German automaker BMW’s American financing subsidiary has agreed to pay $2 million to settle claims it illegally refused to refund payments made in advance by military personnel who terminated their vehicle leases because they were called to duty.
The U.S. Department of Justice accused Woodcliff Lake, N.J.-based BMW Financial Services N.A. of failing to provide refunds to 492 service members who lawfully ended their leases early.
It is the first case the Justice Department has brought against a motor vehicle lessor under the Servicemembers Civil Relief Act.
BMW Financial Services agreed to give refunds to each service member based on how many days were remaining in the lease. In addition, it will pay indirect damages to each military personnel up to three times the refund or $500 and pay $60,000 to the U.S. Treasury. BMW FS also agreed to revise its policies and procedures to ensure that all members of the military who terminate their leases early receive a full refund.
The settlement covers all leases terminated by members of the military since Aug. 24, 2011.
“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.”
Individuals who lease vehicles from BMW FS, including military personnel, contribute an up-front deposit in the form of a cash payment, credit for a trade-in vehicle or other credits. A portion of this amount can be applied to the first month of the lease and up-front costs such as licensing and registration fees. Any remaining funds is used to reduce the monthly payments the lessee must make over the term of the lease.
The DOJ received two complaints from service members resulting in an investigation by the Department’s Civil Rights Division and the U.S. Attorney’s Office for the District of New Jersey. It had filed a lawsuit against BMW FS before the settlement was reached.
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