Thousands of Toyota customers have voiced their grievances, alleging deception by the automaker’s in-house financing services unit. This has led to a substantial $60 million in fines as part of a settlement with the Consumer Financial Protection Bureau (CFPB).
The charges against Toyota Motor Credit revolve around the sale of products, priced between $700 and $2,500 per loan, providing protection for stolen vehicles, damages, or post-warranty parts and services. The CFPB contends that numerous consumers complained about dealers either misrepresenting the mandatory nature of these products or expediting paperwork to obscure the actual costs.
The regulatory body accuses Toyota Motor Credit of orchestrating a strategy to retain revenue from these products. Furthermore, they allege that the process of canceling these bundled services was intentionally made “extremely cumbersome,” with the company neglecting to provide refunds to consumers who successfully canceled. Additionally, the CFPB asserts that Toyota Motor Credit provided false information to consumer reporting companies about missed payments and failed to rectify known reporting errors.
As of now, Toyota has not issued a public response to the settlement. Despite being one of the largest indirect auto lenders in the United States, boasting nearly five million customer accounts and over $135 billion in assets, the company is now compelled by the CFPB to pay $48 million to affected consumers and a $12 million penalty into the CFPB’s victims relief fund.
CFPB Director Rohit Chopra strongly criticized Toyota’s lending arm, stating, “Toyota’s lending arm illegally withheld refunds, made borrowers run through obstacle courses to cancel unwanted services, and tarnished their credit reports.” He emphasized the CFPB’s commitment to pursuing major auto lenders engaging in practices that harm their customers, especially considering the increasing financial burdens of auto loan payments on Americans.