The Hudson Valley Federal Credit Union has settled legal action taken against it by the U.S. Attorney’s Office in Manhattan over allegations of the bank’s illegal repossession of active-duty military members’ vehicles.
The Poughkeepsie-based bank acknowledged the settlement in an email sent by a spokeswoman. According to the U.S. Attorney’s Office, it has agreed to pay $30,000 to the federal government to settle the claims, while not admitting liability. An additional $65,000 will go to compensate service members whose cars were seized, federal prosecutors said.
“Protecting service members is a high priority for this office and the country. We are pleased that Hudson Valley has taken these remedial steps, and this office will continue to protect the rights of men and women in uniform,” U.S. Attorney Geoffrey Berman of the Southern District of New York said in a statement.
In a complaint filed by the office on Friday, federal prosecutors claimed a pattern and practice of the bank repossessing vehicles in violation of the Servicemembers Civil Relief Act, which requires lenders to secure court orders before repossessing the vehicles of active-duty service members.
Federal prosecutors claimed in a court filing Friday that the bank repossessed at least nine vehicles between 2008 and 2014, despite protections. No policy to guard against such violations was in place at HVFCU until August 2014, the U.S. Attorney’s Office claimed.
The U.S. Attorney’s Office pointed to two service member suits that claimed the credit union seized their vehicles, despite qualifying for protection under the SCRA.
The bank failed to run a check through a federal database of active-duty status for members, the U.S. Attorney’s Office claimed. The lawsuits alleged that, not only was their service status not checked, the bank rejected requests for SCRA protection. In one instance, a service member stationed in South Korea tried multiple times to notify the credit union that he was on active duty, yet his car was still repossessed.
Of the nine service members who lost their vehicles to repossession, four of them are still on active duty, according to the U.S. Attorney’s Office.
In its statement, the bank said that only seven instances were ultimately identified by federal prosecutors. According to the U.S. Attorney’s Office, the agreement requires Hudson Valley to provide $10,000 in compensation to each of the six affected service members, plus any lost equity in the vehicle with interest. An additional service member, whose vehicle was repossessed but returned within 24 hours, will receive $5,000, and Hudson Valley has also taken steps to repair the credit of the affected service members, federal authorities said.
“The men and women of our military deserve our unwavering support so when we learned of the DOJ’s inquiry in 2016, we immediately reviewed our procedures to ensure compliance with the SCRA,” HVFCU president and CEO Mary Madden said in a statement.
In addition, HVFCU said it took additional steps, beyond regulatory requirements, including expanding annual SCRA training to all staff and creating a dedicated link and phone number for service members on HVFCU’s website.
A spokeswoman with the Manhattan U.S. Attorney’s Office was not immediately available for comment.