The claim alleges that Toyota Finance, along with insurer Aioi Nissay Dowa Insurance Company Australia (Adica), engaged in conduct that was “unjust, unfair, misleading, and unconscionable”.

The class action has been filed on behalf of individuals who obtained a car loan through Toyota Finance and were sold a Toyota-branded add-on insurance policy between 1 January 2010 and 5 October 2021.

The insurance products targeted in the case include Toyota Payment Protection Insurance, Toyota Finance Gap Insurance, and Toyota Extended Warranty Insurance.

This is the second class action currently being pursued by Echo Law against Toyota Finance.

The first, filed early last year, alleges that hundreds of thousands of customers paid increased interest on loans and that there was an undisclosed “flex commission” arrangement between Toyota Finance Australia and its dealerships, which encouraged the inflation of interest rates on customer loans.

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The Supreme Court has agreed to manage both proceedings together, recognising that many consumers may be impacted by both alleged practices.

Alex Blennerhassett, principal lawyer at Echo Law, stated that the most recent class action seeks to hold Toyota Finance and Adica accountable for “knowingly selling junk insurance to everyday Australians” that “offered no value” to customers.

She explained that, in many instances, “consumers were never told the insurance policies had been added to their car loan, or were told it was a requirement that they purchase the insurance”.

“This conduct is another example of big corporations putting profits before people,” Blennerhassett said.

The allegations follow a 2016 review by ASIC, which found that similar add-on insurance products sold by car dealerships often failed to deliver value to consumers. Specifically, they concluded that Toyota Finance and Adica engaged in:

• Misleading or deceptive conduct in contravention of the Corporations Act and/or the ASIC Act.

• Unconscionable conduct in contravention of the ASIC Act.

• Unfair conduct in contravention of the National Consumer Credit Protection Act 2009 (Cth).

Among those joining the class action are Kingsley and Jessika Smith, a working-class family from Windsor Gardens, South Australia, who unknowingly paid $1,445 for extended warranty insurance when purchasing their car in 2018.

“We had no idea we had been sold this insurance. If it had been brought to our attention, we never would have signed the contract because I know extended warranties are useless,” Kingsley Smith said.

“I thought we’d been treated fairly. Toyota is a well-known, trusted brand. We didn’t think they’d engage in this type of dodgy conduct.”

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