Pub. 18 2019-2020 Issue 3

N E W J E R S E Y C O A L I T I O N O F A U T O M O T I V E R E T A I L E R S 23 new jersey auto retailer W W W . N J C A R . O R G The DCA's regulations define "documentary service" as the preparation and processing of documents in connection with the transfer of license plates, registration or title, and the preparation and processing of other documents relating to the sale or lease of a motor vehicle. Regarding doc fees, these regulations prohibit dealers from telling consumers that the government requires dealers to perform any documentary service. 1 The regulations further require dealers to itemize the actual documentary service and the fee for each service in writing and at least 10-point font, on the sales document. New Jersey courts have held that dealers can meet the item- ization requirements for doc fees by breaking them down into two categories: 1. "clerical fees," which refers to the actual documentary service, and 2. "messenger fees," which refers to the cost of sending or transmitting the documents. While there is presently no "cap" on doc fees, New Jersey's courts have developed a standard through which they com- pare a dealer's doc fee to the doc fees of other dealerships in the local area to determine whether the challenged fee is excessive and therefore, "unconscionable." Additionally, as a result of the settlement of an industrywide class action in New Jersey, all Retail Order Forms must include the following notice to consumers: (a) that the documentary fees are service fees established by the Automotive Retailer in amounts that cover costs and reflect the value of the benefit of the service, (b) that in some cases, the fee includes some optional services that may be performed by the consumer, and (c) that title and registration fees may be estimated and that the Automotive Retailer will refund any overcharge to customers in the ordinary course of business. Finally, the DCA has adopted complex regulations governing motor vehicle advertising practices. Notably, those regulations address vehicle price advertising and how a dealer's fees must be disclosed in advertisements. Specifically, the regulations require that every sale or lease advertisement that sets forth a specific vehicle price must contain the following statement, verbatim: ".. price(s) include(s) all costs to be paid by a consumer, except for licensing costs, registration fees and taxes." The DCA's regulations define the phrase "all costs to be paid by a consumer" in this statement to include dealer preparation fees and any other costs to be borne by a consumer that are not government fees. The DCA takes the position that this definition of "all costs to be paid …" includes dealer doc fees. Accordingly, mandatory dealer prep fees and doc fees must be included in a vehicle's advertised price in all types of advertis- ing mediums ( e.g., print, television, radio, internet, social media ). To the extent that such fees are not included in an advertised price, dealers may be subject to claims of a "bait and switch" scheme under both the DCA's advertising regulations and the CFA's general prohibition against deceptive or unconscionable commercial conduct. Automotive Repairs The DCA has also adopted regulations governing automotive repairs conducted by car dealers. Generally, these regulations require dealers to provide a written estimate and secure written authorization from consumers before beginning any repairs. It is a violation of the DCA's regulations (and by extension, the CFA) for a dealer to exceed the written estimate without obtaining con- sent from the vehicle's owner before proceeding further. Dealers often seek to charge service customers fees for shop supplies, hazardous waste disposal or parts disposal. Failure to include such fees in a written estimate is a per se violation of the CFA. Moreover, charging every customer a shop supply fee, hazardous waste disposal fee or parts disposal fee is problematic. Such fees should only be charged if the specific repair warrants it. For instance, many repairs, such as a headlight adjustment, do not require hazardous waste disposal. Also, certain repairs that impose a shop supply fee may not require the use of enough supplies to justify the amount of the fee. To the extent that such "across the board" fees are charged without regard to the job performed, consumers could claim that the practice is unconscio- nable, and therefore, a violation of the CFA. Conclusion Don't let the CFA throw a wrench into your sales and service operations. Charging fees that accurately reflect the value of services rendered and providing clear written disclosures regard- ing the nature of such fees is the key to protecting your dealership from CFA liability. 1 Likewise, any fee labeled a “motor vehicle fee” or similar wording must be in the required amount charged by the Motor Vehicle Commission, and any charges in excess of that required amount must be refunded to consumers Our end-to-end financing solutions help dealerships grow and customers buy. All credit products are subject to credit approval. Key.com is a federally registered service mark of KeyCorp. ©2020 KeyCorp. KeyBank is Member FDIC. 200116-725692 As a full-service dealer finance company, we understand the challenges you face. Whether for retail or commercial operations, we deliver comprehensive solutions that drive your business forward. Visit key.com/dealer or contact Brian Meierhofer at 973-222-9474.