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Settlements for the Korean-based automakers Hyundai and Kia were finalized, with the companies resolving U.S. Federal Trade Commission (FTC) charges brought against them. The charges stemmed from allegations that the companies had improperly repossessed vehicles belonging to U.S. military service members.
Hyundai Motor Co. and Kia Motors Corporation stand as two of the largest automotive manufacturers internationally, known for their production of a wide range of vehicles. However, the recent FTC settlements have further highlighted their legal difficulties in the overseas market.
Around 862 proceedings were made against the two conglomerates by military personnel, who alleged that the auto manufacturing giants wrongfully took their vehicles. The issues were not one-off instances but spanned over five years, from 2010 to 2015. The incidents targeted service members who were in active duty during the period cited.
Under U.S laws, it is illegal to seize vehicles from active-duty military personnel without a court order. This law is enshrined under the Servicemembers Civil Relief Act (SCRA). The Act intends to ease the financial burdens of service members during their active duty and includes protection against repossession without a court order.
The Hyundai and Kia settlement saw both companies making clear concessions to their wrongdoing. They agreed to a $5.4 USD million civil penalty, projecting an immediate and comprehensive response to the settlement’s charges. Furthermore, both companies have proceeded in setting aside an extra $500,000, intended specifically to compensate service members who faced wrongful repossession.
Once this hefty settlement is paid off, it would help shield Hyundai and Kia against further penalties in the future. On another note, it’s also considered beneficial for the automakers as it ultimately ends one chapter of their legal challenges in the United States.
Despite the difficult narrative, Hyundai and Kia have committed to making internal changes to prevent similar incidents from happening in the future. They have agreed to revise their policies, this includes altering procedures surrounding the repossessions of vehicles.
Both companies’ proactive measures signal their commitment not just to compensating the wronged service members, but also to improving their relationship with the U.S market and its military service members.
This incident shines a spotlight on the intersection of business ethics and the automotive industry. It underscores the need for multinational corporations, such as Hyundai and Kia, to ensure their policies uphold both domestic and international laws.
In repairing their public image and maintaining their market position, Hyundai and Kia’s commitment to resolving the issue and adapting their corporate behavior suggests they’ll take the necessary steps to rectify similar oversights in the future.