LETTING GO OF A RELIC OF THE PAST
I have spoken for years against Dealer Fees. They are also referred to as Doc Fees, Sales Fees, Prep Fees, Closing Fee, etc.
I’m here today to ask you to finally let it go. First, there is a bit of controversy about them. There have been multiple lawsuits filed against dealers concerning the fees, and the dealers usually lose.
First, the word “Doc Fee” is usually short for Documentary Prep Fee. One of the largest lawsuits hinged on this very wording. In most states, the only person who can charge an individual a fee to prepare a legal document is a licensed attorney. Installment Contracts and Bills of Sale are legal documents.
The second issue is that too many dealers and salespeople lie about them. I personally have been told, among other things, that it is:
- A Federal Tax on motor vehicle sales.
- A fee paid to the manufacturers to register the car. (Even used cars.)
- A surcharge by the state or manufacturer to dealers who sell vehicles too cheap.
- An FBI fee for accessing the Homeland Security database.
- A fee or tax paid to local county for processing title work.
Once, I was told it was a bank-loan processing fee. So I asked that it be removed, since I was paying cash. The salesman quickly said he couldn’t, since “Federal Doc Fee Law” said he had to charge everyone. I asked him for a copy of the law, and he said it was “illegal” to show it to customers.
All of these reasons are complete and utter malarkey. I do not know if the sales people made it up, or was taught to say that by the dealership. I saw through the lies, and anyone else with an internet connection can, too.
Most state consumer laws require that the dealer fee be included in the ad, either as part of the advertised price, or separately stated. Problem is, most dealers ignore this. To be fair, the states aren’t enforcing it yet. But what *can* be enforced is that if your customer has a copy of that ad, he may have a case against you for Unfair and Deceptive Trade Practices. And it wont be just one. Once any decent attorney gets that case, he or she will naturally ask if all the other customers of the dealership were also similarly misled about the pricing.
A recent case in South Carolina over the fees went against the dealer to the tune of nearly four million dollars. In this case, originally filed in 2006, the trial judge applied a ruling in another similar case and interpreted “closing fee” to mean a “predetermined set fee for the reimbursement of closing costs, but only those actually incurred by the dealer and necessary to the closing transaction.”