US sues Hyundai and Kia for seizing service workers’ vehicles

By Jonathan Stempel

(Reuters) – The U.S. government on Wednesday sued the U.S. financing arms of Hyundai and Kia, accusing them of taking back vehicles leased by military personnel without first obtaining court approval as required by law.

According to a complaint filed in federal court in Los Angeles, 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 before their active duty.

The Justice Department has said members of the armed forces should not suffer financial hardship because of their service.

In the complaint, the Justice Department cited as an example the 2017 seizure and sale of Navy pilot Jessica Johnnson’s three-year-old Hyundai Elantra after the financing division determined she was on active duty but “not deployed.”

Johnson still owed $13,796 on the car, and the financing department realized in 2020 that it should not have repossessed the car, the complaint said.

Hyundai Capital America, based in Irvine, California, and the automakers did not immediately respond to requests for comment.

The lawsuit seeks an end to improper seizures and a declaration that the case involved “a matter of significant public importance.”

The Justice Department has settled claims under the Service Members Act against several financing companies in recent years, including the financing companies of General Motors, Nissan and Wells Fargo.

The case is U.S. v. Hyundai Capital America, U.S. District Court, Central District of California, No. 24-03818.