Toyota to pay $60 million for illegal lending, credit reporting misconduct-US regulator

(Reuters) – Toyota’s U.S.-based auto financing unit will pay $60 million in fines and restitution to settle a U.S. regulator’s charges it illegally prevented borrowers from canceling product bundles that increased their monthly car loan payments.

The Consumer Financial Protection Bureau on Monday said Toyota Motor Credit will pay a $12 million civil fine, and $48 million to harmed consumers.

Toyota Motor Credit provides financing for people who buy vehicles at Toyota dealerships.

It also offers products, typically at a cost of $700 to $2,500 per loan, that offer protection when vehicles are stolen, damaged, or require parts and service after warranties expire, and when borrowers die or become disabled.

According to the CFPB, thousands of consumers complained to Toyota Motor Credit that dealers lied about whether these products were mandatory, or rushed the paperwork so they wouldn’t realize how much they were paying.

The regulator said Toyota Motor Credit then made it “extremely cumbersome” to cancel the bundles, failed to provide refunds to consumers who did cancel, and tarnished credit reports by falsely claiming that borrowers had missed payments.

Toyota Motor Credit did not admit or deny liability in agreeing to settle. It did not immediately respond to a request for comment.

(Reporting by Jonathan Stempel in New York; Editing by Chizu Nomiyama)