Hyundai and Kia face backlash over weak settlement offer for theft-prone vehicles

Hyundai and Kia

A federal judge has declined to approve a proposed settlement in a class-action lawsuit filed by owners of Hyundai and Kia vehicles that are vulnerable to theft. The lawsuit, which covers about 9 million 2011-2022 model year vehicles in the U.S., claims that the Korean automakers failed to equip their cars and SUVs with adequate anti-theft devices, making them easy targets for thieves who can start them with just a screwdriver and a USB cord.

The judge, James Selna, said the settlement fails to provide “fair and adequate” relief to vehicle owners, who have suffered losses and damages due to the thefts. The settlement, announced in May, could be valued at about $200 million, depending on how many customers choose to participate. It would offer vehicle owners cash payments for theft-related damage and a voluntary recall to update theft-protection software.

However, the judge raised concerns about the process for calculating payments and the adequacy of the software update in preventing future thefts. He also noted that the settlement does not address the underlying security flaw that allows thieves to bypass the ignition system of the vehicles.

Hyundai and Kia

Theft rates soar as social media spreads method

The theft problem has been exacerbated by the spread of social media, especially TikTok, where videos showing how to steal Hyundai and Kia vehicles have gone viral. According to data from eight U.S. cities, seven of them reported substantial year-over-year increases in theft reports through April. Some of the most affected models include the Hyundai Santa Fe and Tucson and the Kia Forte and Sportage.

The automakers have acknowledged the issue and announced a software update in early 2023 that they said would address the security flaw. They also distributed over 65,000 steering wheel locks to customers as a temporary measure. However, these steps have not been effective in stopping the thefts, as The Associated Press reported in May that thieves were still driving off with Hyundai and Kia vehicles at alarming rates.

Attorneys general urge stronger remedies

The proposed settlement has also faced opposition from the attorneys general of six states and the District of Columbia, who urged the judge to require the automakers to install antitheft technology known as engine immobilizers in all theft-prone Hyundai and Kia vehicles, possibly in combination with a vehicle buyback program. Engine immobilizers are devices that prevent a vehicle from starting unless a specific key or fob is present. They are standard features in most other vehicles, even in those years.

The attorneys general said that engine immobilizers are proven to reduce auto thefts and that they are necessary to protect consumers and public safety. They also said that the cash payments offered by the settlement are insufficient to compensate vehicle owners for their losses and inconveniences.

The judge has ordered the parties to submit a revised settlement proposal by Sept. 15 or proceed to trial.

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