GM Financial SCRA Case: 71 Repossessions, Over 1,000 Lease Violations

What happened

On September 30, 2022 the United States sued AmeriCredit Financial Services, Inc., which does business as GM Financial, in the Fort Worth Division of the Northern District of Texas, and filed a proposed consent order with the complaint. The complaint describes GM Financial as a wholly owned subsidiary of General Motors that finances Buick, Cadillac, Chevrolet and GMC sales and leases and offers subprime auto loans under the AmeriCredit brand, with revenue exceeding $13 billion in 2021.

Three separate failures were charged, each counted from January 1, 2015. GM Financial refused 14 qualifying lease terminations outright, and the complaint says many of those refusals hit servicemembers in Alaska or Hawaii holding separation or retirement orders back to the continental United States. It mishandled more than 1,000 terminations it had approved, billing servicemembers after the termination date, pursuing deficiency balances, and failing to refund prepaid amounts within 30 days, in some cases for months or even years, with many refunds paid only after the investigation began. And it repossessed 71 vehicles belonging to protected servicemembers without a court order. The complaint charged the lease failures under Section 3955 and the repossessions under Section 3952.

The investigation started with one Army Chief Warrant Officer 3. He leased a 2017 Chevrolet Volt in Austin, Texas, received a commander's memorandum in August 2017 saying he would deploy outside the continental United States from October 2017 to August 2018, and was told on September 20, 2017 that his termination was approved. He returned the car on October 13, 2017 with the lease paid through October 25. On or about April 5, 2018, while serving overseas, he received a demand for $15,093.71 covering the remaining payments and sale costs. In July 2018, after the United States began investigating, GM Financial told him the termination was approved and he did not owe the amount demanded. It still did not refund the several hundred dollars he had paid for the period after his termination date.

The court entered an amended consent order on October 4, 2022. GM Financial neither admitted nor denied the allegations, and the order runs four years from entry.

The law behind this: 50 U.S.C. § 3955

Termination of residential or motor vehicle leases: read the statute , or read § 3955 in plain English, with its enforcement record .

The last thing servicemembers should be worried about while deployed is paying off vehicle leases they don’t want and can’t use.

Who was covered

Three groups, each reviewed from January 1, 2015: the servicemembers behind the 14 qualifying lease termination requests GM Financial refused; servicemembers whose approved terminations were processed wrongly, leaving them billed after the effective date or waiting on refunds of prepaid lease amounts and capitalized cost reduction; and the owners of the 71 vehicles repossessed without a court order. Non-servicemember co-lessees and co-owners share in the refund and equity portions, while the extra damages go to the servicemember.

What the settlement paid

• $3,534,171 deposited into an interest-bearing escrow account within 14 days of entry (consent order paragraph 35). The order notes that GM Financial was still reviewing account data, including data from legacy systems, that could change what it owed on approved terminations under paragraph 23: if more is owed it must add to the escrow, and if less, it may withdraw the unallocated funds.
• Refused terminations: lease payments and charges paid after the earliest of the vehicle's return, the denial, or 15 days after notice and orders were submitted, plus prepaid lease amounts for that period, plus an additional $5,000 to each of those servicemembers who returned the vehicle (paragraph 18).
• Mishandled terminations: the amount wrongly kept, with interest under 28 U.S.C. § 1961, plus indirect damages of $500 or three times that amount, whichever is larger. The order excuses GM Financial from paying any lessee whose paragraph 22 amount comes to less than $25 (paragraph 23).
• Repossessions: $10,000 per account, paid entirely to the SCRA-protected servicemember on the note, plus lost equity measured against the NADA retail value at repossession and interest on that equity, both split equally among the owners on the title (paragraphs 27 and 28). Servicemembers had three and a half years from notification to return the declaration and release (paragraph 34).
• A $65,480 civil penalty, credit bureau corrections on both the lease and repossession accounts, no collection of post-repossession deficiencies, and refunds of any deficiency already paid.

Why this case matters

Most of the violations here were not refusals. GM Financial approved the terminations and then got the money wrong, over 1,000 times by the complaint's count, which means an approval is not proof that an account was closed correctly. The officer at the center of the case was approved, returned the car early, and was still sent a demand for more than $15,000 while deployed. If you ended a GM Financial lease on orders, compare your final statement against the 30-day refund rule for prepaid amounts and capitalized cost reduction.