CarMax to pay nearly $500,000 in DOJ settlement

Fortune 500 used car retailer CarMax, based in Goochland County, has agreed to pay nearly $500,000 to settle allegations that it violated the Servicemembers Civil Relief Act by illegally repossessing motor vehicles owned by members of the military.

The Department of Justice said Monday that CarMax will pay at least $420,000 in damages to service members and a civil penalty of $79,380 to the federal government.

The SCRA is a federal law designed to protect service members that generally prohibits auto finance or leasing companies from repossessing a service member’s vehicle without first obtaining a court order, provided the service member made at least one payment before entering military service. For reservists, these protections begin when the member receives orders to report for military service.

“The Department of Justice is proud to defend the rights of those who serve in our military and will continue to vigorously enforce the laws that protect them,” Assistant Attorney General Harmeet K. Dhillon of the Justice Department’s Civil Rights Division said in a statement.

The DOJ alleges that CarMax repossessed at least 28 service member vehicles without obtaining court orders as required by federal law, and that it repossessed some vehicles even after owners told CarMax they were in military service. The alleged violations occurred between March 2018 and October 2023, according to the settlement.

The DOJ alleged that most of the violations occurred because CarMax’s policies didn’t require the company to search the Defense Manpower Data Center website to determine an owner’s military status before repossessing a vehicle in a “charge-off” status. Charge-offs occur when lenders or creditors deem that it’s unlikely a debt will be collected after 120-180 days of non-payment. The DOJ also alleged that CarMax failed to extend SCRA protections to reservists who had received orders to report for active duty.

In addition to the civil penalty and compensation to service members, the settlement requires CarMax to revise its policies and procedures to ensure compliance with the SCRA, including verifying borrowers’ military status before repossession and obtaining a court order or valid waiver before repossessing or selling vehicles owned by protected service members.

In an email to Virginia Business, CarMax said it “cooperated fully” with the DOJ, but noted the resolution doesn’t constitute an admission of wrongdoing by CarMax Auto Finance, its finance arm.

“Supporting our nation’s military is rooted in CarMax’s culture, and we take these matters seriously given our long-standing commitment to service members, veterans and their families,” CarMax said in its statement. “Our focus has been — and remains — on providing our customers with a fair, transparent and straightforward experience, and we are committed to serving our military community with care and respect.”

The company said that since 2003, it has provided relief to more than 26,000 service members and their dependents in accordance with the SCRA.

“Consistent with CarMax Auto Finance’s commitment to continuous improvement and supporting those who serve, we have enhanced our SCRA processes, expanded proactive screening and outreach and reinforced employee training to help ensure all eligible service members and their dependents receive the protections they deserve,” the company said in its email.

The DOJ said that since 2011, it has obtained over $484 million in monetary relief for over 149,000 service members through its enforcement of the SCRA.

Founded in 1993 as a subsidiary of electronics retailer Circuit City, CarMax reported more than $26 billion in fiscal 2025 revenue, down 0.7% from the previous year. The company has more than 250 stores in 41 states. CarMax has approximately 30,000 employees, although it has reduced its headcount by approximately 580 across two rounds of layoffs since October 2025. As of summer 2025, its total count included 3,300 in Virginia, but many Virginia employees were terminated in the recent layoffs.

Earlier this month, the used car retailer named hospitality executive Keith Barr as its new president and CEO, effective March 16. Bill Nash, the previous president and CEO, departed in late 2025 amid forecasts of dismal third quarter earnings and a broader leadership shake-up.