May 21, 2013

Is it legal for a car dealer to charge a fee for dealer services?

Dear Consumer Ed:

My daughter purchased a car and the dealer charged her $599 for dealer services.  I heard this is not legal, but the dealer says it is.  She paid it because the car was such a good deal.  Do we have any recourse?

Consumer Ed says:

Subject to a very significant qualification, car dealers are generally allowed to charge “dealer services” fees.  Different dealers use different names for these types of fees—“administrative fees,” “document fees,” “processing fees,” “dealer fees,” “customer service fees,” etc. There is no statutory cap on the amount of such fees that dealers are allowed to charge.  

However, there’s a very important condition:  Even though dealers are allowed to charge these extra fees, if the vehicle is advertised, then they must be included in the advertised price of the vehicle.

For example, let’s say a dealer runs an online or newspaper advertisement showing a particular car on its lot for sale at a price of $10,000.  If you go to the lot to purchase the car, the dealer cannot then charge you an additional $500 for document fees or other such fees, which would cause the price to become $10,500.  What the dealer can legally do is charge $9,500 for the car and $500 for the document fees (which would then equal the total advertised price $10,000).  Other types of fees/charges that MUST be included in the advertised price of vehicles include freight charges, transportation charges, destination charges, dealer preparation charges, overhead charges, and any other terms of similar import.

The only fees that are not required to be included in the advertised price are government fees, which include tax, tag, title, Georgia Lemon Law, and Warranty Rights Act (“WRA”) fees.  

If you believe a car dealer has charged you unfairly based upon the advertised price, you can file a complaint with the Georgia Attorney General’s Consumer Protection Divisionby calling (404) 651-8600.

Related to: