Toyota fined $60 million for illegally bundling high-cost protection products

Toyota Financial Products Investigation

Toyota customers have complained that they were deceived  the automaker’s in-house financing services unit by buying products they couldn’t cancel, have resulted in a multimillion fine and investigation by the federal  Consumer Financial Protection Bureau.

According to the charge, Toyota Motor Credit sells 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.

The agency said that thousands of consumers subsequently complained that dealers lied about whether these products were mandatory, or rushed the paperwork so they wouldn’t realize how much they were paying.

The regulators said that Toyota Motor Credit then “devised a scheme to retain the revenue from these products” and made it “extremely cumbersome” to cancel the added-on bundles, and failed to provide refunds to consumers who did cancel. The company, the CFPB charged, also “falsely told consumer reporting companies that borrowers had missed payments, and it failed to correct consumer reporting errors it knew were wrong.”

 

Toyota has not yet responded publicly to the settlement. It is among the largest indirect auto lenders in the United States, with nearly five million customer accounts and more than $135 billion in assets.

The CFPB is ordering Toyota Motor Credit to pay $48 million to harmed consumers, and pay a $12 million penalty into the CFPB’s victims relief fund.

“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. “Given the growing burdens of auto loan payments on Americans, we will continue to pursue large auto lenders that cheat their customers.”

Odometer Tampering and Fraud Claims

 

When the odometer of a vehicle is misrepresented, it typically involves fraudulent practices related to the vehicle’s mileage. This can lead to various claims and legal actions, depending on the jurisdiction and the circumstances of the misrepresentation.

Here are some common types of claims and actions that can be pursued in cases of odometer misrepresentation:

  1. Odometer Fraud Claims: Odometer fraud involves intentionally misrepresenting the mileage on a vehicle to increase its apparent value or make it more appealing to buyers. In such cases, a buyer may have legal claims against the seller for the misrepresentation.
  2. Breach of Contract: If there was a written contract or sales agreement that included specific information about the vehicle’s mileage, and the seller knowingly provided false information, the buyer may have a breach of contract claim.
  3. Violations of Federal and State Laws: In the United States, the federal government has the “Motor Vehicle Information and Cost Savings Act,” which makes it illegal to tamper with or alter an odometer. State laws also address odometer fraud. Violations of these laws can lead to penalties, fines, and civil liability.
  4. Consumer Protection Laws: Many jurisdictions have consumer protection laws that prohibit deceptive trade practices. Odometer fraud could be considered a violation of these laws, leading to claims and potential legal action.
  5. Tort Claims: In some cases, odometer fraud could lead to tort claims, such as fraud, misrepresentation, or even negligence, if the seller’s actions are deemed reckless or intentional.
  6. Federal Odometer Act (FOA) Claim: In the United States, the Federal Odometer Act (FOA) allows consumers to seek damages for odometer fraud, which includes actual damages or a civil penalty up to three times the amount of actual damages, whichever is greater.
  7. Rescission of the Sale: In some cases, the affected party may seek to rescind the sale, effectively voiding the transaction and returning the vehicle to the seller while recovering the purchase price.

 

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