The Consumer Financial Protection Bureau (CFPB) has taken action against Toyota’s credit arm, ordering them to pay a substantial sum of $60 million. The company was found guilty of deceiving customers by adding unnecessary products to their loans and making it difficult for them to cancel these services.
According to the CFPB, borrowers lodged complaints, accusing Toyota Motor Credit employees of including extra products in their loans without consent. This practice resulted in additional fees for the company and financial burdens for consumers. When customers attempted to cancel these services, Toyota made the process complicated.
As part of the settlement agreement, Toyota Motor Credit will allocate $32 million to reimburse consumers who did not receive owed refunds. Additionally, $9.9 million will be distributed to customers who encountered difficulties canceling policies, and $6 million will be paid to consumers affected by false information reported to a consumer reporting agency. Finally, an amount of $52,000 has been designated for those who received inaccurate refunds. Toyota’s finance arm must pay a $12 million penalty.
To rectify the situation, Toyota Motor Credit must facilitate a straightforward cancellation process for consumers and provide clear information regarding cancellation options. The company will also be monitored to prevent unauthorized additions of products to customer loans without consent. Employee compensation or performance metrics cannot be linked to the retention of bundled products.
The unnecessary products included Guaranteed Asset Protection, Credit Life and Accidental Health coverage, and vehicle service agreements. These products typically ranged from $700 to $2,500 per loan.