The Consumer Financial Protection Bureau ordered Toyota’s U.S.-based auto-financing subsidiary to pay $60 million to harmed consumers for illegally blocking customers from canceling insurance products that inflated monthly payments.
The agency said that the company bundled a product known as GAP (Guaranteed Asset Protection) insurance — which covers the difference between a new car’s value, which constantly decreases, and what a customer owes on an auto loan in case the vehicle is lost, damaged or stolen — as well as Credit Life and Accidental Health, which kicks in if a customer dies or becomes disabled, as well as vehicle-service agreements.
“Toyota’s lending arm illegally withheld refunds, made borrowers run through obstacle courses to cancel unwanted services and tarnished their credit reports,” CFPB Director Rohit Chopra said in a statement Monday. “Given the growing burdens of auto loan payments on Americans, we will continue to pursue large auto lenders that cheat their customers.”
Toyota Motor Credit Corp., the carmaker’s lending arm, has more than 5 million customer accounts in the U.S. and assets of more than $135 billion, according to the CFPB.
The cost of these products ranged from $700 to $2,500 per loan, and the CFPB said that customers complained that dealers lied about whether these products were mandatory or included them on contracts without borrowers’ knowledge.
The company “admitted no wrongdoing but agreed to the terms of the consent order with the CFPB to fulfill our commitment to continually provide ever-better service to our customers,” according to Toyota Motor Credit spokesman Vincent Bray.
“In most instances, TMCC has already addressed the areas of concern cited by the Bureau,” he added. “We will continue to enhance our practices to deliver the best possible customer experiences.”