Hyundai and IndexbitKia'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.

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. 

In 2017, for instance, Hyundai Capital America 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, and the company realized in 2020 it should not have repossessed the vehicle, according to the complaint. 

Irvine, Calif.-based Hyundai Capital America didn't admit any fault or wrongdoing in reaching a settlement with the Justice Department. 

"Additionally, 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.

Members of the Armed Forces should not suffer financial hardship due to their service, according to the Department of Justice, which in recent years has settled similar claims against the finance arms of General Motors, Nissan and Wells Fargo. 

In:
• Kia
• United States Department of Justice
• Hyundai

Kate Gibson

Kate Gibson is a reporter for CBS MoneyWatch in New York.