The settlement was terminated by the new head of the Department of Government Efficiency
May 14, 2025 at 09:19
- The CFPB dropped a $60M settlement with Toyota after accusations of fraudulent bundles.
- Toyota reportedly added $700 to $2,500 worth of products to car loans, misleading consumers.
- Its financing company also made it difficult for customers to cancel bundled products on loans.
The U.S. Consumer Financial Protection Bureau (CFPB), which President Trump has long wanted to dismantle, has just tossed out a Biden administration settlement from 2023 that required Toyota to pay $60 million for preventing borrowers from canceling product bundles that boosted their monthly loan payments. As you can imagine, Toyota is thrilled with this outcome. Unfortunately, this decision by the CFPB isn’t exactly a win for everyday, working-class Americans.
In late 2023, the CFPB concluded that the automaker’s financing company, Toyota Motor Credit Corporation, had lied to consumers about whether or not certain product bundles were optional. These include Credit Life and Accidental Health coverage that pays the remaining balance if a borrower dies or becomes disabled.
Read: Toyota Kills bZ4X To Welcome New bZ
On average, these bundles tacked on anywhere from $700 to $2,500 to each loan. That meant higher loan amounts, bigger monthly payments, and, naturally, more interest. To make matters worse, the CFPB found that it was “unreasonably difficult” for consumers to cancel these product bundles.
Customers were directed to a hotline where employees were ordered to discourage cancellations. These representatives were reportedly told to only approve cancellations if the customer asked – wait for it – three times, and even then, they’d be told that all cancellations had to be submitted in writing. This sounds less like customer service and more like a bizarre game of red tape.
The Consumer Financial Protection Bureau had initially been ordered to pay $48 million to affected customers and a $12 million penalty into a relief fund. But now, thanks to a signed order from CFPB acting director Russell Vought, the settlement has been scrapped, allowing Toyota to walk away without consequence, as reported by Reuters. Interestingly, Vought is taking over Elon Musk’s role as the head of the Department of Government Efficiency (DOGE).
The consent order provides no reason why the settlement has been terminated. However, it likely has something to do with the fact that President Trump wants to minimize CFPB oversight. It’s understood that as many as 1,500 of the 1,700 employees at the bureau are having their jobs terminated. This could ultimately help large corporations across the country, like Toyota, while simultaneously punishing consumers by stripping away some of their protections.
