The following article was provided by Massachusetts Association of Insurance Agents in their February 2012 Registry News:
Massachusetts car buyers are being charged so-called “documentation preparation” fees that can range as high as $400 supposedly for processing paperwork and storage of documents,according to a state-wide survey by the Office of Consumer Affairs.
The Office of Consumer Affairs surveyed almost 190 car dealerships across the state asking if these fees were charged, the amount and the reasons for the fees. Almost 70 percent of the dealerships called charged the fees, which ranged from $45 to $399, and the many reasons given for the fees appeared to be very questionable and literally made up by the auto dealerships. Reasons ranged from a 9/11 security fee to storing documents for eight years at Downtown Crossing to paying insurance agents.
“As consumers gear up for Presidents’ Day sales, they need to know that in most instances dealerships are hitting them with unnecessary fees claiming they are for paperwork and documents.”, said Barbara Anthony, Undersecretary of Consumer Affairs and Business Regulation. “We found that many car dealerships are charging consumers exorbitant fees for costs that are negligible and in some cases telling car buyers these are required charges by state or federal law, which just isn‘t true.”
The survey of 180 car dealerships across the state found:
• 128 dealerships charged documentation fees
• Fees ranged from $45 to $399
• About 50 dealerships charged between $275 and $300
• New car dealerships were more likely to charge the fees than used car dealerships
• Dealerships gave various reasons for the fees, including “September 11th and Homeland Security issues.”
Some dealers also claimed the fees were for title or registry purposes. State law requires that title or registry fees must be separately itemized and cannot exceed the cost charged by the registry. The Office of Consumer Aff airs will refer some of these car dealerships to the state Attorney General‘s Office for further investigation. Complete survey results can be found at: http://www.mass.gov/consumer.
Generally, “document preparation” fees are not revealed until the final stages of a negotiation over the price of an automobile. The Office of Consumer Affairs advises consumers to make these fees part of the negotiation process and to bargain with a dealer to take the fees off the final agreed upon price.
“Car buyers need to look closely at what they are being charged for”, Anthony said. “And consumers should shop around, especially if a particular dealership tries to hit you with non-negotiable documentation fees.”
Editors Note: There is a statute that deals with this practice by dealers. It says: “Dealers who procure, or assist purchasers to procure, certificates of title for vehicles sold by them, may charge the purchasers for such services not more than five dollars for each transaction.” (M.G.L. c. 90D, §33)