Toyota’s in-house financing unit is being hit with $60 million in fines and restitution in an effort to settle charges from the Consumer Financial Protection Bureau that it illegally prevented borrowers from canceling product bundles – resulting in higher monthly car loan payments. Toyota Motor Credit will have to pay a $12 million civil fine and $48 million to customers it wronged, according to a statement from the CFPB .
The U.S.-based auto finance company was in the habit of offering products – typically costing between $700 and $2,500 per loan – that offer protection when a vehicle is stolen, damaged or needs parts and service after a warranty expires, and when the borrower dies or becomes disabled. Lovely. The CFPB says thousands of customers using Toyota Motor Credit were lied to by dealers about whether these products were mandatory, or they rushed paperwork so folks wouldn’t realize how much they were actually paying.
The regulator also said Toyota Motor Credit – one of the largest indirect auto lenders in the U.S. , with nearly five million customer accounts and over $135 billion in assets – would make it “extremely cumbersome” to cancel the bundles, failed to provide refunds to customers who did actually manage to cancel and tarnished credit reports by falsely claiming that the borrowers had missed car payments – something they did not actually do.