A federal agency charged with protecting consumers from predatory financial products on Monday scrapped a $60 million settlement designed to punish Toyota’s lending arm for overcharging borrowers.
Reuters reports, “According to an order canceling the Toyota settlement, the CFPB specifically waived requirements that Toyota pay tens of millions of dollars in refunds and redress to allegedly harmed consumers. The order dated May 12 did not provide a reason for the decision.”
The Settlement
In 2023, Toyota Motor Credit agreed to pay back $48 million to borrowers and pay a $12 million fine to settle claims it pushed borrowers into buying unnecessary products. The Consumer Financial Protection Bureau (CFPB) found that Toyota added between $700 and $2,500 to the average loan for optional services, like extended warranties, telling borrowers they were mandatory.
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The company then made the services hard to cancel, even setting up a cancellation hotline and training operators to make the process as cumbersome as possible.
This Week’s Cancellation
The CFPB has been a target of the Trump administration’s attempt to cut federal oversight. CNBC notes that the White House has “moved to gut the CFPB, most recently attempting to terminate as many as 1,500 of the bureau’s 1,700 employees. A judge has stopped those cuts.”
The move comes days after the administration ended an effort to prevent car dealers from charging so-called “junk fees” in new car sales.