BMW to Pay Over $2 M to Servicemembers Who Terminated their Leases
BMW Financial Services, N.A. (BMW FS) agreed to pay over $2 million to resolve allegations that it violated the Servicemembers Civil Relief Act (SCRA) by failing to refund a type of up-front lease payment to 492 servicemembers who lawfully terminated their motor vehicle leases early.
The SCRA provides servicemembers with protections that permit them to terminate motor vehicle leases early without penalty after entering military service or receiving qualifying military orders for a permanent change of station or to deploy. When servicemembers lawfully terminate motor vehicle leases, the SCRA requires that they be refunded all lease amounts paid in advance.
BMW FS is a New Jersey-based auto financing company that provides auto leasing for customers of BMW, MINI, and Rolls-Royce. Individuals who lease vehicles from BMW FS, including servicemembers, often contribute an up-front monetary amount at lease signing, in the form of a cash payment, credit for a trade-in vehicle, or rebates or other credits. A portion of this up-front amount can be applied to the first month of the lease and certain up-front costs such as licensing and registration fees. The remainder, which is called the capitalized cost reduction (CCR) amount, operates to reduce the monthly payment the lessee must make over the term of the lease.
After the Department received complaints from two servicemembers who were denied refunds of pre-paid CCR amounts by BMW FS, DOJ launched an investigation, which was handled jointly by the Department’s Civil Rights Division and the U.S. Attorney’s Office for the District of New Jersey. The Department’s investigation revealed that BMW FS had failed to refund any portion of the pre-paid CCR amounts to 492 servicemembers who had lawfully terminated their auto leases.
“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 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 agreement resolves a suit filed today by the United States in the United States District Court for the District of New Jersey. It covers all leases terminated by servicemembers since August 24, 2011.
The agreement requires BMW FS to refund to each servicemember portions of the pre-paid CCR amount based on how many days were remaining in the lease. In addition, BMW FS will pay indirect damages to each servicemember of three times the refund or $500, whichever is larger. The agreement requires BMW FS to deposit $2,165,518.84 into an escrow account to compensate the 492 servicemembers whose rights were violated under the SCRA. BMW FS also must pay $60,788 to the United States Treasury.
The agreement also requires BMW FS to revise its policies and procedures to ensure that servicemembers who terminate their auto leases early receive a full refund of all eligible pre-paid CCR amounts.
Posted in The Takedown