In a recent development, Toyota’s U.S.-based auto financing unit, Toyota Motor Credit, has agreed to pay $60 million in fines and restitution to resolve charges brought forth by the U.S. Consumer Financial Protection Bureau (CFPB). The regulatory body accused the company of engaging in illegal practices that prevented borrowers from canceling product bundles, subsequently increasing their monthly car loan payments.
Fines and Restitution
As part of the settlement, Toyota Motor Credit will pay a $12 million civil fine and an additional $48 million to compensate consumers adversely affected by the alleged misconduct.
Financing and Product Offerings
Toyota Motor Credit, responsible for providing financing options to individuals purchasing vehicles from Toyota dealerships, also offers various protection products. These products, costing between $700 and $2,500 per loan, aim to safeguard against vehicle theft, damage, post-warranty parts and service needs, and coverage in the event of the borrower’s death or disability.
Consumer Complaints
According to the CFPB, many consumers lodged complaints against Toyota Motor Credit. Allegedly, consumers claimed that dealers provided misinformation regarding the mandatory nature of these protection products or rushed through the paperwork, leaving borrowers unaware of the significant additional costs.
Unfair Practices
The regulatory body further asserted that Toyota Motor Credit made it excessively difficult for consumers to cancel these bundled products. Additionally, the company purportedly failed to issue refunds to those who did manage to cancel and, more troublingly, adversely impacted credit reports by falsely reporting missed payments.
Settlement Terms
While agreeing to the settlement, Toyota Motor Credit did not admit or deny liability for the alleged actions. The company has not provided an immediate response to requests for comment.
In conclusion, the settlement underscores the importance of fair and transparent practices in the auto financing industry. The financial penalties and restitution are intended to rectify the harm caused to consumers and remind companies about the consequences of engaging in deceptive practices.
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