By Jonathan Stempel
(Reuters) -Hyundai's and Kia's American financing arm will pay $334,941 to settle charges it illegally repossessed vehicles belonging to military service members, the U.S. Department of Justice said on Wednesday.
According to papers filed in Los Angeles federal court, Hyundai Capital America violated the Servicemembers Civil Relief Act between 2015 and 2023 by repossessing 26 vehicles whose owners had begun paying off their loans prior to active duty.
The Justice Department said the law required the financing arm to obtain court permission before repossessing vehicles.
It cited as an example the 2017 repossession and sale of Navy Airman Jessica Johnson's three-year-old Hyundai Elantra, after the financing arm determined that she was on active duty but "not deployed."
Johnson still owed $13,796 on the car, and Hyundai Capital America realized in 2020 it should not have repossessed it, court papers show.
“Members of our Armed Forces should not have to worry about having their cars repossessed while they are in military service," Assistant Attorney General Kristen Clarke said in a statement.
Without admitting wrongdoing, Hyundai Capital America will pay $10,000 plus lost vehicle equity to each of the 26 service members, and repair their credit. It will also pay $74,941 to the U.S. Treasury "to vindicate the public interest."
Hyundai Capital America is based in Irvine, California.
"HCA takes pride in supporting our military families," it said in a statement. "Additionally, we have already taken steps to further enhance our compliance with all SCRA requirements."
The Justice Department in the last several years settled claims under the servicemembers law against several financing companies, including General Motors, Nissan and Wells Fargo financing arms.
The case is U.S. v. Hyundai Capital America, U.S. District Court, Central District of California, No. 24-03818.
(Editing by Diane Craft)
