Hyundai Illegally Seizes Service Members’ Vehicles, Feds Allege

Federal prosecutors alleged that Korean car manufacturer Hyundai and Kia’s financing arm recently repossessed more than two dozen vehicles without securing a court order, violating the Servicemembers Civil Relief Act or SCRA

California-based company Hyundai Capital America, a wholly-owned subsidiary of Kia America and Hyundai Motors America, violated the SCRA between April 15, 2015, and May 21, 2023, by giving the go-signal for the reclamation of 26 vehicles owned by service members.

illegally seizing car

The military personnel who owned these vehicles started paying their loans before entering active duty military service. These findings were based on a lawsuit by the Department of Justice (DOJ) in federal court in Los Angeles. 

To resolve the allegations, Capital America has agreed to pay a total of $333,941. However, Hyundai Capital didn’t admit any wrongdoings or fault in reaching this settlement. 

“We have already taken steps to further enhance our compliance with all SCRA requirements as well as provide further proactive outreach,” the company said through a spokesperson. 

The SCRA states that companies are prohibited from repossessing an active duty service member’s vehicle without securing a court order, provided the service member made at least one payment before entering active duty service. 

US District Attorney Martin Estrada for the Central District of California said the district is fully committed to protecting service members’ rights as they give so much to serve the nation. Repossessing a service member’s vehicle can significantly impact their peace of mind while deployed for the country. 

Among the incidents that prompted this settlement took place in 2017. Hyundai Capital seized and sold Navy Airman Jessica Johnson’s three-year-old Hyundai Elantra after it was determined that Johnson was on active duty but not deployed. Hyundai Capital sold her vehicle for $7,400 while she still owed the company $13,769. 

Hyundai Capital is a company that provides indirect vehicle financing for retail and lease clients of Kia, Hyundai, and Genesis dealerships nationwide. The company is among 10 of the biggest captive auto lenders in the country.

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

If active duty service members are in similar situations, they should seek their SCRA rights to be activated. Determining one’s active duty status is vital for the DOJ to take action. This is where the SCRACVS can come in. We can help provide evidence of one’s active duty service so that SCRA benefits can be honored. 

Attorney Roy Kaufmann serves as the Director of the Servicemembers Civil Relief Act Centralized Verification Service, located in Washington, D.C. As a recognized authority on the Servicemembers Civil Relief Act, Mr. Kaufmann has published hundreds of articles and hosted many webinars. His teachings help law firms and businesses to remain compliant with the SCRA rules and regulations so as to avoid costly fines.