The Consumer Financial Protection Bureau yesterday issued an enforcement action against Toyota Motor Credit Corp. that will see the lender pay $60 million in fines and refunds to consumers for violating the Fair Credit Reporting Act and the Consumer Financial Protection Act by making it difficult for customers to cancel products, delaying the issuance of refunds, and furnishing false data to the credit reporting agencies.
What it Did: Remember this?
When customers wanted to cancel some of their accounts, Toyota directed those consumers to a “retention hotline” which was staffed by representatives whose primary objective was to prevent customers from canceling. More than 118,000 calls were routed through this hotline. Only after customers verbally requested to cancel three times were they told they had to submit the request in writing. The cancellation process was an unfair act under the CFPA, the CFPB determined.
- Rather than issue refunds to customers, Toyota applied the refund as an additional payment toward the principal on the loan, which delayed consumers getting their money until the end of the lease or the term on their loan. Consumers were often informed when attempting to cancel that they would not receive refunds.
- Toyota Motor Credit reported customer accounts as delinquent with the credit reporting agencies even though those customers had already returned leased vehicles and did not correct negative information even though it knew it was wrong. Toyota relied on dealers who were receiving vehicles that were being returned to notify the lender so it could update its records accordingly, but dealers were often slow to report those returns, leading Toyota to report that consumers were delinquent even though the vehicle had been returned. This policy wasn’t updated until July 2020, according to the CFPB.