Toyota Fined $60M for False Claims, Lending Issues

Toyota Credit Accused of Deceptive Financing Practices

Toyota Motor Credit Corporation (TMCC) has reached a deal to settle for the sum of $60 million which had been mandated by the Consumer Financial Protection Bureau (CFPB). Allegations had been previously made against the lender, part of the Toyota family, alleging they were prohibiting buyers from canceling bundled products frequently linked to vehicle purchases. Furthermore, it was maintained that fake statements were submitted to crediting bureaus impacting the credit ratings of those affected.

According to the CFPB’s press release, consumers who had grievances concerning unwanted products were often directed to internal customer service teams where the process of having them removed or refunded was overly complex. While the types of products weren’t specified, the CFPB noted that additional costs ranged from $750 to $2,500 per auto loan. Allegedly, some Toyota dealerships misled customers by claiming these products were mandatory and refunds issued were not always for the full amount. The CFPB reports that between 2016 and 2021, 118,000 customers dialed a “dead-end cancellation hotline”.

“Toyota Financial Services has been accused of unlawfully withholding reimbursements, making customers jump through hoops to cancel services they don’t need, and damaging their credit reports,” said CFPB Director Rohit Chopra. “Since many Americans are already struggling with car loan payments, we will keep on holding large auto lenders accountable for any fraudulent behavior.”

The CFPB has declared that TMCC reported inaccurate information to credit agencies about some accounts even though customers had returned leased vehicles. Additionally, these mistakes were not remedied in a timely way. Reuters reveals that 27,500 TMCC clients had wrong data on their records which detrimentally affected their credit scores.

In a proclamation to Motor1, Toyota accepted no liability but reasoned to accord to the conditions of the arrangement.

In accordance with the agreement, TMCC is going to remit $48 million to those affected and a fine of $12 million to the CFPB Victims Relief Fund.

Source: Consumer Financial Protection Bureau