Toyota Credit Business Fined $60 Million for Downgrading Customers’ Credit
Toyota, one of the world’s largest car companies, has been fined $60 million by the U.S. Consumer Financial Protection Bureau (CFPB) for overcharging customers on their loans. According to the CFPB’s report, Toyota Motor Credit Corporation has been found to degrading borrowers’ credit ratings without justifiable reason, like existing delinquencies or bankruptcy.
The CFPB found that Toyota’s practice of lowering customers’ credit scores was based on “inaccurate information” and “improperly inflated loan balances.” This means is that customers who were deemed in good financial standing by Toyota were being ejected from the company’s “preferential” credit program. As a result, these customers often found themselves paying more on their loans than expected.
Moreover, the CFPB added in its report that Toyota had failed to adequately oversee its credit department and provide reasonable oversight. As a result, the company has had to pay $21.1 million in consumer compensation, a $3.2 million penalty, and $35.9 million in refunds to more than 800,000 customers.
In a statement, Toyota vowed to strengthen oversight and prevent similar problems from occurring again: “Toyota Credit takes these matters seriously and has worked hard to address the issues raised by the CFPB. We are taking comprehensive corrective action and have implemented enhanced oversight and controls to ensure similar issues do not arise in the future.”
Toyota’s $60 million fine serves as a reminder of how important it is for companies to properly manage their finances and adequately oversee their credit departments. In this case, Toyota’s negligence and lack of proper oversight was particularly costly, both for the company and for its customers.
At the same time, the CFPB’s findings also serve to underscore the importance of staying vigilant and persistent about managing your credit score so that you can protect yourself from unfair practices. This is especially true for those with lower credit scores who may be more likely to be taken advantage of and fall prey to unscrupulous lenders and credit departments.
