US Justice Department Reaches Settlement with CarMax Over Military Vehicle Repossessions

The Department of Justice has announced a major settlement with CarMax Inc. following allegations that the company illegally repossessed vehicles owned by members of the U.S. military.

Under the agreement, CarMax will pay at least $420,000 in compensation to affected servicemembers, plus a $79,380 civil penalty to the federal government.

The settlement underscores the Department’s commitment to enforcing the Servicemembers Civil Relief Act (SCRA), which provides vital legal and financial protections to active duty and reserve service members.

Allegations Against CarMax

The Justice Department alleges that CarMax repossessed vehicles without the required court orders, in violation of the SCRA. Some vehicles were taken even after owners notified CarMax of their military service.

Additionally, reservists who had received orders to report for active duty reportedly did not receive the protections they were entitled to under federal law.

Assistant Attorney General Harmeet K. Dhillon emphasized the importance of enforcing these laws: “Federal law prohibits businesses from repossessing service members’ vehicles without a court order… the Department of Justice is proud to defend the rights of those who serve in our military.”

What the SCRA Protects

The SCRA is designed to shield military members from certain financial and legal pressures while serving. Among other protections, it prohibits repossession of vehicles without a court order, provided the servicemember has made at least one payment before entering active service.

For reservists, these protections kick in from the moment they receive orders to active duty. The law is intended to prevent undue financial hardship and ensure military service does not result in the loss of essential personal property.

CarMax’s Commitments

As part of the settlement, CarMax has agreed to revise its internal policies and procedures. The aim is to ensure full compliance with the SCRA going forward, preventing future violations and protecting the rights of servicemembers.

This action is part of a broader DOJ effort to enforce the SCRA, which since 2011 has resulted in over $484 million in relief for more than 149,000 servicemembers.

Cases are handled in partnership with both the Civil Rights Division and local U.S. Attorney’s Offices, in this instance including the Eastern District of Virginia.

Why This Matters

Military families face unique challenges. Deployment, relocation, and frequent moves can strain finances and complicate interactions with lenders.

Protecting their property rights ensures that service members can focus on duty without fear of losing essential assets like vehicles.

Repossession without court orders not only violates federal law but can cause serious personal and financial harm to those who serve. The DOJ’s action sends a clear signal that companies must respect these legal protections.

Impact and Consequences

• For servicemembers: Compensation for past losses and reassurance that their rights are enforceable.
• For CarMax: Financial liability, reputational impact, and mandatory policy revisions.
• For the industry: Reinforces that SCRA compliance is non-negotiable; other auto lenders may review their own procedures.
• For the Department of Justice: Continues to demonstrate vigilance in protecting military personnel from unfair financial practices.

What’s Next?

Affected servicemembers should verify whether they are eligible for compensation. Those with ongoing SCRA concerns can contact the nearest Armed Forces Legal Assistance Program Office, with locations available at legalassistance.law.af.mil.

Meanwhile, CarMax must implement policy and procedural changes to prevent future violations. DOJ monitoring and potential audits may ensure compliance.

Summary

The DOJ’s settlement with CarMax highlights the government’s ongoing commitment to enforcing the Servicemembers Civil Relief Act.

By securing financial relief and requiring policy reforms, the case protects the legal and financial rights of U.S. servicemembers, sending a clear message to lenders nationwide: military members’ rights must be respected.

Bulleted Takeaways

• CarMax will pay at least $420,000 in damages to servicemembers and $79,380 in civil penalties.
• Alleged violations included repossessing vehicles without court orders and ignoring notifications of military service.
• SCRA protections apply to both active duty and reserve servicemembers, preventing repossessions without court approval.
• CarMax will revise policies and procedures to ensure compliance with federal law.
• The DOJ has recovered over $484 million for more than 149,000 servicemembers since 2011 through SCRA enforcement.
• Servicemembers with potential SCRA violations should contact their local Armed Forces Legal Assistance Program Office.
• The case reinforces accountability for lenders and financial institutions dealing with military personnel.