Voluntary Restitution Programs And Class Action Exposure: Lessons From The Hyundai/Kia Consumer Class Action Settlements

In many misleading advertising and consumer protection cases, a company that discovers a regulatory breach will self-report to the Competition Bureau or other law enforcement agencies, and implement a voluntary compensation program to mitigate the company's regulatory and civil class action exposure. In some circumstances, the immediate and voluntary implementation of a restitution program can operate as an important tool in managing the company's risk. However, the recent class action settlements that were announced in the Hyundai/Kia misleading advertising case serve as a sobering reminder that the adoption of a voluntary compensation program for consumers will not eliminate class action exposure. In short, while Hyundai and Kia were able to reach favourable settlements with the Canadian Commissioner of Competition that did not involve any financial penalties or any admission of liability, they were subsequently stung by a class settlement for about $70 million.