$15K Each: Largest US Used Car Dealer Pays Out Over Illegal Repossessions

In addition to being the largest used-vehicle dealer in the United States, CarMax is largely regarded among customers as quite reliable. But that doesn't mean that the company is infallible. For instance, it has recently come to light that CarMax had illegally repossessed a number of vehicles over a five-year period. Now, the firm has to financially compensate the affected drivers, with those whose vehicles were taken illegally set to receive $15,000 each.

Per the United States Department of Justice, these illegal repossessions affected at least 28 active United States military members. The vehicles were taken between March 1, 2018, and October 24, 2023, allegedly without court orders, while their owners were being called to or were already in active military service. This was deemed a violation of the Servicemembers' Civil Relief Act (SCRA), which suspends commitments like credit card payments, mortgage payments, taxes, and more while military members are on duty and thus can't handle day-to-day civilian tasks. Alongside the $15,000 payment to each individual, CarMax will also pay $79,380 as a civil penalty.

For its part, CarMax has said it will go a step further and try to set things right. It aims to revise its policies and procedures in connection with this situation to prevent any SCRA-related slip-ups down the road.

Vehicle repossessions without court orders and failure to meet the requirements of the Servicemembers' Civil Relief Act are just two parts of CarMax's overall wrongdoing here. As reported by Al.com, federal prosecutors claimed that, in some cases, the company was told ahead of time that the vehicles up for repossession were those of current military servicemembers and therefore SCRA-protected. Despite that, the company went ahead with the repossession process anyway. 

In a statement shared with news outlets such as WTVR, CarMax claims that "We have enhanced our SCRA processes, expanded proactive screening and outreach, and reinforced employee training to help ensure all eligible servicemembers and their dependents receive the protections they deserve." The company also reaffirmed its commitment to serving servicemembers and their families, noting that it has served roughly 26,000 military members in accordance with the SCRA, providing financial relief and repossession protections. The statement also urged those with SCRA-related questions or concerns to reach out to CarMax via email at CAF_SCRA@carmax.com or at (800) 925-3612 x4077.

Even though it's one of the best apps for buying new and used cars, CarMax evidently isn't perfect. Hopefully, the company will better honor the SCRA and continue to make changes to the benefit of servicemembers and their families in the wake of this situation.