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Car Dealer Fined A Whopping $2.6 Million Dollars!

Written by CarPro | Aug 17, 2024 9:46:27 PM

This one my friends, will likely send shock waves through the car dealership network nationwide, at least I hope it does.  This dealership was doing things I’ve railed against for many years. - Car Pro Show Host Jerry Reynolds

 

An Arizona-based automotive dealer will pay $2.6 million to settle a lawsuit for deceptive pricing and discriminatory practices.  This follows legal action taken by the Federal Trade Commission and the State of Arizona against Coulter Motor Company.  The FTC and the Arizona Attorney General charged the dealership and key employees with using bogus online pricing to entice consumers, tacking on thousands in junk fees and charging Latino customers extra.

According the FTC press release below dated August 15th, 2024:

 

The Federal Trade Commission and State of Arizona are taking action against Arizona-based Coulter Motor Company 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. Coulter, along with its former general manager, Gregory Depaola, will pay $2.6 million to settle the lawsuit, most of which will go to provide refunds to consumers harmed by defendants’ allegedly unlawful actions.

In the complaint announced today, the FTC and State of Arizona allege that Coulter, which operates Coulter Cadillac Tempe and Tempe Buick GMC, along with Depaola, regularly charged consumers for unwanted add-ons that consumers never agreed to pay and other bogus fees. A survey of consumers who purchased or leased cars from Coulter found that 92 percent of the consumers surveyed were charged for at least one add-on without their authorization, or that they thought 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 prices for cars online at significant discounts under the cars’ suggested retail prices, in many cases thousands of dollars less, leading consumers to think they could purchase the advertised car for that advertised amount. Consumers complained that when they arrived at the dealership, they were told the advertised price was not available. Instead, the dealership added hundreds or thousands of dollars more than the advertised price in a so-called “market adjustment,” supposed add-ons that were pre-installed on the car, and other miscellaneous fees.

The add-ons included items like vehicle identification number etching, window tinting, nitrogen-filled tires, and theft recovery services – items that Coulter would deceptively tell consumers were required to purchase the car. The complaint alleges that in some cases, Coulter charged consumers twice for the same add-ons, once individually and again as part of an add-on “package.”

The complaint also alleges that Coulter discriminated against Latino consumers in vehicle transactions. On average, Latino consumers who shop at Coulter pay nearly $1,200 more in interest and add-on charges than their non-Latino White counterparts. These increased costs come in the form of higher interest rate markups on financing, as well as higher charges for various add-on products.

The complaint charges Coulter and Depaola for violations of the FTC Act, the Equal Credit Opportunity Act, and the Arizona Consumer Fraud Act.

Under the terms of the proposed federal court order with the FTC and the State of Arizona, Coulter and Depaola are required to pay a $2.6 million judgment, of which $2.35 million will be used to provide refunds to consumers harmed by their allegedly unlawful actions. 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.

To read more visit the FTC's website.

Graphic Credit: Scott Maxwell LuMaxArt/Shutterstock.com.