Hyundai sues Napleton for engine warranty fraudNovember 19, 2020
Hyundai Motor America is suing Napleton Automotive Group and current and former dealership group employees in federal court over an alleged scheme to fraudulently collect warranty payments for unnecessary engine repairs.
On Tuesday, the automaker filed a lawsuit in the US District Court in West Palm Beach, Florida. In a statement, the company claims it first became aware of alleged fraudulent engine warranty claims in April.
Hyundai is seeking damages in excess of $ 75,000. The lawsuit named the dealership group itself as defendants, as well as a Hyundai store in West Palm Beach in Napleton, Heinrich Haitin, the store’s former CEO, Ernie Revuelta, director of store services, and Ed Napleton Jr., director of operations for Napleton Automotive. The attorney representing Napleton Automotive denies any wrongdoing on the part of the seller.
From 2015 to 2019, Hyundai recalled certain model years Sonata, Santa Fe Sport, Tucson and Veloster due to possible engine failure, and the automaker extended the warranty beyond the original specification.
In the lawsuit, Hyundai argued that at least since 2016, the defendants have bought certain Sonata and Santa Fe vehicles at auctions and have made fake warranty claims on those vehicles to the manufacturer. Hyundai then reimbursed the dealership for the repair costs. In some cases, Hyundai bought cars back.
According to the automaker, many vehicles submitted for warranty claims for faulty engines “never had an engine problem before they reached” Napleton Automotive. According to Hyundai’s complaint, the alleged scheme generated about $ 180,000 in profits for the retailer’s West Palm Beach dealership in 2017, helping it post higher margins than other Napleton stores.
The lawsuit alleges that Napleton executives became aware of the alleged scheme orchestrated by Haitin and Revuelta in mid to late 2017, when discrepancies in details became apparent in the store. It also claims that the heads of the dealership group, including CEO Ed Napleton Sr., met with Haitin, Revuelta and Napleton Jr. and ordered them to end the practice. But Hyundai’s complaint alleges that this did not happen, that the fraud continued and that by January 2019 the defendants were “destroying up to 22 engines a month”.
Napleton denies the charges.
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