The Department of Justice is Making a Statement on the SCRA
Posted June 18th, 2026 by Peter Lukevich, JD
The Servicemembers Civil Relief Act (SCRA) is enforced by the Civil Rights Division of the Department of Justice (DOJ. Recently the DOJ has been very active investigating and conducting litigation to assess significant settlements that include large restitution amounts and penalties. This month, we thought it would be worthwhile to review those recent DOJ case results.
In San Antonio, TX, an investigation of Vehicle Management Solutions, Inc. (VMS) recently concluded. After an extensive review of all the VMS auction/lien sales over the span of 5 years, the DOJ and VMS resolved the allegations against the towing company for $280,000. The parties agreed that $220,000 would be paid as restitution to the affected service members and VMS would pay a $60,000 civil penalty as well as make policy and training changes to avoid future violations. This case grew out of one complaint from an active-duty member from 2024. In addition to the settlement agreement, VMS had to incur their own administrative costs and legal fees and costs.
Another example of the Department’s prosecution of SCRA compliance is the United States v. S&K Towing in San Clemente, CA. In this case the DOJ alleged that S&K had repeatedly violated the statute between August of 2020 and April of 2025. During this period S&K auctioned or otherwise disposed of over 100 vehicles that were owned by servicemembers. This lawsuit was filed just over two months ago on March 25, 2026 and has not been resolved as of the day of this post. The court is being asked to rule that the company violated the SCRA; to award monetary damages to the service members, and take other steps needed for restitution and to award penalties. It seems likely that the resolution of this case will be costly and require significant changes to business practices on how screening is completed to determine the active-duty status of a registered owner.
It is important to note that the DOJ does not restrict how an operator gets rid of a vehicle. Disposition is broadly defined and includes any form including lien/auction, disposals for salvage, a sale to a dismantler, or scrap iron processor. If you think that selling a vehicle at auction or some other form of sale is the only reason the DOJ comes calling is risky and incorrect. From Texas, to California, to Massachusetts, to Hawaii, Virginia, Florida, and many other locations in the U.S. the DOJ is ready, willing, and able to investigate and prosecute allegations of violations of the SCRA.
To protect yourself and your business you must train your employees, maintain up-to-date SCRA compliance policies and procedures, and take all the reasonable steps you can to determine if a registered owner (ROs) is a member of the active-duty military. Service Member Data (SMD) can help. At SMD we have worked with towing companies across the U.S. to get the information you need before you dispose of a vehicle. We can work with you to screen ROs, develop policies and procedures and even obtain SCRA waivers.
Whether your company is located near a military installation or not, you should consider protecting yourself from an unintentional sale/disposition of a vehicle owner by an active-duty military member. Taking steps now to avoid having the DOJ or your own state attorney general commence litigation to enforce just one complaint is critical. Let SMD be your partner in SCRA education and compliance.
