Toyota's auto loan scandal led to a $60 million settlement. This was confirmed by the U.S. Consumer Financial Protection Bureau (CFPB).
The American regulator said that it ordered the Japanese automaker to settle the mentioned amount because it misled car owners to increase their monthly car loan payments.
CFPB officials said on Monday, Nov. 20, that the $60 million settlement will be distributed for consumer redress and penalties for Toyota's illegal auto loan scheme.
Toyota Auto Loan Scandal Leads to $60 Million Settlement
According to Yahoo Finance's latest report, Toyota Motor Corp. was accused of fooling its customers into purchasing additional products, which led to more expensive auto loan monthly payments.
CFPB explained that Toyota withheld refunds or refunded insufficient amounts to car owners on their bundled products. The U.S. regulator further stated that the carmaker did this despite knowing it could tarnish consumers' credit reports with false information.
"Toyota's lending arm illegally withheld refunds, made borrowers run through obstacle courses to cancel unwanted services, and tarnished their credit reports," said CFPB Director Rohit Chopra via the regulator's official press release.
"Given the growing burdens of auto loan payments on Americans, we will continue to pursue large auto lenders that cheat their customers," he added.
Because of this issue, CFPB officials ordered Toyota Motor Credit to stop its illegal auto loan scheme and to pay $48 million to affected car owners, as well as settle a $12 million penalty into the CFPB's victims relief fund.
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What Toyota Argues
The Toyota Motor Credit clarified that they didn't admit any of the accusations from CFPB. However, the automaker decided to agree to the settlement to fulfill its commitment to provide "ever-better" service to consumers.
CFPB explained that the Toyota Motor Credit Corporation (TMCC) is the auto-financing arm of Toyota in the U.S. The American regulator added that TMCC is considered to be one of the largest indirect auto loaners in the United States.
CFPB said that TMCC currently has over 5 million customer accounts, as well as over $135 billion in assets. Toyota's U.S.-based auto loan provider offers bundled products that are very expensive.
The bundle loans offered by TMCC usually cost between $700 to $2,500 per month. CFBP said that these expensive auto loan packages are commonly added to a vehicle sale and lease, which can really make the monthly payment, loan fee, and finance charge extremely expensive.
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