BMW Finance Unit in $2M Accord With U.S. Under Military Law

By Chris Bruce

BMW Financial Services Inc. will pay more than $2 million to settle U.S. claims that its refund practices violated a federal law that protects military service members, the Justice Department said Feb. 22.

The accord, the latest of several recent actions against financial services firms under the Servicemembers Civil Relief Act, centered on claims that BMW Financial Services failed to refund certain lease payments by 492 service members who terminated their leases early. It’s the first such action by the Justice Department under the SCRA.

The Justice Department filed a complaint against the company in the U.S. District Court for the District of New Jersey and announced the settlement the same day. BMW Financial Services didn’t respond to a request for comment.

The SCRA gives special protection to service members on a range of financial services matters. Among others, the statute allows them to terminate motor vehicle leases early without penalty after they enter military service, or if they receive qualifying duty orders, such as orders to deploy. In such cases, the SCRA requires refunds of any amounts they paid in advance.

“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 DOJ 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 settlement requires BMW Financial Services to make refunds on a pro rata basis, and to pay indirect damages amounting to either three times the refund amount, or $500, whichever is larger.

The case is United States v. BMW Fin. Svcs. Inc. , D.N.J., No. 18-cv-02495, complaint filed 2/22/18 .

To contact the reporter on this story: Chris Bruce in Washington at cbruce@bloomberglaw.com

To contact the editor responsible for this story: Michael Ferullo at mferullo@bloomberglaw.com

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