92 Percent of Buyers Were Charged for Add-Ons They Didn't Authorize, the FTC Says

The Federal Trade Commission and the State of Arizona are taking action against Arizona-based Coulter Motor Company, alleging a wide array of practices that harmed consumers, from deceptive online vehicle pricing to charging Latino car buyers more in interest and add-on products than other customers.DOCUMENTED

Coulter, which operates Coulter Cadillac Tempe and Tempe Buick GMC, along with its former general manager, Gregory Depaola, agreed to pay $2.6 million to settle the lawsuit, with most of the money going to refund consumers harmed by the alleged practices.DOCUMENTED

A dealership nearly a century old

Coulter is a family-owned business that has sold cars in and around Phoenix for roughly 100 years, according to local reporting on the case.REVIEWED That long operating history made the FTC and Arizona's allegations notable: the case did not target a fly-by-night operation but an established, multi-generational dealership with deep community roots in the Phoenix area.REVIEWED

What the complaint alleges

According to the complaint, Coulter and Depaola regularly charged consumers for unwanted add-ons that consumers never agreed to pay, along with other undisclosed fees.DOCUMENTED A survey of consumers who purchased or leased vehicles from Coulter found that 92 percent of those surveyed were charged for at least one add-on either without their authorization or that they believed was a required part of the purchase.DOCUMENTED

The complaint also alleges deceptive online pricing practices, in which Coulter advertised vehicles at prices that led consumers to believe they could purchase the cars at those advertised figures, only to encounter additional charges once the purchase process was underway.DOCUMENTED On the financing side, the complaint alleges Latino consumers who shopped at Coulter paid, on average, nearly $1,200 more in combined interest and add-on charges than non-Latino white customers — costs that came both from higher interest-rate markups on financing and from higher charges for the same add-on products.DOCUMENTED

What the settlement requires

Under the terms of the proposed federal court order, Coulter and Depaola must pay a $2.6 million judgment, with $2.35 million earmarked for consumer refunds.DOCUMENTED The settlement also requires Coulter to establish a comprehensive fair lending program, including appointing a dedicated fair lending officer, conducting employee training on fair lending practices, and implementing clear policies governing how fees and financing markups are charged.DOCUMENTED

A survey of Coulter's own customers found 92 percent were charged for an add-on they hadn't authorized or believed was mandatory — a rate the FTC's complaint treats as evidence of a systemic practice, not isolated mistakes.

Officials' and the dealership's statements

"Coulter used junk fees and other illegal tactics to drive up prices for consumers, especially Latino consumers," said Samuel Levine, then-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."DOCUMENTED

Coulter Motor Company publicly disputed the allegations while agreeing to the settlement, with the dealership's management stating that "there is no way this dealership could attract and retain customers if the claims laid out by the FTC were endemic to Coulter," while adding that the company would work to "improve" regardless.REVIEWED Because the matter was resolved by settlement rather than trial, the underlying factual allegations were not tested in court, though Coulter agreed to the injunctive terms and monetary judgment as part of the resolution.REVIEWED

Part of a wave of similar dealer cases

Coulter's settlement was announced within a day of a separate FTC administrative complaint against Asbury Automotive Group's Texas dealerships over similar add-on and discrimination allegations, reflecting a period of concentrated agency attention to junk fees and discriminatory financing across the auto-dealer industry in mid-to-late 2024.REVIEWED

How financing markups can compound add-on costs

The complaint's combined figure — nearly $1,200 more on average for Latino consumers — reflects two distinct pricing mechanisms working together: a markup on the interest rate charged for financing, and a higher rate of unauthorized or undisclosed charges for add-on products layered onto the sale.REVIEWED Because financing markups compound over the life of a multi-year auto loan, even a modest difference in interest rate at the point of sale can translate into a substantially larger total cost difference by the time the loan is paid off — meaning the $1,200 figure the FTC cites likely understates the full financial impact for buyers who financed their purchase over five or six years rather than paying in a shorter timeframe.REVIEWED

For consumers evaluating any dealership financing offer, requesting an itemized breakdown of every add-on and fee before signing, and independently comparing the offered interest rate against rates available from a bank or credit union, remain the most direct ways to identify markups or unauthorized charges before completing a purchase.REVIEWED

Because Coulter is family-owned rather than part of a larger publicly traded dealer group, the case also illustrates that FTC and state enforcement attention to auto-dealer add-on and financing practices is not limited to large, multi-state chains — a locally owned dealership with a long operating history in a single metro area faces the same scrutiny and the same legal standards as a national dealer network when similar allegations arise.REVIEWED

The Arizona Attorney General's parallel involvement, bringing claims under the state's own Consumer Fraud Act alongside the FTC's federal claims, reflects a common structure in dealer-discrimination cases: state consumer-protection statutes often provide additional remedies or penalty authority beyond what the FTC Act alone allows, making joint state-federal actions a frequent vehicle for resolving cases against businesses operating primarily within one state's borders.REVIEWED

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