Connect with us

Hi, what are you looking for?

Financial News

Toyota Receives $60 Million Fine for Unjust Practices

Today, the Consumer Financial Protection Bureau (CFPB) announced that it has mandated Toyota Motor Credit, the credit division of Toyota, to pay a penalty of $60 million for engaging in misleading practices that impacted numerous consumers. The CFPB discovered that Toyota Motor Credit deceived customers into purchasing unnecessary products, subsequently making it overly challenging for them to terminate these services.

A multitude of borrowers filed grievances, claiming that Toyota Motor Credit appended additional products to their loans, resulting in charges for the company at the expense of consumers. Furthermore, the CFPB stated that the company erected barriers for consumers attempting to rescind these services.

As part of the agreement, Toyota Motor Credit did not admit to any wrongdoing but consented to compensate $32 million to consumers who were not provided with owed refunds, $9.9 million to consumers who were unable to terminate their policies, $6 million to those impacted by false information disseminated to consumer reporting companies, and $52,000 for individuals who received inaccurate refunds. Additionally, the company will pay a $12 million penalty to the CFPB’s victim relief fund.

One highlighted revelation by the CFPB detailed that Toyota Motor Credit set up a hotline for customers desiring to cancel additional products. However, the process was deliberately vexing, necessitating customers to request termination thrice via phone before being informed that the sole method for cancellation was through a written request. Over 118,000 customers dialed this hotline from 2016 to 2021.

In addition to the financial penalties and restitution, Toyota Motor Credit is required to streamline the termination process for undesired coverage, apprise consumers of online or written termination alternatives, and oversee dealers to prevent unauthorized additions of products to customer loans. Additionally, the company is barred from connecting employee compensation or performance metrics to consumer retention of bundled products.

The superfluous products in question encompassed Guaranteed Asset Protection, Credit Life and Accidental Health coverage, and vehicle service agreements, with mean expenses spanning from $700 to $2,500 per loan.

The CFPB also highlighted that Toyota Motor Credit knowingly furnished false information to rating agencies, detrimentally affecting customers’ credit scores by inaccurately reporting missed payments for leased vehicles that had, in reality, been returned.

Image Source: josefkubes / Shutterstock

You May Also Like

Stocks

Previously, in April, the CEO of Tesla and SpaceX, Elon Musk, caused quite a stir by revealing his intentions to procure the entire social...

Stocks

Concerns about rising prices are impacting the entire economy of the United States, and one sector that is particularly affected is the real estate...

Stocks

With rising expenses in fuel and power worldwide, particularly in the United States, the quest for sustainable energy sources has intensified. A significant historical...

Stocks

Kellogg, a major supplier of packaged foods in the United States and globally, has maintained overall centralized control of all its owned labels during...