Toyota will pay $60 million to settle accusations by a U.S. regulator that it illegally canceled unwanted product bundles that increased car buyers’ monthly loan payments and tarnished buyers’ credit reports.
The Consumer Financial Protection Bureau (CFPB) said Monday that Toyota Motor Credit, the automaker’s U.S.-based lending arm, will pay $12 million in fines and $48 million in restitution to car buyers who suffered losses since 2016.
Plano, Texas-based Toyota Motor Credit provides financing to people purchasing vehicles from Toyota dealerships, with approximately 5 million customer accounts as of October 2022.
Monday’s deal concerned “add-on” products, typically costing $700 to $2,500 per loan, that provide protection when vehicles are damaged, stolen or out of warranty and car buyers are killed or disabled.
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According to the CFPB, thousands of borrowers have complained to Toyota Motor Credit that dealers lied about whether these items were essential or rushed paperwork to avoid understanding how much they were paying.
The regulator said Toyota Motor Credit had made canceling packages “extremely cumbersome”, including directing more than 118,000 borrowers to a helpline where agents were instructed to discourage cancellations and often failed to provide refunds.
Toyota Motor Credit was also accused of falsely reporting to credit reporting agencies that borrowers had missed payments and failing to promptly correct negative information on more than 27,500 borrowers.
Toyota Motor Credit agreed to facilitate the cancellation of unwanted product packages under a consent order and without admitting or denying liability.
They also agreed to monitor dealers’ behavior more closely and ensure that employees’ pay and performance measurements are not tied to package sales.
Toyota did not immediately respond to requests for comment.
news source (www.brecorder.com)
