In a significant development, the Consumer Financial Protection Bureau (CFPB) has ordered Toyota Motor Credit Corporation to pay $60 million in consumer redress and penalties for engaging in an illegal scheme that unfairly burdened borrowers.
The company’s alleged misconduct included preventing the cancellation of product bundles, withholding refunds, and tarnishing consumers’ credit reports with false information.
Toyota Motor Credit’s Deceitful Practices
According to the CFPB, Toyota Motor Credit bundled products such as Guaranteed Asset Protection (GAP), Credit Life and Accidental Health (CLAH) coverage, and vehicle service agreements with car loans, significantly increasing the loan amount, monthly payments, and finance charges.
Thousands of consumers registered formal complaints regarding dealers lying about product mandates, adding products without consent, and rushing through paperwork to obscure terms. As detailed in the CFPB Order, Toyota devised a cumbersome process for canceling bundled products, making it difficult for consumers. A “retention hotline” directed consumers to dissuade cancellations, requiring verbal requests to cancel three times before accepting.
However, the CFPB said that instead of issuing timely refund checks or reducing monthly payments, Toyota applied the refunds as additional principal payments, delaying the return of consumers’ money. The company relied on faulty calculations, resulting in incorrect refunds for consumers who canceled their vehicle service agreements.
According to the allegations, Toyota reported delinquency for customers who had returned leased vehicles and knowingly sent incorrect information to consumer reporting companies. The company should have promptly corrected negative information sent to consumer reporting companies once they were aware of inaccuracies.
CFPB Enforcement Action
Under the Consumer Financial Protection Act, the CFPB has taken decisive action against Toyota Motor Credit Corporation. Toyota must pay nearly $48 million in consumer redress, addressing withheld refunds, cancellation difficulties, and inaccurate refund calculations. Toyota is prohibited from tying employee compensation to consumers’ retention of bundled products. The company must make canceling unwanted coverage easy and monitor dealers for improper product imposition. Toyota Motor Credit will pay a $12 million civil penalty to the CFPB’s victims relief fund, emphasizing the consequences of unfair and abusive practices.
Legal Assistance for Victims
The CFPB Order is a win for all consumers, and depending on the circumstances, consumers may be entitled to even more compensation by suing Toyota Motor Credit directly.
At The Holland Law Firm, our experienced team of credit report lawyers and consumer protection lawyers assist victims in disputing false information on credit reports, getting corrections to credit reports, mitigating the impact on credit scores, and protecting consumers from unfair practices. Our team can guide victims through legal avenues to seek redress for deceptive practices and financial harm.
If you’ve been harmed by deceptive practices affecting your credit score and quality of life, please reach out.