Hyundai Capital America SCRA Case: 26 Repossessions, No Court Order

What happened

The United States sued Hyundai Capital America on May 8, 2024 in the Central District of California, alleging a pattern or practice of repossessing 26 vehicles leased or owned by SCRA-protected servicemembers without first obtaining court orders. The complaint describes the company as a wholly owned subsidiary of Hyundai Motor America and Kia America and one of the top-10 captive auto-finance companies in the country, financing retail and lease customers of Hyundai, Genesis and Kia dealerships. DOJ's announcement that day said Hyundai had agreed to pay $333,941. The consent order sets the money out in separate pieces, listed below.

The lead example is a Navy Airman who financed a 2014 Hyundai Elantra in Phoenix in June 2014, enlisted in March 2015, and in June 2015 faxed Hyundai her enlistment orders, asserting that the car could not be repossessed without a court order while she was on active duty. On July 27, 2017 she told a customer service agent she was no longer deployed but was still in the military. An employee recommended repossession that same day, attaching a Defense Manpower Data Center report showing her on active duty since August 25, 2015. Hyundai approved the repossession on July 28 because she was “active [duty], but … confirmed not deployed,” took the car on or about July 30, 2017, and sold it in October 2017 for $7,400. On or about the date of repossession she still owed $13,796 on the contract.

The complaint follows the account into 2020. In January 2020 an agent told her to resubmit her orders, which, the complaint notes, Section 3952 does not require. On February 3, 2020 a senior manager found she qualified for protection; on February 5 the company's SCRA department reversed that finding; and on or about February 23, 2020 Hyundai concluded it had repossessed the car in error.

The review behind the case covered repossessions from April 15, 2015 through May 21, 2023 and found 25 more. Both sides signed the consent order in May 2024, but the court did not approve it until November 26, 2024. Under the four-year order Hyundai neither admitted nor denied what the complaint alleged.

The law behind this: 50 U.S.C. § 3952

Protection under installment contracts for purchase or lease: read the statute , or read § 3952 in plain English, with its enforcement record .

Members of our Armed Forces should not have to worry about having their cars repossessed while they are in military service.

Who was covered

The owners of the 26 accounts the United States identified, repossessed without a court order between April 15, 2015 and May 21, 2023, where the servicemember paid a deposit or at least one installment before entering military service. The order treats a reservist's early alert period, between receiving orders and reporting, as protected time on the date of repossession, but not as military service for the pre-service payment test.

What the settlement paid

• $10,000 for each servicemember-owner listed on the account, paid to the servicemember alone (consent order paragraphs 17 and 18).
• For retail accounts, lost equity: the NADA retail value at repossession, taking condition and mileage into account, less the amounts owed, liens and certain disbursements, plus interest from the sale date under 28 U.S.C. § 1961. Equity and interest are split equally among everyone on the title (paragraphs 17 and 18).
• An opening escrow deposit of $270,000 within 14 days of entry, with Hyundai required to add funds as needed to meet its obligations (paragraph 24). Servicemembers and co-owners have three years from notification to provide the declaration and release (paragraph 23), and money not distributed within four years of the order goes to the Treasury (paragraph 29).
• $74,941 to the United States Treasury under the civil penalty provision, 50 U.S.C. § 4041(b)(3) (paragraph 33). The DOJ case page calls it a civil penalty. Hyundai must also ask the credit bureaus to delete the tradelines, stop collecting on the accounts, and refund any deficiency already paid.

Why this case matters

Hyundai looked up her status and repossessed anyway. The file that approved taking the Navy Airman's car carried a Defense Manpower Data Center report showing active duty, and the company acted on the fact that she was not deployed. Section 3952 asks whether the servicemember is in military service and paid a deposit or installment before service began. It does not ask whether she is deployed. A lender that treats home station as unprotected is making the error this complaint describes.