Washington and HSBC strike deal over ‘improper’ repossessions of cars owned by US troops

The US Justice Department announced Monday that it had reached a US$434,500 settlement with HSBC Finance Corporation over the repossession of cars owned by US military service members.

The settlement covers repossessions of 75 cars that occurred between 2008 and 2010 and that federal officials say were done without the proper court orders.

The deal resolves allegations that HSBC violated the Servicemembers Civil Relief Act, which is designed to safeguard the legal rights of people in the military and protect against auto repossessions.

Under the law, judges are supposed to review and approve a car repossession in instances when a service member secured a loan on a car and made a payment on it before entering the military. Judges can also delay the transaction or appoint a lawyer to represent the military service member.

But the federal government says HSBC sidestepped the law by failing to obtain court orders before repossessing the cars.

“Service members should never have to worry that they will lose their cars while they answer our nation’s call to duty,” Vanita Gupta, head of the Justice Department’s Civil Rights Division, said in a statement.