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The nation’s largest used car dealer, CarMax, will pay at least $420,000 to settle allegations that it seized the cars of US employees without court orders, the US Department of Justice announced Monday.
In addition to compensating the affected service members, the company will pay a civil penalty of $79,380 to the US, according to the DOJ.
Federal officials have accused CarMax of violating the Servicemembers Civil Relief Act (SCRA) by seizing the vehicles of members of the military without first obtaining court approval.
“Federal law prohibits businesses from repossessing service members’ vehicles without a court order,” said Assistant Attorney General Harmeet K. Dhillon. “The Department of Justice is proud to protect the rights of those who serve in our military and will continue to enforce the laws that protect them.”
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Ford Mustangs and other used cars for sale are parked at the CarMax dealership on April 24, 2025 in San Diego, California. (Photo by Kevin Carter/Getty Images / Getty Images)
The violation is alleged to have occurred between March 1, 2018, and at least Oct. 24, 2023, affecting at least 28 service members. Each is entitled to a minimum payment of $15,000, plus the lost value of the vehicle and interest on that value.
As part of the settlement, CarMax – which neither admitted nor denied the allegations – agreed to review its policies and procedures to better protect the rights of US service members.
In a statement, CarMax said it fully cooperated with the DOJ to reach the decision and strengthen its existing compliance program. The company also said that this decision does not constitute an admission of wrongdoing by CarMax Auto Finance.
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CarMax will pay at least $420,000 in punitive damages after the DOJ accused the retailer of illegally taking cars from US workers. (John Moore / Getty Images / Getty Images)
“Supporting our nation’s military is rooted in CarMax’s tradition, and we take these issues seriously given our long-standing commitment to service members, veterans and their families,” the company said. “We are – and remain – focused on providing our customers with relevant, transparent and accurate information, and we are committed to serving our military community with care and respect.
“Since 2003, CarMax Auto Finance has provided assistance to more than 26,000 service members and their dependents in compliance with the SCRA, by reducing financing costs and protecting against car repossession,” CarMax continued. “In keeping with CarMax Auto Finance’s commitment to continuous improvement and support for those who serve, we have enhanced our SCRA procedures, expanded our thorough screening and outreach, and strengthened employee training to help ensure that all eligible service members and dependents receive the protections they deserve.”
The SCRA is a federal law designed to protect the legal and financial interests of US service members and their families while on active duty.
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It prevents auto lenders and leasing companies from repossessing a service member’s vehicle without a court order if the borrower makes at least one payment before entering military service.
For reservists, those protections begin when they receive official orders to report to active duty.
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Service members or their dependents who believe their rights have been violated are encouraged to contact the nearest Army Legal Aid Program office.
