New York Credit Union Agrees to DOJ Settlement
Hudson Valley FCU to pay $95,000 to resolve allegations of repossessing military service members’ cars without court orders.
The $4.8 billion Hudson Valley Federal Credit Union in Poughkeepsie, N.Y. has agreed to pay $95,000 to resolve allegations that it repossessed vehicles of military service members without first obtaining the required court orders, according to the U.S. Attorney’s office in Manhattan.
Under the agreement announced Friday, HVFCU has agreed to pay $65,000 to compensate seven service members whose cars it unlawfully repossessed and will pay a civil penalty of $30,000 to the United States government.
In a prepared statement, HVFCU said it did not admit to any liability and that the claims are a result of seven loans, which the Department of Justice identified as possible issues but made no legal determination on whether the issues were violations.
However, the DOJ said its investigation of HVFCU’s repossession practices revealed seven violations of the Servicemembers Civil Relief Act, SCRA, which requires financial institutions to obtain court orders before repossessing cars of active military service members.
The U.S. Attorney’s office launched an investigation into HVFCU’s repossession practices after learning of two private lawsuits filed in U.S. District Court in Manhattan. In both lawsuits, the plaintiffs alleged that credit unions violated SCRA by repossessing the plaintiffs’ vehicles after they had entered military service.
The DOJ said its investigation identified seven additional violations. The federal probe also revealed that prior to August 2014 HVFCU did not have any written policies or procedures that addressed the SCRA’s protections against non-judicial auto repossessions.
The agreement requires the credit union to provide $10,000 in compensation to each of the six affected service members, plus any lost equity in the vehicle with interest. An additional service member, whose vehicle was repossessed but returned within 24 hours, will receive $5,000.
HVFCU Valley has taken steps to repair the credit of the affected service members.
“The men and women of our military deserve our unwavering support so when we learned of the DOJ’s inquiry in 2016 we immediately reviewed our procedures to ensure compliance with the SCRA,” HVFCU President and CEO Mary D. Madden said.
HVFCU took additional steps, beyond regulatory requirements, which included expanding annual SCRA training to all staff and creating a dedicated link and phone number for service members on the credit union’s website.