Consumer Rights At Risk: Hyundai and Kia Seek to Enforce Individual Arbitration Against California Customers

Consumer Rights At Risk: Hyundai and Kia Seek to Enforce Individual Arbitration Against California Customers

In what is being seen as a push to restrict customer rights, Hyundai and Kia are seeking to force individual arbitration against California vehicle owners who have filed complaints against the automaker.

Simply put, California Hyundai/Kia vehicle owners who have a dispute with the automaker, will be forced into private arbitration. Stripping away the right to join a class action lawsuit, and weakening consumers rights. It’s a dangerous precedent that could have far-reaching consequences.

This move comes despite the fact that both automakers were already fined by the National Highway Traffic Safety Administration for failing to abide by customer safety laws.

The Fine Print

Hyundai’s decision to include mandatory arbitration clauses in their warranty agreements is an interesting one. These terms, which are buried deep in the owners manual, force California customers out of the federal court system.

Instead, forcing individual customers to resolve complaints in the private arbitration system.

Hyundai/Kia arbitration provision statement can be found in all 2022 Hyundai/Kia owner’s manuals

While beneficial to the automaker, customers will be without some protections afforded by court cases. In fact, this could result in much less compensation for damages if they’ve been wrongfully injured or had to pay out-of-pocket for car repairs.

Additionally, many experts argue that private arbitration discourages consumers from even raising a complaint. They say that it makes people less likely to speak up when they have a problem, because they know they’ll just be sent to private arbitration.

It then raises the question, how many California Hyundai/Kia vehicle owners were even aware of this arbitration provision when making their vehicle purchase? Would it have changed their decision to purchase the vehicle?

Legal Experts Warn, Private Arbitration Seeks to Limit Consumers Rights

While private arbitration may sound like a good idea, it actually limits your rights as a consumer. If you’re up against a large corporation, you’re at a disadvantage in terms of resources and bargaining power.

Legal experts warn that private arbitration is not only bad for consumer, but also for the justice system. They argue that it’s simply a way for corporations to avoid accountability and escape liability.

Additionally, consumer advocates are concerned that this latest action will make it more difficult for customers to seek justice if they experience problems with their vehicles.

A Dangerous Precedent That Gives All The Power to the Corporations

This news is troubling for a number of reasons. First, it seems that Hyundai and Kia are trying to avoid taking responsibility for their actions by attempting to avoid class action lawsuits and making each customer bring an individual lawsuit.

Second, by requiring arbitration, the automaker can essentially choose the arbitrator, meaning that owners may not get a fair hearing.

Finally, this could set a dangerous precedent for other companies who might seek to force customers into individual arbitration instead of dealing with complaints head-on through a class action.

Cho, et al. v. Hyundai Motor Company

The law firm representing the plaintiffs in the case, Sauder Schelkopf say that it appears that Hyundai and Kia are attempting to avoid taking responsibility for the defective cars.

Below is the official statement from the law firm handling the Cho, et al. v. Hyundai Motor Company case.

On March 23, 2022, the law firms of Sauder Schelkopf LLC and Walsh PLLC filed a class action lawsuit captioned Cho, et al. v. Hyundai Motor Company, LTD, No. 8:22-cv-00448 (C.D. Cal.) against Hyundai and Kia on behalf of owners and lessees with vehicles that are prone to excessive engine oil consumption, oil sludge and engine failure. The lawsuit alleges that certain Hyundai and Kia vehicles are experiencing oil consumption that results in ticking noises and possible failure of the engine’s internal components. When consumers present their vehicles to Hyundai and Kia for repair, they are informed that engine oil consumption is considered normal and are denied warranty coverage for the necessary repairs. As a result, current and former owners and lessees may be forced to pay for replacement engines and repairs out-of-pocket.

On June 28, 2022, Hyundai filed a motion to compel individual arbitration, where it argues that a Plaintiff, who purchased a 2022 vehicle, has claims that “do not belong in this Court because he is bound by an arbitration provision mandating individual arbitration.” Hyundai’s motion also does not even contend that the Plaintiff ever saw the arbitration clause at issue. If granted, a motion to compel individual arbitration sends the individual plaintiffs’ claims to private and binding arbitration. Arbitrations cannot be conducted on a class-wide basis, which means that Hyundai will only be held liable as to an individual plaintiff’s claims, instead of having to answer for a pervasive safety defect that plagues millions of its vehicles. In effect, the arbitration clause allows Hyundai to avoid liability almost entirely. Manufacturers, like Hyundai, bury these arbitration clauses in hundreds of pages of post-sale paperwork.

