The auto lending arm of Japanese automaker Toyota illegally added insurance products on car loans, then purposely made removing those policies difficult for thousands of borrowers, a federal consumer watchdog agency said Monday.
The Consumer Financial Protection Bureau (CFPB) also accused Toyota Motor Credit Corporation of taking too long to issue refunds for those insurance lines once customers cancelled them. As a result, Toyota has agreed to pay a $60 million fine, $48 million of which will go directly to customers.
Employees at Toyota dealerships often tacked on guaranteed asset protection and credit life and accidental health insurance policies, which added between $700 and $2,500 extra to each auto loan, CFPB officials said. Employees lied about those insurance products being mandatory or rushed borrowers through the paperwork, the agency said. That allowed Toyota to tack on higher finance charges to car loans, the agency said.