By Jonathan Stempel

(Reuters) – The U.S. government on Wednesday sued Hyundai and Kia’s American financing arm, accusing it of repossessing vehicles leased by military service members without first obtaining court permission 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 prior to active duty.

The Department of Justice has said that Armed Forces members should not suffer financial hardship because of their service.

In the complaint, the Justice Department cited as an example the 2017 repossession and sale of Navy Airman Jessica Johnnson’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 the financing arm realized in 2020 it should not have repossessed it, the complaint said.

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

The lawsuit seeks to halt improper repossessions and a declaration that the matter concerned “an issue of significant public importance.”

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 finance arms.

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