2023-11-20 11:10:32 ET
The Consumer Financial Protection Bureau has ordered Toyota Motor ( NYSE: TM ) Credit Corp. to pay $60M over product bundles associated with car loans and providing false data about customers to credit reporting agencies.
Of the $60M, the credit division will pay $48M to impacted customers and another $12M into the CFPB's victims relief fund.
The bundled products Toyota Motor ( TM ) Credit Corp. offered were Guaranteed Asset Protection, which covers the difference between the amount a consumer owes on an loan and what their insurance pays if the vehicle is stolen, damaged, or totaled. It also offers Credit Life and Accidental Health coverage, to cover the balance of the loan should the borrower die, as well vehicle service agreements, which reimburse for parts and service outside of what is covered by the manufacturer warranty.
While the company makes extra money off these bundles, many consumers said that dealers included them in contracts without their knowledge, lied about whether they were mandatory, or rushed through explaining paperwork where the bundles were tucked in.
CFPB said Toyota Motor ( TM ) Finance Corp. made it very difficult to cancel these bundles, and then failed to provide correct refunds to those who were ultimately successful.
In addition, the agency said the company falsely told consumer reporting companies that borrowers had missed payments, and it failed to correct errors it knew were wrong.
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Toyota credit division to pay $60M for lending, credit reporting misconduct