WASHINGTON — Nissan Motor Acceptance Corp., the financial services arm for Nissan North America, settled a federal lawsuit Thursdays alleging violations of a law that helps members of the military by suspending certain financial obligations during active duty.

The $3 million settlement was reached the same day the government’s complaint was filed; the investigation, however, had been going on since at least December 2016 when the government first notified Nissan that it was looking into the alleged misconduct.

The lawsuit alleged that Nissan repossessed at least 113 service members’ vehicles without a court order and failed to refund certain upfront payments after many service members terminated their leases, as required by law. Nissan did not admit to any wrongdoing in the settlement.

The purpose of the Servicemembers Civil Relief Act is “to enable [service members] to devote their entire energy to the defense needs of the Nation,” according to the government’s complaint.

The amounts the government contended Nissan failed to refund were capitalized cost reduction (CCR) payments, which are initial payments, including the value of a trade-in, intended to reduce the cost of financing. Nissan argued that those payments do not qualify as “lease amounts” that need to be refunded under the law. Nonetheless, Nissan revised its policy effective November 2018 to conform to the government’s interpretation, according to the settlement.

The settlement covers conduct alleged to have occurred from 2008 through November of 2018. The agreement specifies that over $2.9 million of the $3 million settlement will be put in a fund to compensate the 113 service members whose vehicles were repossessed, as well as those who didn’t get their CCR refunds; the rest will go to the Treasury.

It also requires Nissan to make efforts to restore the credit ratings of all service members and co-borrowers whose vehicles were repossessed, but credit bureaus ultimately decide whether to make requested modifications to a credit report.

Going forward, Nissan must modify its policies and training related to repossessions and refunds of CCR payments to ensure the problem doesn’t happen again. The Justice Department will monitor Nissan over the next four years to ensure that it complies.

In an email responding to a request for comment, Nissan said: “NMAC denies any wrongdoing but has agreed to settle with the Department of Justice in the best interest for all parties. NMAC worked closely with the DOJ to reach the settlement agreement and to provide appropriate relief for affected service members.”

It is the 10th settlement reached between the government and an auto finance provider for violations of the law protecting service members since 2015, according to the Justice Department.

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