Complaints by thousands of Toyota customers, that they were scammed by the automaker’s in-house financing services unit by buying products they couldn’t cancel, have resulted in $60 million in fines to settle charges from the Consumer Financial Protection Bureau.
According to the charge, Toyota Motor Credit sells products, typically at a cost of $700 to $2,500 per loan, that offer protection when vehicles are stolen, damaged or require parts and service after warranties expire.
The agency said that thousands of consumers subsequently complained that dealers lied about whether these products were mandatory, or rushed the paperwork so they wouldn’t realize how much they were paying.
The regulators said that Toyota Motor Credit then “devised a scheme to retain the revenue from these products” and made it “extremely cumbersome” to cancel the added-on bundles, and failed to provide refunds to consumers who did cancel. The company, the CFPB charged, also “falsely told consumer reporting companies that borrowers had missed payments, and it failed to correct consumer reporting errors it knew were wrong.”
Toyota has not yet responded publicly to the settlement. It is among the largest indirect auto lenders in the United States, with nearly five million customer accounts and more than $135 billion in assets.
The CFPB is ordering Toyota Motor Credit to pay $48 million to harmed consumers, and pay a $12 million penalty into the CFPB’s victims relief fund.
“Toyota’s lending arm illegally withheld refunds, made borrowers run through obstacle courses to cancel unwanted services, and tarnished their credit reports,” said CFPB Director Rohit Chopra. “Given the growing burdens of auto loan payments on Americans, we will continue to pursue large auto lenders that cheat their customers.”
Related video:
