WASHINGTON, D.C. — Santander Consumer USA Inc. has agreed to pay at least $9.35 million to resolve a lawsuit filed by the U.S. Department of Justice (DOJ), which charged the auto finance source of violating the Servicemembers Civil Relief Act (SCRA). The complaint and the settlement, which is subject to court approval, were filed on Wednesday in the U.S. District Court for the Northern District of Texas.

The settlement covers repossessions of 1,112 motor vehicles between January 2008 and February 2013. According to the DOJ, the proposed consent order represents the largest settlement involving vehicle repossessions ever obtained by the United States under the SCRA.

“This is a just resolution that will provide service members with financial relief and help repair their bad credit caused by Santander’s improper repossessions and fee collections with respect to more than 1,100 cars,” read a statement from Acting Associate Attorney General Stuart Delery. “The Department of Justice will continue devoting time and resources to protect our service members and their families from such unjust actions and hold bad actors accountable."

The SCRA protects service members against certain civil proceedings that could affect their legal rights while they are in military service. It requires a court to review and approve any repossession if the service member took out the loan and made a payment before entering military service. The court may delay the repossession or require the lender to refund prior payments before repossessing. It can also appoint an attorney to represent the service member, require the lender to post a bond with the court and issue any other orders it deems necessary to protect the service member.

The DOJ charged Santander with failing to obtain court orders before repossessing motor vehicles owned by protected service members, preventing them from obtaining a court’s review on whether their repossessions should be delayed or adjusted in light of their military service.

The lawsuit alleges that Santander initiated and completed 760 repossessions without court orders. The agreement requires Santander to pay $10,000 plus compensation for any lost equity (with interest) to each of these service members. The lawsuit also alleges that Santander sought to collect fees arising from an additional 352 repossessions that unrelated finance sourced had conducted in violation of the SCRA before Santander acquired the loans. The agreement requires Santander to pay $5,000 to each of these service members. Santander is also required to repair the credit of all affected service members.

“The SCRA is an important protection for the men and women serving our country in the armed forces, and this settlement not only will rectify the past improper repossessions of service members’ vehicles, but will work to prevent such improper repossessions in the future,” said Acting U.S. Attorney John Parker of the Northern District of Texas.

For future repossessions, the settlement requires Santander to check the Defense Department’s automated database to see if a car’s owner is in military service prior to conducting a repossession.

The Department of Justice first learned of Santander’s repossession practices through a referral from the U.S. Army’s Legal Assistance Program. The referral involved a claim that Santander illegally repossessed the car of a service member, U.S. Army Specialist Joshua Davis, in the middle of the night, after having been informed that he was at basic training. The department also opened its investigation after learning that Santander used an arbitration clause included in its loan documents to prevent a second service member from pursuing systematic relief through a class action lawsuit he filed. It alleged that Santander had repossessed service members’ vehicles in violation of the SCRA.

As part of its investigation, the United States has already identified Santander’s illegal repossessions and efforts to collect unlawful repossession fees between January 2008 and February 2013. Service members identified based on that investigation will be contacted by an independent settlement administrator later this year. And according to the settlement, Santander must conduct a review and provide compensation for any additional unlawful repossessions that may have occurred since February 2013.