A California woman has sued Toyota Motor Credit Corp. and Toyota, alleging one of the manufacturer’s franchised dealerships sold her a maintenance plan for 10 service visits and exaggerated the combined savings over the life of the coverage by hundreds of dollars compared with the cost of the service she received.
Teresa Solis’ Southern District of California lawsuit did not count as defendants either of the California dealerships mentioned in her allegations, though the case involves 100 unknown “Doe Defendants” to be named later. She claims a Toyota dealership other than where she purchased the contract skipped four of the services and charged her for filters that were supposed to be covered.
Solis’ case accuses the defendants of one count of unjust enrichment, one count of fraud, one count of negligent representation, one count of violating the Magnuson-Moss Warranty Act, one count of violating the Lanham Act, two counts of violating the California Business and Professions Code and one count of breach of contract.
She also seeks class-action status for everyone who purchased a maintenance plan within 90 days of buying a vehicle from the defendants.
Neither Toyota nor Toyota Motor Credit Corp., its captive finance company, could comment on pending litigation, Toyota spokesperson Vincent Bray wrote in an email March 14.
Solis in 2020 bought a certified used 2019 RAV4 from Santa Margarita Toyota in Rancho Santa Margarita, Calif. She added an optional ToyotaCare Plus maintenance plan good for five years or up to 55,000 miles, financing that $1,025 coverage along with the vehicle itself through Toyota Motor Credit in a 72-month loan with 4.7 percent interest.
According to the lawsuit, Solis bought the maintenance plan based on Santa Margarita Toyota’s claims she would save money.
Solis was allegedly told the plan covered seven regular services and three major services occurring at 5,000-mile intervals starting at the 10,000-mile mark — her vehicle had 6,801 miles on the odometer at the time of purchase — and continuing through 55,000 miles. She could redeem the coverage for major services at 15,000, 30,000 and 45,000 miles.
“Toyota told Plaintiff that each Regular Service typically costs $100, and Major Services cost $400,” Solis’ lawsuit stated. “Thus, Defendants represented that Plaintiff’s Maintenance Plan was valued at $1,900.”
But when she brought the RAV4 to Toyota Carlsbad in Carlsbad, Calif., for the 20,000-mile regular service in July 2022, the store allegedly conducted the 30,000-mile major service and billed Toyota only $210. If she had bought the work at the retail price charged consumers, the bill would only have been $380 — also less than the purported $400 the Santa Margarita store had indicated, according to the lawsuit.
At 29,500 miles, Solis brought the RAV4 in for the 30,000-mile major service but allegedly only received the 35,000-mile regular service. Toyota Carlsbad allegedly only charged Toyota $30 and would have only charged her $43 if she paid retail — both less than the $100 she had been told.
“Plaintiff started to recognize a consistent pattern whenever she brought her car in for service,” the lawsuit stated. “Often, the dealership would skip scheduled services and bill Toyota amounts less than the value Plaintiff was told when she purchased the Maintenance Plan. She also realized the cash price for her scheduled services was less than the value Plaintiff was told by Defendants when she purchased the Maintenance Plan.”
Neither Santa Margarita Toyota nor Toyota Carlsbad managers responded to requests for comment.
Solis’ lawsuit estimates she’d only have paid between $800 and $900 compared with the $1,900 quoted. Solis’ attorney, John Ternieden, an associate at Singleton Schreiber in Sacramento, Calif., said in an email to Automotive News that “not all regular services were the cash price of $43 …. nor were all major services $380.” Other major services were less than $200 each, he wrote.
“In total, between the seven services our client actually received (which Toyota told her represented the entirety of her plan), the actual cash price would have been less than the price of the maintenance plan,” Ternieden wrote in an email March 11.
According the lawsuit, Toyota Carlsbad skipped the regular services for 20,000, 25,000, 40,000 and 55,000 miles, which were covered by the plan.
The lawsuit said Solis asked the service department about the lower-than-claimed charges and the premature service, and a representative said that “everything was being done as it should, and that Plaintiff was getting exactly what she paid for in the Maintenance Plan.”
At the 45,000-mile mark, the dealership told Solis she only had one more service remaining, not the two she expected, and it said she needed to pay for cabin and air filters even though those expenses were supposed to be included, the lawsuit said.
Even if Solis received all 10 services she was due under the plan, the $1,025 coverage would still have cost more than paying for the work retail, Ternieden said.
“Based on our client’s experience and information, we believe that it would have been less,” he wrote in another email March 14. “The bottom line is that our client did not receive the value she was promised by Toyota.”
Asked if having the air and cabin filters provided for free as Solis expected would have changed this cost-benefit calculation, Ternieden wrote March 25, “We don’t know what Toyota would have charged to replace the air and cabin filters. So, we cannot comment on hypotheticals. Our position remains that Toyota mispresented the value of the maintenance plan and did not provide our client with the value she was promised.”
Typically, prepaid maintenance plans give the buyer a discount relative to the cost of buying the individual covered services retail, said Stephen McDaniel, CEO of compliance firm F&I Sentinel.
A prepaid maintenance plan costing more than the combined maintenance expense “seems like a relatively large problem because you’re calling it prepaid maintenance, which implies that, ‘I’m prepaying for this maintenance and I’m not going to overpay,’ ” McDaniel said.
Some lenders set caps on the amount they’ll lend for a particular F&I product type to avoid imbalances between the price of the coverage and the cost of the services it provides, he said. He called these limits “some of the things that lenders are thinking about as a way to make sure that there actually is value.”