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October 27, 2016

Kia and Hyundai to Pay Iowa $1.4 Million for Overstated Fuel Economy Claims

$41.2 million settlement with 33 states and DC; states allege conduct misled and influenced buyers during time of high gasoline prices

DES MOINES – Automakers Kia and Hyundai will pay $1.4 million to Iowa to resolve the state’s claims that the companies misrepresented mileage and fuel economy ratings for some of their model year 2011-2013 vehicles, as part of a $41.2 settlement with 33 states and the District of Columbia.

The agreement resolves a multistate investigation into the companies' business practices relating to fuel economy estimate adjustments that occurred at a time when gasoline prices nationwide were especially high.

Federal law and some state laws set limits on emissions from vehicles sold in the United States. Before manufactures can sell vehicles, they must first conduct testing under regulated protocols and use the data to support applications demonstrating their vehicles' conformity to government standards.

“We’re confident that many buyers purchased these vehicles at least in part because of the mileage claims on window stickers and advertisements,” Attorney General Tom Miller said. “These automakers overstated their claims to consumers, and through this agreement we are holding them accountable.”

The agreement in Iowa, through a consent judgment entered by Polk County District Court Judge David May, resolves a consumer fraud petition filed today in Polk County District Court. As part of the agreement, the automakers do not admit to wrongdoing or violations of Iowa law.

2012: Companies Disclosed Overstated Fuel Efficiency
In November 2012, Hyundai and Kia announced they were adjusting and restating fuel economy ratings for certain model year 2011- 2013 vehicles after it was revealed that the companies had overstated the fuel efficiency of certain vehicles. The automakers overstated the fuel economy by one to six miles per gallon, depending on the vehicle.

The states alleged that Hyundai and Kia incorporated the inflated and inaccurate data into the estimated mileage ratings displayed on the window stickers of hundreds of thousands of cars in Iowa and across the country. The states also alleged that the companies sought to capitalize on the erroneous mileage estimates by placing them prominently in a variety of advertisements and other promotional campaigns.

The states further alleged that these actions were likely to mislead consumers and were material to consumers' decisions to purchase particular vehicles during a time of high gasoline prices.

Previous $100 Million Record Federal Clean Air Act Penalty
In 2014, Hyundai and Kia paid a record $100 million civil penalty to the U.S. Department of Justice and the Environmental Protection Agency (EPA) to resolve alleged Clean Air Act violations. The agencies alleged the automakers were responsible for the emissions of approximately 4.75 million metric tons of greenhouse gases in excess of what the automakers certified to the EPA, based on the sale of 1.2 million affected vehicles.

Separate Consumer Relief
The civil penalties are in addition to funds the automakers previously set aside for consumers. In 2012 the companies announced lifetime reimbursement programs to compensate consumers based on their actual mileage and the fuel costs for the region in which they live. In 2013 the companies announced a one-time lump sum payment option.

Iowa a Lead State in Investigation and Settlement
Attorney General Tom Miller’s office is one of the leading states involved with the multistate investigation and settlement. The company’s payment to Iowa will go to the state’s Consumer Education and Litigation Fund.

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