Toyota’s U.S.-based auto financing unit is set to pay a hefty $60 million in fines and restitution following charges by a U.S. regulator that it unlawfully prevented borrowers from canceling product bundles that resulted in higher monthly car loan payments.
The Consumer Financial Protection Bureau (CFPB) announced on Monday that Toyota Motor Credit, which provides financing for individuals purchasing vehicles from Toyota dealerships, will pay a $12 million civil fine, as well as an additional $48 million to compensate affected consumers.
The products offered by Toyota Motor Credit, priced between $700 and $2,500 per loan, are designed to provide protection in case of vehicle theft, damage, or the need for repairs after warranties have expired. They also cover situations where borrowers pass away or become disabled.
The CFPB revealed that numerous consumers had submitted complaints to Toyota Motor Credit, alleging that dealers had deceived them regarding the mandatory nature of these products or had rushed the paperwork to prevent them from fully understanding the associated costs.
Furthermore, the regulator stated that Toyota Motor Credit had made the cancellation process for these bundles excessively complex, failed to provide refunds to customers who did cancel, and falsely reported missed payments, leading to damage to borrowers’ credit reports.
Although Toyota Motor Credit has agreed to settle the charges, it has neither admitted nor denied liability. The company has not yet issued a comment on the matter.
This article was written by Jonathan Stempel in New York and edited by Chizu Nomiyama.