Automakers Kia and Hyundai have agreed in a California federal court to pay between $80 million and $145 million to settle a class action lawsuit. The suit stems from a defective ignition design that made some of the companies’ most popular vehicles easier to steal.
After a viral TikTok video by @robbierayyy exposed the security flaw in specific models, Kia and Hyundai thefts spiked in July 2022. The flaw allowed thieves to steal the vehicles by removing the steering column cover and using a USB plug to start the vehicle.
The ‘Kia Challenge’ went viral — and thefts increased
The vehicles in question also lacked a common anti-theft device called an immobilizer, which could have prevented the crimes. This ease of theft, shared on social media, sparked the so-called “Kia challenge.”
Thieves across the country posted their thefts of vulnerable vehicles on several social media platforms. Targeted vehicles included the following:
The frequency of thefts was so great that the Kia Optima, Hyundai Elantra, and Hyundai Sonata finished among the 10 most stolen vehicles in America in 2022. None of these vehicles were in the top 10 the year before.
Thefts of Hyundais and Kias alone rose 85% in Los Angeles in the wake of the challenge, according to the Associated Press.
Impact on auto insurance rates for Kia and Hyundai owners
The vulnerability of the targeted vehicles placed their owners in a difficult situation. Those who hadn’t had their vehicle stolen still found new difficulty in acquiring or maintaining insurance for their vulnerable vehicles.
Both Progressive and State Farm halted issuing new policies for the targeted vehicles in 2023, and the average insurance rate for the targeted vehicles climbed 55% between 2020 and 2023.
“We continue to insure existing customers who own these types of vehicles … We expect the limitations of these new business limits and pricing adjustments to continue changing as this issue evolves,” Progressive said in a statement at the time.
Automakers settle consolidated lawsuits
Kia and Hyundai faced more than three dozen class action lawsuits stemming from the thefts. The federal court in Los Angeles consolidated those lawsuits into a single case in 2022. The automakers agreed to settle the case in late October.
Under the terms of the settlement, Kia and Hyundai will spend at least $80 million and up to $145 million making payouts to the plaintiffs. Plaintiffs can receive $250 for new key fobs and other related upgrade expenses through the payouts.
If the total payouts fall below $80 million, existing claim amounts could be increased on a pro-rated basis.
What’s next? More lawsuits ahead
While this settlement brings an end to the consolidated class action lawsuits, Kia and Hyundai face additional lawsuits from auto insurers themselves.
Allstate, GEICO, Liberty Mutual, Nationwide, Progressive, State Farm, Travelers, and USAA filed a class action lawsuit in October 2023, seeking compensation for the claims the insurers paid out on vehicles that lacked the anti-theft technology.
Kia and Hyundai sought to have the case dismissed last November, but a judge rejected their request.
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