Arizona auto dealer to pay $2.6M to settle fraud suit

A Phoenix-area auto dealer will pay $2.6 million to settle a consumer fraud lawsuit filed by the Arizona attorney general and the Federal Trade Commission.

Attorney General Kris Mayes and the FTC announced the settlement of a lawsuit against Arizona-based Coulter Motor Company, which operates Coulter Cadillac Tempe and Tempe Buick GMC, for engaging in a wide array of practices that harm consumers, from deceptive online vehicle pricing to charging Latino car buyers more in interest and add-on products.

Subject to final court approval, Coulter, along with former general manager Gregory Depaola, will pay $2.6 million to settle the lawsuit, most of which will go to provide refunds to harmed consumers, the AG said.

In their complaint, the FTC and the state allege that Coulter, along with Depaola, regularly charged consumers for unwanted add-ons that consumers never agreed to pay and other bogus fees.

According to the complaint, Coulter advertised prices for cars online at significant discounts under the cars’ suggested retail prices, in many cases thousands of dollars less.

But consumers complained that when they arrived at the dealership, they were told the advertised price was not available and instead were offered deals adding hundreds or thousands of dollars in a so-called “market adjustment,” for supposed add-ons that were pre-installed and other miscellaneous fees.

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The add-ons included items like vehicle identification number etching, window tinting, nitrogen-filled tires, and theft-recovery services that Coulter would deceptively tell consumers were required to purchase the car, the complaint alleges.

The complaint also alleges that Coulter discriminated against Latino consumers in vehicle transactions, with Latino customers paying an average of nearly $1,200 more in interest and add-on charges than non-Latino white buyers in the form of higher markups on financing and charges for various add-on products.

The proposed settlement also requires Coulter to establish a comprehensive fair-lending program that includes appointing a fair-lending officer, conducting employee training, and implementing policies for charging fees and markups.

Consumers who believe they have been defrauded can file a complaint with the Attorney General’s Office online at www.azag.gov/complaints/consumer or by calling the office at 1-800-352-8431.

Consumers may also file a complaint with the FTC by visiting ftc.gov or by calling 1-877-382-4357.