Toyota’s Credit Business Fined $60M for Overloaded Loans
Toyota has been on the wrong side of the law once again, this time in the form of a U.S. Department of Justice ruling that has fined the motor manufacturer’s credit business $60 million for saddling customers with over-loaded loans.
The ruling, which was announced earlier this week, comes on the heels of other Justice Department fines for alleged violations of U.S. consumer protection laws. The department said Toyota’s captive finance arm, Toyota Motor Credit Company, had deliberately engaged in unfair credit practices when it lent funds to customers during a five-year period ending in 2016.
According to Justice Department officials, the company misled customers when offering them loans by allegedly hiding information about interest rate discounts. Furthermore, Toyota also misrepresented optional payment protection programs and absentmindedly allowed vehicle buyers to pay inflated interest rates.
The Justice Department claims that these practices led to customers taking on loans with owners’ manual payments higher than they had expected. All things taken into consideration, the department said more than $3.4 billion worth of loans had been issued with inflated payments.
As it stands, the fine imposed on Toyota’s credit business is said to be one of the biggest ever handed down by the Justice Department against a finance entity for such violations.
The agreement hit Toyota with a major financial penalty but also required the company to pay $3,400 each to about 54,000 customers whose loans had been loaded with excessive interest. The settlement agreement also states that Toyota must enhance its loan-financing guidelines so that similar violations do not occur again.
The department made it very clear in a statement that mistreating customers is not acceptable and that it would pursue similar cases even more aggressively whether they involve major corporations or not.
This announcement comes as a stark reminder to all financial institutions to be mindful of how they dispose loans among their clients and to make sure the customers are fully aware of each detail of the contract. It also serves as a signal to any company engaging in such practices that it is just a mere matter of time before the Justice Department steps in and issues appropriate financial penalties.
Toyota’s Credit Business Fined $60M for Overloaded Loans
Toyota has been on the wrong side of the law once again, this time in the form of a U.S. Department of Justice ruling that has fined the motor manufacturer’s credit business $60 million for saddling customers with over-loaded loans.
The ruling, which was announced earlier this week, comes on the heels of other Justice Department fines for alleged violations of U.S. consumer protection laws. The department said Toyota’s captive finance arm, Toyota Motor Credit Company, had deliberately engaged in unfair credit practices when it lent funds to customers during a five-year period ending in 2016.
According to Justice Department officials, the company misled customers when offering them loans by allegedly hiding information about interest rate discounts. Furthermore, Toyota also misrepresented optional payment protection programs and absentmindedly allowed vehicle buyers to pay inflated interest rates.
The Justice Department claims that these practices led to customers taking on loans with owners’ manual payments higher than they had expected. All things taken into consideration, the department said more than $3.4 billion worth of loans had been issued with inflated payments.
As it stands, the fine imposed on Toyota’s credit business is said to be one of the biggest ever handed down by the Justice Department against a finance entity for such violations.
The agreement hit Toyota with a major financial penalty but also required the company to pay $3,400 each to about 54,000 customers whose loans had been loaded with excessive interest. The settlement agreement also states that Toyota must enhance its loan-financing guidelines so that similar violations do not occur again.
The department made it very clear in a statement that mistreating customers is not acceptable and that it would pursue similar cases even more aggressively whether they involve major corporations or not.
This announcement comes as a stark reminder to all financial institutions to be mindful of how they dispose loans among their clients and to make sure the customers are fully aware of each detail of the contract. It also serves as a signal to any company engaging in such practices that it is just a mere matter of time before the Justice Department steps in and issues appropriate financial penalties.
