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Hyundai’s finance unit illegally seized military vehicles, feds allege
The American financial arm of Hyundai and Kia repossessed more than two dozen vehicles leased by U.S. military personnel without first obtaining court orders as required by law, federal prosecutors alleged Wednesday.
Irving, California-based Hyundai Capital America, a wholly owned subsidiary of Hyundai Motor America and Kia America, violated the Servicemembers Civil Relief Act (SCRA) between 2015 and 2023 by repossessing 26 vehicles belonging to military service members who began paying back their loans before beginning active duty, according to a lawsuit filed by the Department of Justice in Los Angeles federal court.
The company agreed to pay $333,941 to resolve the allegations, the agency announced in a news release. release Wednesday afternoon.
Hyundai Capital did not admit any fault or wrongdoing in reaching the agreement.
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“We have already taken steps to further improve our compliance with all SCRA requirements, as well as provide greater proactive disclosure,” a company spokesperson said in an email.
Auto financing and leasing companies are prohibited by federal law from repossessing a service member’s vehicle without a court order, as long as the service member has made at least one payment before entering military service.
“We are fully committed to protecting the rights of military personnel who give so much to protect our country,” said U.S. Attorney Martin Estrada for the Central District of California in a statement. “Something as simple as repossessing a vehicle can have a significant impact on a service member’s peace of mind as he or she deploys in defense of the United States.”
In 2017, for example, Hyundai Capital seized and sold a three-year-old Hyundai Elantra belonging to Navy aviator Jessica Johnson after determining she was on active duty but “not deployed,” according to legal documents. Johnson still owed $13,769 on the car, which Hyundai sold for $7,400, according to the legal complaint.
Between April 15, 2015, and May 21, 2023, Hyundai illegally repossessed 25 additional motor vehicles owned or leased by military personnel protected by the SCRA, the government alleged.
Hyundai Capital provides indirect vehicle financing to retail and leasing customers of Hyundai, Genesis and Kia dealerships nationwide and is among the nation’s 10 largest captive auto lenders, which serve as the financing arms of auto manufacturers, offering loans and leasing for the brands they sell. .
In recent years, the government has resolved similar complaints against the financial arms of General Motors, Nissan and Wells Fargo.