BMW Financial Services North America has agreed to pay $2.1m (£1.5m, €1.7m) to settle a dispute over early termination fees with US military personnel relocated overseas.

The case originally spurred from two separate complaints lodged with the US Department of Justice (DOJ).

In both instances, a member of the air force, through vehicle trade-in and dealer rebate, had paid a capitalised cost reduction (CCS), of $4,000 in one case and $5,000 in the other, to lower future monthly payments.

The air force subsequently relocated the two members to Afganistan and Japan respectively. Under a US law, military personnel are permitted to cease payments for a lease contract in such circumstances, which the two lessees did.

However, BMW did not refund them any of the CCS paid up-front. After the two lessees lodged the complaint, the DOJ launched an investigation, and found that BMW had refused pro rata refunds of CCS to almost 500 personnel. The DOJ brought the case to court.

BMW has now agreed to refund all of the personnel affected, in proportion to how many days were left on the leasing contract. Additionally, it will pay each of them indirect damages equivalent to three times the refund, for a minimum of $500.

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Acting assistant attorney general John Gore, of the Civil Rights division, said: “We ask a great deal of those who serve our nation, including asking them to drop their affairs to deploy or serve in a new location, sometimes at a moment’s notice.

“Our men and women in uniform should be able to devote their entire energy to their service and defense of our nation, and the Justice Department is committed to protecting these rights when their obligations to the American people force them to change their plans.”

Motor Finance has asked the UK Ministry of Defence on whether similar arrangements where in place for UK army personnel that was transferred mid-lease.