- Toyota's U.S. financing arm was fined $60 million by regulators who said the lender illegally kept consumers from canceling loan bundles that raised the cost of their monthly payments.
- The Consumer Financial Protection Bureau (CFPB) said the company devised a "scheme" to keep the money from consumers.
- The ruling requires Toyota to pay $48 million to those affected, and $12 million to the CFPB's victims relief fund.
The Consumer Financial Protection Bureau (CFPB) ordered Toyota Motor Credit Corp. to pay $60 million in penalties for what it called “operating an illegal scheme to prevent borrowers from canceling product bundles that increased their monthly car loan payments.”
The CFPB said that Toyota Motor Credit, based in Plano, Texas, withheld funds or refunded incorrect amounts on bundled products, and “knowingly tarnished consumers’ credit reports with false information.”
The bureau indicated those bundled products averaged between $700 and $2,500 per loan, and that thousands complained about it to Toyota Motor Credit. However, the lender devised a plan "to retain the revenue from these products by making it extremely cumbersome to cancel, and then failed to provide proper refunds for consumers who succeeded in canceling.”
The ruling requires the company to stop the practices and reimburse harmed consumers $48 million, with the remaining $12 million going into the CFPB’s victims relief fund.?
Despite Monday’s loss of nearly 3%, Toyota Motor ADRs are up about 36% year-to-date.