Credit Union repossession notification settlement: Hughes FCU $7M

The plaintiffs are two former borrowers, and the case is about the letters that go out after a repossession, not the repossession itself. The preliminary approval order summarizes the allegation: “Plaintiffs contend that the notices failed to comply with applicable provisions of Arizona’s Uniform Commercial Code and seek statutory damages.” Hughes “denies that it violated any law and denies that Plaintiffs or Settlement Class Members are entitled to any recovery,” and the court has not decided who is right.

Do banks notify you before repo? The documents in this case deal with a different notice, the one that comes before the sale. Under Arizona’s version of the UCC, a lender that sells repossessed collateral “shall send … a reasonable authenticated notification of disposition” (A.R.S. 47-9611). In a consumer case, that letter must include, among other things, “a description of any liability for a deficiency” and a phone number where you can find out what it costs to get the car back (A.R.S. 47-9614). Whether a lender has to warn you before the tow truck comes is a separate question, and this settlement does not answer it.

The penalty explains how payments are calculated. When the collateral is consumer goods, Arizona law lets a borrower recover “in any event an amount not less than the credit service charge plus ten per cent of the principal amount of the obligation” (A.R.S. 47-9625). That is why the fund is split “pro rata … based on each member’s finance charge and amount financed, per Secured Obligation.” A bigger loan with more interest means a bigger check. The 14.69 percent figure is how much of that full statutory amount the settlement is expected to pay.

The class covers people (a) who financed a vehicle for consumer use through Hughes, or whose loan was later assigned to Hughes; (b) whose vehicle secured the loan; (c) “from whom HFCU, as secured party, repossessed the vehicle or ordered it repossessed”; (d) who had an Arizona address on the date of repossession; and (e) whose repossession fell between May 18, 2019 and August 4, 2023. Hughes’s records show 3,815 secured obligations, some with co-borrowers, for a total of 4,548 borrowers. If a notice came to you in the mail, the credit union’s records list you as a likely class member. The documents we read don’t say whether a car you turned in voluntarily counts; the administrator can tell you.

The $1,067 is an average, not a promise. Lawyers’ fees, costs and administration come out of the $7 million first. Class counsel, Flitter Milz and Rubin & Bernstein, will request up to $2,800,000 in fees and $50,000 in expenses, plus $15,000 service awards for each of the two plaintiffs. If all of that is approved, by our arithmetic, at most about $4.12 million is left before administration costs, and the fee alone is 40 percent of the cash. The draft final order defends the fee by valuing the cash and the canceled debt together, which it says “exceeds $32,603,000.00.” The judge can award less. To see your own estimate, use the Estimated Award page on the official site with the Notice ID and PIN from your letter.

The money comes as a check unless you choose another method early. The notice says it “will be sent to you by check unless you promptly request one of the other available payment methods offered via the Select Payment Method button on the website.” If more than $150,000 is left over after the first round of checks, there will be a second distribution. Any money left after that goes, under the draft final order, 50 percent to Angel Charities and 50 percent to the Arizona Foundation for Legal Services and Education. Payments over $2,000 may come with a Form 1099. Hughes will not issue 1099s for the canceled deficiencies unless an agreed accounting firm says it has to. Ask a tax adviser about your own situation.

For many class members, the debt relief may matter more than the check. A deficiency is what the lender says you still owed after the car was sold. Hughes says the total of these balances is about $25,603,000. Unless you send back a form saying you don’t want it, the settlement resolves that balance. There is one exception: the relief does not cover “certain claims where a Settlement Class Member reinstated a Secured Obligation and got the repossessed vehicle back before auction.”

On credit reports, Hughes will, “not later than sixty (60) days after the Effective Date,” ask the credit bureaus to delete the trade line for the car loan and the deficiency. The bureaus are separate companies, and the agreement sets limits on what Hughes has to do if a bureau doesn’t delete the entry. People searching this case also ask whether you can still buy a house with a repo on your credit. This settlement can’t answer that. All it does is request the deletion, and only after the settlement becomes final.

Yes. A letter that matches the official notice is genuine. The notice reads: “An Arizona Court has authorized this notice. This is not a solicitation from a lawyer. You are not being sued.” The only official channels are the site HarrisonRepoSettlement.com, info@HarrisonRepoSettlement.com, the administrator at 1-866-473-1092 and class counsel at 1-888-668-1225. The site is run on American Legal Claim Services’ platform, and your estimate sits behind the Notice ID and PIN printed on your letter.

The notice and FAQ we read do not ask class members to pay a fee or sign up with a lawyer, and the notice says the settlement is not a solicitation from a lawyer. The only item we found that asks for personal identifiers is the written objection, which asks for the last four digits of your Social Security number. Choosing a payment method other than a check is done through the Select Payment Method button on the official website, so never give payment details to anyone who calls or texts you. If someone calls or texts claiming to be from the settlement, hang up and call the number above. The notice asks people not to contact the court, Hughes or its lawyers with questions.

Some of the top search results for this topic are Facebook posts about a different case: Credit Acceptance’s settlement with state attorneys general. That case has nothing to do with Hughes or this Arizona class action.