AG Mayes takes tough action against car dealership accused of fraud

TEMPE, Arizona – One of Arizona’s oldest family-owned auto dealerships has agreed to comply with a court order regarding allegations of deception and discriminatory sales practices.

The Coulter Motor Company and one of its former managing directors must pay $2.6 million. The majority of the sum will go to customers who were allegedly harmed by the company's actions.

“Coulter's deceptive and discriminatory practices are unacceptable,” Attorney General Kris Mayes said in a statement to 12News. “My office will not tolerate this type of predatory behavior.”

According to a complaint filed Thursday, Mayes and the FTC alleged that Coulter engaged in misconduct at two of the company's locations: Coulter Cadillac Tempe and Tempe Buick GMC. The lawsuit accuses the company of violating consumer rights and fraud laws.

According to Lindsey Coulter, Coulter's operations manager, the dealership agreed to the court order to avoid what could be years of litigation.

“We respectfully deny all of the FTC’s allegations,” Coulter said.

Evidence cited by the prosecution and presented in court states that the company:

• advertised non-existent lower prices on the Internet to attract customers to the car dealership
• Customers are charged unwanted additional services and fees when making a purchase
• charged twice when purchasing the same “add-ons”
• discriminated against Latino consumers by charging them nearly $1,200 more in “interest and additional fees” than their non-Latino white counterparts

The lawsuit alleges that it was no secret at the dealership that customers had complained about unfair business practices.

“The defendant (General Manager) received complaints from consumers… as well as updates from employees… regarding persistent bait-and-switch tactics and hidden additional fees,” the lawsuit states.

12News was unable to reach former general manager Gregory Depaola, who was named in the complaint.

The settlement requires Coulter to implement a fair lending program, appoint a fair lending officer, provide employee training and implement new policies for charging fees and surcharges.

“We are committed to doing things right and we will continue to do so,” said Lindsey Coulter.

Coulter claims the company was blindsided by the allegations. For example, she said she had seen no evidence that customers were charged twice for the same “additional services.”

“We combed through all the information we gave to the FTC two years ago to see if any of it was valid. It's not valid,” Coulter said.

The lawsuit cites evidence including online advertisements that allegedly touted a nonexistent “Coulter Price” and refers to “numerous instances” in which defendants charged customers “hundreds or thousands of dollars more than the advertised price, including for a previously undisclosed and fabricated 'market adjustment,' allegedly for pre-installed add-ons and other fees.”

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