Toyota Financial Ordered to Pay $60M Penalty

by Matthew Guy

Published: November 20th, 2023

toyota financial ordered to pay 60m penalty

In yet another chapter of dealers (and their financial arms) behaving badly, Toyota Motor Credit has been levied $12 million civil fine and also order to fork over $48 million in restitution after a court found the organization played fast and loose with some rules.

At issue were items described by the court as “product bundles” which the Consumer Financial Protection Bureau alleges were nigh-impossible to cancel once pushed through the approval process. This, they say, drove up monthly payments of hapless customers. Anyone who’s been plunked into the business office of a dealership knows exactly the types of bundles to which the CFPB is alluding.

Interestingly, the company apparently did not admit or deny liability whilst agreeing to settle the case. A number – thousands, according to the regular – of customers seemingly complained about being saddled with these add-on bundles, alleging shadiness at the dealer level about if these packages were mandatory or the rushing of paperwork in apparent attempts to obfuscate true costs.

But the dealers aren’t all to blame, it seems. The regulator goes on to say that Toyota Motor Credit went out of its way to making the reversal of these charges “extremely cumbersome”, including the practice of routing callers to agents instructed to discourage cancellations. In some cases, refunds are alleged to not have been given at all – whether due to requests falling through the cracks, someone losing paperwork, or willful maliciousness is unclear.

According to reports, the consent order instructs Toyota Motor Credit to simplify the process for cancelling unwanted product bundles whilst also agreeing to monitor the conduct of its dealer body more closely. As well, it is suggested they also copped to ensuring employee pay and performance metrics are not tied to sales of these bundles but anyone with even a passing knowledge of dealer management techniques know that decree is all but impossible to enforce. In a statement, Toyota Motor Credit said it "admitted to no wrongdoing but agreed to the terms of the consent order with the Consumer Financial Protection Bureau to fulfill our commitment to continually provide ever-better service to our customers.”

And your kid promises to do their homework on time, as well.

[Image: Toyota]

Become a TTAC insider. Get the latest news, features, TTAC takes, and everything else that gets to the truth about cars first by subscribing to our newsletter.

#Toyota #crime #Dealerships #HighFinance

Matthew Guy

Matthew buys, sells, fixes, & races cars. As a human index of auto & auction knowledge, he is fond of making money and offering loud opinions.

More by Matthew Guy

Comments

Join the conversation

3 of 21 comments

Peter on Nov 22, 2023

No biggie just add another $60 million to Toyota’s $225 Billion debt pile. #Worlds most indebted company.

1 Reply
- Analoggrotto on Nov 23, 2023
  
  Totally a good reason to switch to Hyundai Kia for a healthier company serving higher ATPs.
  
  Like
Dukeisduke on Nov 27, 2023

A rare black eye for Toyota. I'd expect shenanigans from the dealer's F&I office - I experienced them when I bought my then-new 2013 Tacoma (and paid cash for it) eleven years ago, but I expect more from a corporate finance arm.

Have they been hiring people from Wells Fargo?

Like Reply

Recent Comments

SCE to AUX Introduce a modern V-16 and put it into a Celestiq-like vehicle instead of electric.
DungBeetle62 For where we're at in the product cycle, I think there are bigger changes afoot. With this generation debuting in 2018, and the Avalon gone, is the next ES to be Crown based? That'll be an interesting aesthetic leap.
Philip Precht When Cadillac stopped building luxury cars, with luxury looks, that is when they started their downward spiral. Now, they just look like Chevrolet knock-offs, not much luxury, no luxurious looks. Interiors are just generic. Nothing what they used to look like. Why should someone spend $80,000 on a Cadillac when they can spend a LOT less and get a comparable looking Chevrolet????
Ajla A time machine.
28-Cars-Later This question has been posed many times and we discussed it in depth around the time of the ATS and JdN. Then GM had 933 dealers left over from its glory days and ATS was intended to be volume lease fodder for all of those dealer customers. But of course the problem there is channel stuffed junk worked against the image they ostensibly were trying to create when they threatened products like Escala (and the image they thought they were creating with ELR). Cadillac had two choices in my view at the time, either drop 2/3rds of the dealers and focus on truly bespoke low volume product or abandon the pretense of exclusive/bespoke and build high volume models as they had essentially been doing since the last 1960s. Ten years on the choice they made was obvious, hence XT everything... XT an acronym for Xerox This when pointing at Chevrolets and Buicks.There's no "saving" a marque which doesn't wish to be saved. In the next major financial crisis Buick may be folded or consolidated into Chevrolet but Cadiwrack will just become a wrapper over whatever Chinesium infused junk the new openly owner/controlled SAIC GM wants it to be. Cadillac been gone for a long, long time.