Feds Fine Toyota M For Unfair Lending Practices and False Credit Reports
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Feds Fine Toyota $60M For Unfair Lending Practices and False Credit Reports

Feds Fine Toyota M For Unfair Lending Practices and False Credit Reports

Toyota Motor Credit Corporation (TMCC), the financing arm of Toyota, has agreed to a $60 million settlement with the Consumer Financial Protection Bureau (CFPB). The CFPB accused TMCC of unlawfully preventing consumers from canceling bundled products often included in vehicle purchases and making false reports that negatively impacted buyers’ credit reports.

According to the CFPB, consumers who wanted to cancel unwanted products were directed to internal customer service teams where the process of getting them removed or refunded was unnecessarily difficult. The specific types of products are not specified, but the added costs ranged from $750 to $2,500 per auto loan. In some cases, Toyota dealerships allegedly misrepresented these products as mandatory, and refunds were sometimes not issued for the full amount. The CFPB reported that 118,000 customers encountered obstacles when trying to cancel unwanted services between 2016 and 2021.

CFPB Director Rohit Chopra stated, “Toyota’s lending arm illegally withheld refunds, made borrowers run through obstacle courses to cancel unwanted services, and tarnished their credit reports. 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, the CFPB announced that TMCC falsely reported some accounts as delinquent to credit agencies, even though customers had returned lease vehicles. Furthermore, TMCC did not promptly correct these errors, resulting in incorrect data on the credit reports of 27,500 TMC customers, which lowered their credit scores.

Although Toyota admitted no wrongdoing, it agreed to the terms of the settlement. In a statement to Motor1, Toyota said, “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.”

As part of the settlement, TMCC will pay $48 million to affected customers and a $12 million penalty to the CFPB victims relief fund.