Westlake Services: $925K in Two SCRA Settlements | Why the DOJ Came Back

Westlake Services, a subprime auto lender based in Los Angeles, has been the subject of two separate DOJ SCRA enforcement actions, a distinction no auto lender wants to hold.

In September 2017, Westlake and its subsidiary Wilshire Consumer Capital paid $700,000 for illegally repossessing 70 servicemembers’ vehicles without court orders. Then in September 2022, the DOJ returned with an addendum: Westlake owed an additional $225,000 for failing to provide interest rate benefits to 250 servicemembers as required by the SCRA.

Total: $925,000 across two settlements, 320 servicemembers affected.

Phase 1: The Repossession Settlement (2017)

What the DOJ Found

From 2011 to 2016, Westlake and Wilshire repossessed 70 vehicles owned by active-duty servicemembers without first obtaining court orders, a direct violation of 50 U.S.C. Section 3952.

The violations followed the same pattern as every other auto lending SCRA case: the repossession workflow had no military status verification step. When a borrower defaulted, the standard collections process ran. The standard process did not check whether the borrower was a protected servicemember.

The Settlement Terms

Westlake agreed to:

• Pay $10,000 to each of the 70 affected servicemembers, plus compensation for any lost equity in the repossessed vehicle with interest
• Repair the credit of all affected servicemembers
• Pay a $60,788 civil penalty to the United States
• Adopt new SCRA compliance policies and procedures
• Implement DMDC verification before future repossessions

Phase 2: The Interest Rate Settlement (2022)

What the DOJ Found

Five years after the initial settlement, the DOJ addressed a second category of violations: Westlake had failed to properly provide the 6% interest rate cap required under 50 U.S.C. Section 3937.

Specifically, 250 servicemembers either did not receive interest rate benefits at all, or had to wait more than 60 days to receive them after submitting valid requests with military orders. Under the SCRA, the interest rate reduction should be applied retroactively to the date the servicemember entered active duty, not the date the lender gets around to processing it.

The Settlement Terms

The addendum required Westlake to:

• Pay $185,460 in compensation to 250 servicemembers who did not receive timely interest rate benefits
• Pay an additional civil penalty
• Modify its interest rate reduction process to ensure timely compliance

Total across both phases: approximately $925,000.

What Went Wrong

Westlake’s case illustrates two distinct compliance failures.

The first was structural: no military status verification before repossession. This is the same failure that cost Wells Fargo $9.5 million and Capital One $12 million. The fix is the same: DMDC check before every repo.

The second was operational: even after the consent decree required SCRA compliance, Westlake’s interest rate reduction process was too slow or failed entirely for 250 servicemembers. Processing a rate cap request shouldn’t take 60+ days. The servicemember submits orders, you verify, you reduce the rate. The delay suggests the process was manual, understaffed, or both.

Why the DOJ Came Back

The 2022 addendum is a warning to every company under a consent decree: the DOJ monitors compliance. The original 2017 settlement resolved the repossession violations. But consent decrees typically include ongoing monitoring and auditing requirements. When that monitoring revealed the interest rate failures, the DOJ imposed additional penalties.

This is the lifecycle of SCRA enforcement: violation, settlement, consent decree, monitoring, and (if compliance gaps persist) additional enforcement. The consent decree is not the end of the story. It’s the beginning of the DOJ watching everything you do.

Why This Case Matters for Subprime Lenders

Westlake is a subprime auto lender, not a household name. That’s the point. The DOJ does not only pursue national brands. Subprime lenders, BHPH dealers, and regional finance companies face the same enforcement as Wells Fargo and Capital One.

If anything, subprime lenders face higher SCRA risk. Their borrower populations include enlisted servicemembers who are statistically more likely to have subprime credit and more likely to finance vehicles through non-traditional channels. The intersection of subprime lending and military populations is exactly where SCRA violations cluster.

The DOJ knows this. Subprime auto lending is an enforcement priority.

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Sources: DOJ Press Release, September 27, 2017 (justice.gov/archives/opa/pr/justice-department-obtains-700000-servicemembers-resolve-allegations-westlake-services-and); DOJ Press Release, September 27, 2022 (justice.gov/archives/opa/pr/westlake-financial-pay-over-225000-resolve-servicemembers-civil-relief-act-claims)