The U.S. Attorney’s Office and the Department of Justice launched an investigation into NEW CITY’s repossession practices following the filing of a private lawsuit in the Southern District of New York.  In the lawsuit, the plaintiff alleged that NEW CITY violated the SCRA by repossessing the plaintiff’s vehicle after the plaintiff had entered military service.  The subsequent investigation identified four additional violations to date and revealed that NEW CITY regularly failed to adhere to its written policies and procedures regarding SCRA’s protections against non-judicial auto repossessions.

NEW CITY, headquartered in Stony Point, New York, provides auto financing to New Yorkers, many of whom are unable to obtain financing from traditional lending institutions. 

“New Yorkers support the women and men of our armed forces, and New Yorkers want our Office to stand up for the rights of our service members, particularly when they are deployed,” said U.S. Attorney Jay Clayton.  “The Servicemembers Civil Relief Act protects our troops from having their cars and other assets seized while serving, and our Office stands ready to enforce those protections.”

“By repossessing these vehicles, New City Funding disregarded the law and the duties it owed to members of our Armed Forces,” said Assistant Attorney General Harmeet K. Dhillon of the Justice Department’s Civil Rights Division.  “We will hold accountable any business that does not respect the legal rights of U.S. servicemembers.”

The agreement requires NEW CITY to provide $15,000 in compensation, plus any lost equity in the vehicle with interest, to each of the four affected servicemembers who have been identified to date and will provide similar compensation to any additional servicemembers subsequently identified whose rights under the SCRA were violated by NEW CITY.  NEW CITY will also take steps to repair the credit of the affected servicemembers.  NEW CITY will contact servicemembers to be compensated through this settlement in the upcoming months and will distribute payments at no cost to servicemembers.  As noted above, NEW CITY will also pay a $60,000 civil penalty to the United States.

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.  For more information about SCRA enforcement efforts, please visit www.servicemembers.gov.

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 legalassistance.law.af.mil.

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This case is being handled by the U.S. Attorney’s Office’s Civil Rights Unit in the Civil Division and the Civil Rights Division’s Housing and Civil Enforcement Section.  Assistant U.S. Attorney Dana Walsh Kumar of the U.S. Attorney’s Office and Trial Attorney Audrey M. Yap of the Civil Rights Division are in charge of the case.