The Federal Trade Commission and the State of Arizona have initiated legal action against Coulter Motor Company, an Arizona-based dealership, for engaging in practices that allegedly deceive consumers and discriminate against Latino buyers. Coulter, along with its former general manager Gregory Depaola, will pay $2.6 million to settle the lawsuit, with most of the funds allocated for consumer refunds.
The complaint alleges that Coulter Cadillac Tempe and Tempe Buick GMC engaged in deceptive pricing practices by charging consumers for unauthorized add-ons and other fees. A survey revealed that 92 percent of customers were charged for at least one unauthorized add-on or believed it was required.
“Coulter used junk fees and other illegal tactics to drive up prices for consumers, especially Latino consumers,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “The FTC will continue cracking down on practices that drive up prices, cheat consumers, and undercut honest sellers.”
According to the complaint, Coulter advertised vehicles online at significant discounts from their suggested retail prices but added substantial fees when customers arrived at the dealership. These included a "market adjustment" fee and charges for pre-installed add-ons such as vehicle identification number etching, window tinting, nitrogen-filled tires, and theft recovery services.
The complaint also alleges discriminatory practices against Latino consumers who paid nearly $1,200 more in interest and add-on charges compared to non-Latino White customers. These costs were attributed to higher interest rate markups on financing and increased charges for various add-on products.
Coulter and Depaola are charged with violations of the FTC Act, the Equal Credit Opportunity Act, and the Arizona Consumer Fraud Act. Under a proposed federal court order with the FTC and State of Arizona, Coulter must pay a $2.6 million judgment—$2.35 million of which will be used for consumer refunds—and establish a comprehensive fair lending program.
The Commission's vote authorizing staff to file the complaint was unanimous at 5-0. The case has been filed in the U.S. District Court for the District of Arizona.
NOTE: The Commission files complaints when it believes defendants are violating or about to violate laws in ways that serve public interest. Stipulated final orders become law once approved by a District Court judge.
FTC staff attorneys Sanya Shahrasbi and Brian Berggren are handling this matter.
The Federal Trade Commission works to promote competition while protecting and educating consumers about frauds and scams through resources available at consumer.ftc.gov.
