Trump's Consumer Watchdog Exonerates Toyota for Misleading Customers | Carscoops

      The new head of the Department of Government Efficiency has canceled the settlement.

      

      11 hours ago

      By Brad Anderson

      The CFPB has annulled a $60 million settlement with Toyota following allegations of deceitful product bundles.

      Reports indicate that Toyota added between $700 and $2,500 worth of products to car loans, misleading consumers in the process. Additionally, its financing branch made it challenging for clients to cancel bundled products associated with these loans.

      The U.S. Consumer Financial Protection Bureau (CFPB), which President Trump has sought to dismantle, has just terminated a 2023 settlement from the Biden administration that mandated Toyota to pay $60 million for obstructing borrowers from canceling product bundles that increased their monthly loan payments. Unsurprisingly, Toyota is pleased with this development. However, this CFPB decision is not favorable for everyday working-class Americans.

      Toward the end of 2023, the CFPB determined that Toyota Motor Credit Corporation, the automaker's financing entity, had misled consumers about the optionality of certain product bundles. These bundles included Credit Life and Accidental Health coverage, which pays off the remaining loan balance if a borrower dies or becomes disabled.

      On average, these bundles added between $700 to $2,500 to each loan amount, leading to higher loan totals, increased monthly payments, and consequently, more interest. Furthermore, the CFPB found it "unreasonably difficult" for consumers to cancel these bundles.

      Customers were referred to a hotline where staff were instructed to dissuade cancellations. Representatives were reportedly told to approve cancellations only if customers requested them—wait for it—three times, and even then, they informed customers that all cancellations needed to be submitted in writing. This scenario resembles less of a customer service interaction and more of an absurd bureaucratic obstacle.

      Initially, the Consumer Financial Protection Bureau had been compelled to pay $48 million to affected customers, alongside a $12 million penalty into a relief fund. However, a signed order from acting CFPB director Russell Vought has now annulled the settlement, allowing Toyota to evade repercussions, as reported by Reuters. Notably, Vought is replacing Elon Musk as the leader of the Department of Government Efficiency (DOGE).

      The consent order does not state the reason for the termination of the settlement, but it likely relates to President Trump’s desire to reduce CFPB oversight. It is believed that up to 1,500 of the bureau's 1,700 employees may lose their jobs. This could potentially benefit large corporations like Toyota while simultaneously harming consumers by diminishing their protections.