Capital One to Pay $12M Over Alleged SCRA Violations

""Capital One"":https://www.capitalone.com/ agreed to pay approximately $12 million to settle a lawsuit alleging the bank did not uphold certain protections in the Servicemembers Civil Relief Act (SCRA), the ""Justice Department"":http://www.justice.gov/ announced Thursday.

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According to a statement, a range of provisions guaranteed by the SCRA were violated through certain actions including wrongful foreclosures, unlawful repossessions of motor vehicles, and improper denials of the 6 percent interest rate the SCRA requires for servicemembers.

Capital One will pay about $7 million in damages to servicemembers, including at least $125,000 in compensation for servicemembers who lost their home to a wrongful foreclosure.

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Another $5 million will be used to compensate servicemembers who were shorted on SCRA benefits regarding their credit card accounts, motor vehicle finance loans, and consumer loans.

The SCRA allows those serving in the military to postpone certain civil obligations so that those called to serve don't have to worry about paying their bills and losing their home or car.

""This settlement demonstrates that the Justice Department will take any and all actions to ensure that the rights of service members are protected. We rely on these brave men and women to protect the safety and security of this country and we will be vigilant in protecting their rights at home,"" said Assistant Attorney General for the Civil Rights Division Thomas E. Perez. ""We commend Capital One for taking steps to develop strong SCRA policies before they knew the full results of our investigation.""

Capital One agreed to pay more than $12 million if ongoing, independent audits reveal violations in accounts that it recently acquired from HSBC or ING Direct USA.

Capital One also adopted a policy offering a 4 percent interest rate to qualifying servicemembers.

Eligible servicemembers will be identified and compensated on accounts dating back to July 15, 2006.

The agreement is still awaiting for court approval and was filed Thursday in federal court in Alexandria, Virginia.

The lawsuit resulted from a referral to the Justice Department involving a claim that a servicemember did not receive an interest rate reduction on his Capital One account.