9th Aug 2016 05:25
LONDON (Alliance News) - The US Justice Department announced that HSBC Finance Corporation, as successor to HSBC Auto Finance Inc., has agreed to pay USD434,500 to resolve allegations that it violated the Servicemembers Civil Relief Act or SCRA by repossessing 75 cars owned by protected servicemembers without obtaining the necessary court orders. The settlement is subject to approval by the US 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.
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 USD10.5 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.
Most of the servicemembers compensated through this settlement received partial compensation through the settlement with Santander, and this agreement requires HSBC to pay USD5,500 to each of these servicemembers. HSBC must pay USD11,000 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.
Copyright RTT News/dpa-AFX
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