In April 2025, Maria Lopez took her new Hyundai SUV to Downey Hyundai for repairs after it was vandalized. She left with something far worse than a broken window.
What followed was a nightmare of dealer misrepresentation, auto loan fraud, and a CLRA violation as the dealership pressured her into a second vehicle purchase while leaving her burdened with damaged credit.
Surrender fraud
After expressing concerns about her safety, Lopez asked about exchanging her vehicle. Dealership staff claimed she owed too much on her loan for an exchange and instead pressured her to purchase a different SUV for $73,000.
They claimed the process would be straightforward and routine, and instructed her to:
- Surrender the original SUV to Hyundai Capital America.
- Stop making payments on the first loan.
- Ignore all calls from Hyundai Capital, claiming the balance would be rolled into the new loan “penalty-free.”
But in May, Lopez received an alert that her credit score had plummeted by 100 points. Hyundai Capital claimed her account showed late payments and they had not received documentation to process a voluntary surrender. Instead, the surrender would be reported as a repossession which was not disclosed during the sale process.
Meanwhile, the original SUV had not even left the dealership’s lot. Lopez pushed for answers and by June, had located and retrieved her car from Downey Hyundai’s service department.
But by then, the financial and emotional damage had already been done. She was burdened with two car payments and significant credit damage.
Consumer deception and CLRA violations
In October 2025, Lopez filed suit against Downey Hyundai Inc., and Hyundai Capital America, alleging violations of California’s Consumer Legal Remedies Act (CLRA), fraud, and unlawful business practices.
The complaint alleges that Downey Hyundai Inc., and Hyundai Capital America engaged in a coordinated series of deceptive practices including:
- Making false promises that Lopez could surrender her financed SUV without penalty.
- Instructing her to stop making payments and ignore the lender, which led to late reporting and a sharp drop in her credit score.
- Reporting the surrender as a repossession and failing to disclose the repossession surprise.
- Concealing or misrepresenting material financial terms to secure approval of a $73,000 loan.
- Failing to flag inflated income on her application and participating in or benefiting from the transaction.
Repossession not trade-in
Lopez was told she could return her financed SUV without a trade-in penalty. But vehicle surrenders work differently.
When a financed vehicle is surrendered, the lender may liquidate it and report the event as a repossession, which is not the same as a routine trade-in. If a lender treats a surrender as a repossession, it can trigger long-term credit harm that stays on a consumer’s credit profile for years.
Credit manipulation
The dealership overstated Lopez’s monthly income on her credit application by approximately $5,000. This Tucson loan inflation significantly changed her debt-to-income profile, making her loan approval more likely.
Inflated income on a credit application can make a high-cost loan appear affordable on paper, shift underwriting decisions, and lock a consumer into unfair terms.
Hyundai capital’s role and financing misconduct
Auto financing is complex by design. Most consumers rely on dealership staff and lenders to explain the risks accurately and submit truthful information on their behalf. When there’s inflated income, undisclosed surrender consequences, or a failure to flag application errors, the burden falls on the consumer long after the paperwork is signed.
Have you been targeted by loan inflation, credit app fraud, or a Hyundai Capital kickback scheme? Don’t face the fallout alone. Brennan Law fights for the rights of consumers facing co-seller allegations and predatory financing tactics. Contact us today for a case evaluation to protect your credit and hold deceptive lenders accountable.