GM Financial, a unit of General Motors, has agreed to pay more than $3.5 million to deal with allegations it breached a U.S. federal law that offers certain benefits and protections to eligible servicemembers, the Justice Department said.
The unit was alleged of violating the Servicemembers Civil Relief Act by unlawfully repossessing 71 servicemembers’ vehicles and by improperly denying or mishandling over 1,000 vehicle lease termination requests, the Justice Department said in a statement on Wednesday.
GM Financial is set to pay $3.5 million to the affected servicemembers and a $65,480 civil penalty to the government.
The company will pay at least $10,000 to each of the 71 servicemembers who had their automobiles illegally repossessed.
The unit is a wholly-owned subsidiary of General Motors and offers to finance vehicle sales and leases. In 2021, GM Financial had revenue exceeding $13 billion.
In a complaint submitted to U.S. District Court in Dallas, the department said that since 2015 GM Financial had inappropriately denied servicemembers’ lease termination requests, charged servicemembers improper early termination fees or lease amounts following the date of termination, and failed to provide servicemembers timely refunds of lease amounts they paid in advance.
The Justice Department said it started investigating GM Financial after getting a complaint about a potential violation involving a U.S. Army chief warrant officer.
