May 8 (Reuters) - Hyundai's and Kia's

American financing arm will pay $334,941 to settle

charges it illegally repossessed vehicles belonging to military

service members, the U.S. Department of Justice said on

Wednesday.

According to papers filed in Los Angeles federal court,

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 Justice Department said the law required the financing

arm to obtain court permission before repossessing vehicles.

It cited as an example the 2017 repossession and sale of

Navy Airman Jessica Johnson'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 Hyundai Capital

America realized in 2020 it should not have repossessed it,

court papers show.

"Members of our Armed Forces should not have to worry about

having their cars repossessed while they are in military

service," Assistant Attorney General Kristen Clarke said in a

statement.

Without admitting wrongdoing, Hyundai Capital America

will pay $10,000 plus lost vehicle equity to each of the 26

service members, and repair their credit. It will also pay

$74,941 to the U.S. Treasury "to vindicate the public interest."

Neither the Irvine, California-based financing arm, nor

Hyundai and Kia immediately responded to requests for comment.

The Justice Department in the last several years settled

claims under the servicemembers law against several financing

companies, including General Motors ( GM ), Nissan ( NSANF ) 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.

(Editing by Diane Craft)