TUCSON, Ariz.—Hughes Federal Credit Union has agreed to a $7 million class action settlement to resolve allegations it violated Arizona law by failing to provide required notices to borrowers whose vehicles were repossessed, according to TopClassActions.com.
The settlement, which does not include an admission of wrongdoing by the credit union, also provides for the resolution of approximately $25.6 million in disputed loan deficiency balances and credit reporting relief for affected borrowers.
According to TopClassActions.com, the lawsuit alleged Hughes FCU failed to provide proper notification letters after repossessing vehicles, depriving borrowers of information about their rights as required under Arizona law.
Who Is Eligible?
The settlement covers individuals who meet all of the following criteria:
- Financed the purchase of a motor vehicle through Hughes Federal Credit Union.
- Had their vehicle repossessed by the credit union between May 18, 2019, and Aug. 4, 2023.
- Had an Arizona address at the time of repossession.
Payments Expected to Average $1,067
According to TopClassActions.com, eligible class members will receive cash payments based on the amount financed and the finance charges associated with their vehicle loans.
The settlement website estimates payments will represent approximately 14.69% of the full statutory damages, with an average payment of $1,067 per class member. Actual payments could be higher or lower depending on individual circumstances.
Any money remaining after the initial distribution will be used for a second round of payments. If funds remain after that distribution, they will be donated to a court-approved charity.
$25.6 Million in Deficiency Balances Addressed
In addition to the cash settlement, the agreement resolves approximately $25.6 million in disputed deficiency balances associated with class members’ vehicle loans.
Deficiency balances generally arise when a repossessed vehicle is sold for less than the amount owed on the loan, leaving the borrower responsible for the difference.
According to TopClassActions.com, eligible borrowers who remain in the settlement will have those disputed balances resolved. Borrowers who opt out will not receive that relief.
Credit Reporting Relief Included
The settlement also includes provisions addressing borrowers’ credit reports.
Under the agreement, Hughes FCU will request that credit reporting agencies delete the tradelines associated with the affected vehicle loans and deficiency balances from class members’ credit files.
Those requests must be made within 60 days after the settlement’s effective date.
Key Deadlines
According to TopClassActions.com, the settlement establishes the following deadlines:
- Nov. 20, 2026: Deadline for eligible borrowers to request exclusion from the settlement or file an objection.
- Dec. 7, 2026: Scheduled final approval hearing.
Eligible borrowers do not need to submit a claim form to receive benefits. Those who do not exclude themselves will automatically receive applicable settlement benefits if the agreement receives final court approval.
Hughes Federal Credit Union, which offers consumer loans, credit cards, mortgages and other financial services in Arizona, has denied wrongdoing but agreed to the settlement to resolve the litigation.
The agreement remains subject to final court approval.
