Watch CBS News

Hyundai's finance unit illegally seized service members' vehicles, feds allege

Hyundai and Kia's American financing arm repossessed more than two dozen vehicles leased by U.S. military service members without first getting court orders, as legally required, federal prosecutors alleged on Wednesday.

Irving, Calif.-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 reclaiming 26 vehicles owned by service members who began paying off their loans before starting active duty, according to a lawsuit filed by the Department of Justice in federal court in Los Angeles. 

The company has agreed to pay $333,941 to resolve the allegations, the agency announced in a news release late Wednesday.

Hyundai Capital did not admit any fault or wrongdoing in reaching the settlement.

"We have already taken steps to further enhance our compliance with all SCRA requirements as well as provide further proactive outreach," a spokesperson for the company stated in an email.

Auto finance and leasing companies are barred by federal law from repossessing a service member's vehicle without a court order, so long as the service member made at least one payment before entering military service.

"We are fully committed to protecting the rights of service members, who give so much to protecting our country," U.S. Attorney Martin Estrada for the Central District of California said in a statement. "Something as simple as a vehicle repossession 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 instance, Hyundai Capital seized and sold a a three-year-old Hyundai Elantra belonging to Navy Airman Jessica Johnson after determining that 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 unlawfully repossessed 25 additional motor vehicles owned or leased by SCRA-protected service members, the government alleged.

Hyundai Capital provides indirect vehicle financing for retail and lease customers of Hyundai, Genesis and Kia dealerships nationwide, and is among the nation's 10 biggest captive auto lenders, which serve as the financing arms of auto manufacturers, offering loans and leases for the brands they sell.

The government in recent years has settled similar claims against the finance arms of General Motors, Nissan and Wells Fargo. 

View CBS News In
CBS News App Open
Chrome Safari Continue
Be the first to know
Get browser notifications for breaking news, live events, and exclusive reporting.