Hudson Valley Federal Credit Union has agreed to pay $95,000 in penalties for illegally repossessing vehicles from military service members.
The repossessions violated the Servicemembers Civil Relief Act, according to a news release from U.S. Attorney Geoffrey S. Berman.
“Financial institutions must recognize and honor their responsibilities to our men and women in uniform,” John Gore, acting assistant U.S. attorney general said in the news release.“The men and women of our military deserve our unwavering support,” Mary D. Madden, Hudson Valley’s president and CEO, said in a news release, “so when we learned of the Department of Justice’s inquiry in 2016, we immediately reviewed our procedures.”
HVFCU agreed to the settlement without admitting any liability, and it refers to the findings as “alleged violations.”
The law in question can be traced back to the Civil War, when Congress placed a moratorium on civil actions brought against Union soldiers and sailors until they returned home from the war.
Similar laws were enacted for World War I and World War II. The 1940 law never expired.
The Servicemen’s Civil Relief Act, often referred to as the SCRA law, is meant to protect the legal rights of soldiers, sailors, airmen, marines and coast guardsmen. A contract for a motor vehicle for which a deposit or payments has been made, for instance, may not be rescinded for breach of contract or repossessed without a court order.
HVFCU, according to a civil complaint filed Nov. 2 by the government, repossessed at least nine vehicles from service members, without court orders, from 2008 to 2014.
The credit union, headquartered in Poughkeepsie, was established in 1963 and is the 34th largest in the country. It has more than $4.8 billion in assets and serves more than 275,000 individuals and businesses in Dutchess, Orange, Putnam and Ulster counties.
It was only after a soldier in 2014 and an airman in 2015 filed lawsuits that federal prosecutors became aware of the repossession practices. The government then identified seven more violations.
Patrick Clarke, the soldier, and his girlfriend bought a car from Middletown Pontiac Buick GMC in 2007. The dealership assigned its interest in the contract to the credit union and the couple made payments from a joint checking account.
Clarke joined the Army in 2009 and was deployed to Camp Casey, South Korea, from December 2009 to December 2010.
Clarke and his girlfriend contacted the credit union multiple times, according to the federal complaint, to let it know he was on active duty and stationed overseas.
According to Clarke’s lawsuit, HVFCU never checked the Department of Defense online manpower database that is provided to lenders to verify military status.
While stationed in South Korea, the credit union repossessed his vehicle, without obtaining a court order.
Clarke was awarded $20,000 in damages in his lawsuit in 2016. Bromberg Law Office of Manhattan was awarded $110,802 in legal fees and costs for defending him. HVFCU was also ordered to contact credit unions to delete or block negative information on his credit reports.
The prosecutor’s office notified HVFCU in late 2016 that its repossession practices were being investigated. Prior to August 2014, the federal complaint states, the credit union did not have written policies or procedures on protecting service members from nonjudicial repossessions. Until late 2014, it had been failing to check the military’s manpower database.
The settlement was announced on Nov. 2, the same day the prosecutor filed a complaint. HVFCU agreed to pay six service members $10,000 each, plus any lost equity in their vehicles. One service member, whose vehicle was repossessed but returned within 24 hours, will get $5,000. The credit union will pay a civil penalty of $30,000 to the federal government.
HVFCU has expanded its annual training on the law and it has set up a website link and telephone number for service members. The website declares the credit union’s commitment to providing protections to service members.
“To all those in the military,” the notice states, “we thank you and your families for your service.”
The prosecutor’s case was handled by Ellen Blain, an assistant U.S. attorney in the office’s civil rights unit.