Earlier this year, Bill S1031 was introduced in the New Jersey Legislature. The bill would require licensed dealerships to report their documentary preparation fees (Doc Fees) to the Attorney General’s office. Subsequently, the fees would be posted on the websites maintained by the Department of Law & Public Safety and the Division of Consumer Affairs.
As you know, Doc Fees are professional service fees charged by dealers to complete dozens of administrative tasks required by regulators and finance sources to process a new or used car deal. As you can see by the accompanying list of services on page 8, dealers save consumers valuable time and aggravation of getting on the phone, online or physically standing in line to complete the necessary tasks.
While the State of New Jersey does not regulate the amount of Doc Fees, and this bill does not propose regulating the amounts either, their disclosure is already regulated in two ways. N.J.A.C. 13:45A-26BN.2(b) requires dealers to clearly disclose all pre-delivery service fees (including Doc Fees) on the Retail Order Form. N.J.A.C. 13:45A-26A.5 requires dealers to include their Doc Fee in any motor vehicle price advertising. These regulations ensure consumers know up-front what they will be paying (in detail) at the point of purchase. While S1031 may seem duplicative, NJ CAR didn’t oppose the legislation, preferring to show our elected officials that the industry supports transparency.
At the same time S1031 was pending in the Senate Transportation Committee, NJ CAR began to hear whispers of possible legislation to impose a cap on Doc Fees. The Coalition has been aggressively making the case to elected officials that this is unnecessary.
The State of New Jersey does not regulate the professional service fees charged by lawyers, accountants, doctors, contractors, landscapers, barbers or dozens of other regulated professions serving the public. One of the primary benefits of a free market is that informed consumers can shop for the best deal. Dealers are already required to disclose their Doc Fees in two ways, with a possible third required disclosure if S1031 eventually becomes law.
The 500+ franchised new car and truck dealerships in New Jersey provide consumers with fierce inter-and intra-brand competition for sales and service. Doc Fee disclosures give car buyers ample opportunity to shop around and get the best deal on the vehicle they want and the Doc Fee they’ll pay.
NJ CAR conducted a Doc Fee survey in mid-February, with 175 dealerships (35% of all dealers) participating. The survey found that 43% of respondents (75 dealers) had a doc fee between $400 and $500, and nearly 80% had a doc fee in the $300-$600 range. A small percentage reported a doc fee below $300 or greater than $600. Hudson, Union and Morris counties had the highest average Doc Fee, while Cumberland, Cape May, Camden and Gloucester counties had the lowest averages.
Government should not cap what a business charges for the professional services it provides. A cap on what dealers can charge for a Doc Fee doesn’t come with a cap on the cost of providing those services. Inevitably, a government mandate that caps Doc Fees will force some dealers to charge higher prices for the vehicles they sell to cover their costs and earn a fair return on their investment.
