Toyota Motor Credit allegedly made it difficult or impossible to cancel unwanted extras during financing, among other things.
Toyota Motor Credit Corporation (TMCC) has agreed to a $60 million settlement ordered by the Consumer Financial Protection Bureau (CFPB). The lending arm of Toyota was accused of illegally preventing consumers from canceling various bundled products often included in vehicle purchases. The federal agency also states false reports were made to credit companies that negatively affected buyers’ credit reports.
According to a press release from the CFPB, consumers complaining about unwanted products were often funneled to internal customer service teams where the process of getting them removed or refunded was unnecessarily difficult. The types of products aren’t mentioned, but CFPB states that added costs were between $750 and $2,500 per auto loan. In some cases, Toyota dealerships allegedly lied to customers about these products being mandatory, and refunds that were issued were sometimes not for the full amount. A total of 118,000 customers called a “dead-end cancellation hotline” between 2016 and 2021, according to CFPB.
“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.”
On the credit front, CFPB’s announcement states that TMCC falsely reported some accounts as delinquent to credit agencies despite customers having returned lease vehicles. Moreover, TMCC didn’t correct such errors in a prompt fashion. According to Reuters, 27,500 TMC customers had incorrect data on their reports as a result, lowering their credit scores.
In a statement to Motor1, Toyota admits no wrongdoing but agrees to the terms of the settlement.
“Toyota Motor Credit Corporation is committed to doing what’s right for our customers and strives to consistently follow all federal and state laws in our sales, customer service, and administrative practices. We are dedicated to ensuring we demonstrate our core value of “Respect for People” in every aspect of our relationship with customers.
TMCC admitted to no wrongdoing but agreed to the terms of the consent order with the Consumer Financial Protection Bureau to fulfill our commitment to continually provide ever-better service to our customers. In most instances, Toyota Motor Credit Corporation has already addressed the areas of concern cited by the Bureau. We will continue to enhance our practices to deliver the best possible customer experiences.”
Per the terms of the settlement, TMCC will pay $48 million to affected customers and a $12 million penalty to the CFPB victims relief fund.
Keyword: Feds Fine Toyota $60M For Sketchy Lending Practices, False Credit Report Claims