CFPB Orders Toyota to Pay $60 Million Over Lending Practices -- Update

By Dean Seal

Federal regulators have ordered Toyota Motor's auto-lending arm to pay $60 million in fines and consumer redress for allegedly preventing borrowers from canceling product bundles that raised their monthly loan payments.

The U.S. Consumer Financial Protection Bureau said Monday that Toyota Motor Credit Corp. violated federal law by withholding refunds or refunding incorrect amounts on bundled products, unduly hurting consumers' credit reports.

The Toyota unit neither admits nor denies the agency's findings but consents to the entry of the CFPB's order, which requires it to pay $48 million to affected customers and a $12 million penalty.

A representative for Toyota Motor Credit said in a statement that it has admitted no wrongdoing but agreed to the consent order to "fulfill our commitment to continually provide ever-better service to our customers."

"In most instances, TMCC has already addressed the areas of concern cited by the bureau," the statement said.

According to the CFPB, the Toyota financing unit offers optional products and services that can be bundled into packages and added to car loan contracts. Including those products can significantly increase the size of a loan, monthly payment or finance charge.

The agency alleges that Toyota Motor Credit made it extremely difficult to cancel those bundled products and services, and then failed to properly provide refunds for consumers who were able to cancel. The unit also allegedly lied to consumer reporting companies about borrowers missing payments, the CFPB said.

Write to Dean Seal at [e-mail]

(END) Dow Jones Newswires

November 20, 2023 10:21 ET (15:21 GMT)

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