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Banks

Santander Consumer USA to pay $9.35 million settlement over repossessed cars

WASHINGTON (Reuters) - Santander Consumer USA Holdings Inc will pay at least $9.35 million to resolve charges that it improperly repossessed the cars of members of the U.S. military, the U.S. Department of Justice said on Wednesday.

The settlement covers the repossessions of 1,112 motor vehicles SCUSA carried out between January 2008 and February 2013 without obtaining a court order, in violation of the Servicemembers Civil Relief Act.

SCUSA neither admitted nor denied any wrongdoing, and a spokeswoman said the lender has already set aside funds to cover the cost of the settlement. SCUSA is the tenth largest U.S. auto lender, according to data provider Experian Automotive.

The rapid growth of the auto finance market has prompted U.S. law enforcement officials to examine lending practices more closely. The amount of outstanding auto loans reached an all time high of $866 billion as of the end of 2014, according to Experian Automotive.

The Justice Department is investigating whether auto lenders’ policies have resulted in overcharging minority borrowers for loans and whether issuers of securities backed by subprime auto loans have made appropriate disclosures to investors.

SCUSA received a subpoena in 2014 as part of prosecutors’ subprime auto probe, but the company spokeswoman said Wednesday’s settlement was unrelated to that matter.

Reporting by Lindsay Dunsmuir; Editing by Susan Heavey, Bernard Orr

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