The Consumer Financial Protection Bureau (CFPB) ordered Toyota Motor Credit to pay a $60 million fine for engaging in illegal lending practices and credit reporting misconduct.
The auto-financing arm of Toyota Motor Corporation prevented borrowers from canceling product bundles that increased their monthly car loan payments, withheld refunds or refunded incorrect amounts, and knowingly tarnished consumers’ credit reports with false information, the CFPB said in a Monday (Nov. 20) press release.
“Toyota’s lending arm illegally withheld refunds, made borrowers run through obstacle courses to cancel unwanted services, and tarnished their credit reports,” CFPB Director Rohit Chopra said in the release. “Given the growing burdens of auto loan payments on Americans, we will continue to pursue large auto lenders that cheat their customers.”
Toyota Motor Credit, headquartered in Plano, Texas, is one of the largest indirect auto lenders in the United States, with nearly 5 million customer accounts and over $135 billion in assets as of October 2022, according to the release.
The company provides financing for consumers buying cars through Toyota dealerships and offers bundled products and services, per the release. The bundled products increase the loan amount, monthly payment and finance charge.
The CFPB said in the release that its investigation found that Toyota Motor Credit received numerous complaints from consumers regarding dealers misrepresenting these products, adding them to contracts without their knowledge, or rushing through paperwork to hide buried terms.
Despite the complaints, the company devised a scheme to retain revenue from these products by making it difficult for consumers to cancel and failed to provide proper refunds for those who successfully canceled, the release said. The company also falsely reported missed payments to consumer reporting companies and neglected to correct these errors.
As a result of these violations, the CFPB has ordered Toyota Motor Credit to cease its unlawful practices, pay $48 million in consumer redress and contribute a $12 million penalty to the CFPB’s victims relief fund, according to the release.
Last month, the CFPB and the Federal Trade Commission took action against TransUnion, alleging multiple violations of the Fair Credit Reporting Act. The organizations have requested a federal court to order TransUnion to pay $15 million.
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