Uber’s preferred auto loan lender illegally repossessing active military’s vehicles

Photo Credit: U.S. Chamber of Commerce

Ride-sharing giant Uber has been linked to auto lender Santander Consumer USA, who has just agreed to pay over $9 million to resolve the accusation that it illegally repossessed more than 1,100 vehicles from active duty military members.

The Verge reported that Uber works closely with the company, referring drivers with low credit to Santander loan officers.  The partnership may come as a surprise to some as this is not the first time the loan company has been the subject of criminal investigation.  There have been several inquiries into Santander’s subprime auto loan arm.

According to the U.S. Department of Justice, Santander violated the Servicemembers Civil Relief Act (SCRA), a consumer protection statute that requires lenders to obtain court approval before repossessing assets of active duty soldiers.

Since the Civil War, military personnel have been allowed some degree of special protections from civil claims like bankruptcy, foreclosure, and divorce. SCRA, formerly known as the Soldiers and Sailors Civil Relief Act, was enacted in 1919 to allow military personnel relief from debt collectors while fighting in World War I. The statute still stands today and companies are still required to verify the military status of loan holders against a federal database.

The purpose of the SCRA is to make sure that military members do not return from active duty and find their homes foreclosed or their cars and other belongings repossessed.

Joshua Davis joined the Army and was sent to boot camp shortly after buying a car.  The 19-year-old soldier got his loan from Santander and even though he informed his loan officer that he would be leaving, the company started making collections calls shortly after his departure.

Eventually, the bank seized Davis’ car from outside his home. Although he was still in boot camp, Santander proceeded to bill Davis for $9,000, sold his car at auction, and reported him to the credit bureaus.

According to The Verge, Davis reached out to the U.S. Army’s Legal Assistance Program for help, which asked the Department of Justice to look into a potential violation of the SCRA. The investigation reviewed Santander’s compliance of the Act from 2008–2013.  It discovered a pattern of abuse described by the DOJ as “intentional, willful, and taken in disregard for the rights of service members.”

“Those who answer this nation’s call to duty understandably have much on their minds while they are in military service,” said Acting Assistant Attorney General Vanita Gupta of the Civil Rights Division. “Whether their car will be seized and sold at auction should not be an additional worry.”

Uber’s affiliation with Santander has attracted much criticism. The ride-sharing giant has omitted any mention of its partner’s subprime business in promotional materials since Santander’s subprime arm records were subpoenaed in August.

Santander’s violations of the SCRA have been a big concern for military veterans working for Uber. Last September, Uber launched UberMILITARY, a campaign to employ at least 50,000 military veterans and active duty personnel. To date, over 10,000 military personnel have signed up for the program.

UberMILITARY aggressively recruited veterans at job fairs, promising “flexible” and “well paid work.” Veterans who did not own a car, or who could not afford one, were directed to Santander for financing.

Last September, Uber Spokesperson Ariel Goren said, “We never want not owning a car to be a barrier to driving with Uber. That is why partnering with Uber gives drivers the option to finance a vehicle.” At the time, she pointed out that “this is particularly salient for veterans who may have incomplete credit histories due to deployment.”

Uber has not released any data on how many of its drivers took out financing through Santander.  It would not discuss the settlement or its partnership with the auto lender.

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