September 26, 2023

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Toyo Takes $7.6M Repo Related Legal Hit

Toyota Motor Credit Corp. will pay $7.6 million to settle allegations of unfair lending practices brought by the office of Attorney General Andrea Campbell.

According to the office of the attorney general, a significant portion of that sum, approximately $5.5 million, will be used to eliminate debts owed to Toyota by as many as 500 borrowers in Massachusetts.

According to the attorney general’s office, the remaining $2.1 million will be used to pay for the years-long investigation, the costs of implementing the agreement, and some direct payments to borrowers.

The attorney general’s office has been looking into “unfair and predatory collection practices” by lenders and those who service loans, and the Toyota agreement is the latest in a long line of investigations.

More than $30 million was received in two previous settlements, one with Santander Consumer USA and the other with Credit Acceptance Corp.

The allegations against Toyota focus on how the lender communicated with its borrowers after they defaulted on their loans and had their cars taken away.

One of the claims was that Toyota broke consumer protection laws that say creditors can’t contact debtors more than twice in a seven-day period. Toyota was accused of breaking these laws.

The other claim is that Toyota failed to adequately inform debtors about the status of their loans following repossession. The amount still owed may be contingent on how the value of the repossessed vehicle is determined, so repossession of a vehicle does not necessarily eliminate a debt.

Whether the repossessed vehicle is valued at fair market value or the amount it sells for at auction is one of the factors that can make the calculation of outstanding debt more difficult.

According to the office of the attorney general, Toyota “failed to provide certain consumers with sufficient information about the calculation methods.”

According to the office of the attorney general, “this kind of information can be helpful to consumers determining how to respond to a lender’s collection efforts in the best way.”

According to a press release, Campbell stated, “Consumers facing repossession and collection actions on their vehicles deserve clear and transparent information from auto lenders.”

She stated, “It is our hope that the debt waiver and funds secured through this settlement will assist hundreds of residents in getting the relief they need and deserve — and build on our efforts to provide families across Massachusetts with economic opportunity.”

Toyota “has represented… that it has substantially adopted compliant practices… as of at least August 2018,” according to the office of the attorney general, despite the fact that the alleged unfair practices date back to 2017.

Toyota agreed to accept the settlement “without admitting any facts, liability, or wrongdoing, in the interest of resolution of this matter and for settlement purposes only” in an agreement that was filed in Suffolk Superior Court on January 17.

In response to the settlement, Toyota issued a statement stating that it is “committed to doing what’s right for our customers.” In our sales, customer service, and administrative practices, the company strives to consistently comply with all state laws.

According to the statement, “TMCC admits to no wrongdoing in settlement with the state of Massachusetts.” Our post-repossession notices were updated in 2018 by TMCC to reflect the court’s interpretation of the state statute.

A lawsuit brought by then-Attorney General Maura Healey, who was elected governor in 2018, was settled in 2019 for more than $27 million by Credit Acceptance Corp., a national subprime auto lender. It was the largest settlement of its kind at the time.

Over 3,000 borrowers were made eligible for debt relief and credit repair as a result of that settlement.

According to the office of the attorney general, another subprime auto lender, Santander Consumer USA, agreed to pay $5.56 million to settle claims that it “did not provide sufficient disclosures to consumers as it pertains to the company’s auto loan debt collection practices.”

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