Toyota Motor Credit Corp (TMCC), the U.S. financing arm of Toyota Motor Corporation, was recently ordered by the Consumer Financial Protection Bureau (CFPB) to pay $60 million for illegal lending and credit reporting practices. This significant penalty underscores the importance of understanding your rights as a consumer when financing a vehicle through Toyota Motor Credit Corp.
Unfair Practices by Toyota Motor Credit Corp
The CFPB order outlines several violations of the Consumer Financial Protection Act of 2010 by TMCC, impacting consumers who financed vehicles and purchased optional add-on products like Guaranteed Asset Protection (GAP) and Credit Life and Accidental Health (CLAH).
Obstacles to Cancelling Add-ons
The CFPB found that Toyota Motor Credit Corp made it unreasonably difficult for consumers to cancel unwanted add-on products, even in cases where consumers alleged that dealers had forced these products upon them without their consent. This practice was deemed unfair and abusive.
Inaccurate Refund Practices
The order also highlighted TMCC’s failure to ensure consumers received appropriate refunds for unearned premiums on GAP and CLAH products when loans were paid off or leases terminated early. This left consumers paying for services they no longer needed or could utilize. Additionally, flawed system logic resulted in inaccurate refunds for cancelled vehicle service agreements.
False Delinquency Reporting
Beyond add-on issues, Toyota Motor Credit Corp was found to have violated the Fair Credit Reporting Act by falsely reporting customer accounts as delinquent, even after vehicles were returned. The company also failed to promptly correct this negative information with credit reporting agencies and lacked adequate procedures to ensure accurate payment reporting. These errors could significantly impact a consumer’s credit score and financial standing.
Consequences for Toyota Motor Credit Corp
The $60 million penalty includes $48 million in consumer redress and a $12 million civil money penalty. The order also mandates that Toyota Motor Credit Corp cease its unlawful practices, comply with the law, and prohibits incentive-based compensation related to add-on products. This aims to prevent future abuses and protect consumers.
Conclusion: Understanding Your Rights with Toyota Motor Credit Corp
The CFPB’s actions against Toyota Motor Credit Corp highlight the importance of carefully reviewing financing agreements and understanding your rights as a consumer. Consumers should be aware of the terms and conditions of add-on products and their right to cancel them. It’s crucial to review credit reports regularly and dispute any inaccuracies. This case serves as a reminder to be proactive in protecting your financial well-being when dealing with auto financing. If you believe you have been impacted by similar practices by Toyota Motor Credit Corporation, you can contact them directly through the information provided in the original document.