In 2013, The New York Times published an article whereby Hyundai agreed to drop the enforcement of the arbitration provision which brought attention to Hyundai’s arbitration policies. As a result, Hyundai eliminated binding arbitration policies from 2015 to 2019. Hyundai now attempts to reintroduce its arbitration clause in model year 2022 vehicles.

Sauder Schelkopf

Millions of consumers, including those in Cho. v. Hyundai Motor Company, LTD, may never have their day in court over the oil consumption defect, or any other defect with their vehicles because of Hyundai’s attempt to enforce individual arbitration.

Final Thoughts

If you’re a Californian Hyundai or Kia owner, be aware that your right to join forces with other customers in a class action lawsuit has been taken away. The next time you have a dispute with the automaker, you’ll be forced into individual arbitration. A process that is often beneficial to the company, but can be damaging to consumers.

It’s important to know these things before you buy, and we hope our readers will share this article so that others may be informed as well.

Californian Hyundai and Kia owners, would you have bought your car if you knew about the individual arbitration clause? Let us know in the comments below.

We will continue to follow this story and provide updates as they become available.

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Last Updated on August 24, 2022

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4 thoughts on “Consumer Rights At Risk: Hyundai and Kia Seek to Enforce Individual Arbitration Against California Customers

  1. Avatar
    Reply
    Jim Renswick
    November 25, 2022 at 12:57 pm

    At around 56 thousand miles I brought my 2018 Kia Soul into their shop due to low oil. They informed me that they wouldn’t need to do a consumption test in 1000 miles. When I brought it back they said it had not lost enough oil for them to get it fixed even though I was under warranty. I then came back for low oil again for another oil shortage.they said I they would give me an oil change and another 1000 mile test. Today I was told it had only lost .85 of a quart and that they couldn’t cover it.j

  2. Avatar
    Reply
    Jacquline
    November 29, 2022 at 2:50 am

    On 11/05/22 My 2018 kia forte had complete engine failure at 109,000 miles ,about 3-5 miles after hearing a knock / ticking noise.I bought this car brand new at Darcars kia frederick md. THIS has been the worst experience in my like from them wanting 7,000. to replace my engine and kia America ignoring all communications from me ,I’m at a loss and idk what to do ,I need some help

  3. Avatar
    Reply
    shelly newton
    December 29, 2022 at 6:49 pm

    in June took my car in for the check engine light — they confirmed my velostar was burning oil and did nothing about it except charged me 800.00 for fuel injection cleaning! Still burning oil

  4. Avatar
    Reply
    Christopher Ritter
    January 27, 2023 at 8:42 am

    I bought pre-owned 2016 Santa Fe from Centereach Hyundai in June of 2020 with 50k purchased the extended warranty platinum package was also told that I’d get free oil changes for 3 years should have looked more carefully they charged 1100 for a maintenance contract. I took good care of the vehicle changing the oil every 5 to 6.5k under suggested manu. I was a day out from getting my oil changed mid November 2022 when I noticed a knock thought it may have been bad gas brought to my mechanic next morning he told me it was very low on oil I had no warning (Check Engine light) I immediately brought it to dealership only for them to tell me the motor was bad. I was at 87k well within original warranty. While waiting for a ride because they had no courtesy vehicle to provide me even though that is part of my extended warranty they tried to talk me into a new vehicle a 7 yr loan at 8 percent interest I was out of sorts because of the news about the motor I almost went for it but it was contingent on the motor being replaced. They held a down payment on a new tucson but sold the car 4 days later and gave me the down payment back. Hyundai corporate denied the claim immediately I provided maint records to no avail. they sent it directly to the extended war. I ok’d the pulling of valve covers and oil pan as well and they have sat on the claim for almost three months. I have rented borrowed taken public transportation all the while still keeping up with loan payments. I’ve been blown off treated rudely specifically by a case manager named Henry. I finally received good news on the 25th of January they are replacing the motor but honestly at this point I want my money back!!! I will never buy a hyundai again this manufacturer is horrendous!!! I hope this class action suit goes through I’m in!!!

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