Auto Dealer Closing Fee (DOC Fee)

There are many businesses that charge a document preparation fee as the result of a sale or a loan.  These fees are charged to cover the cost of the necessary documents to record sales with some government agency or record the security of a loan.  I have been in the automotive business for over 30 years and have yet to see dealer take any efforts to justify what they charge as a DOC fee.  The amounts charged are usually based on what the market will allow or what a particular state law mandates.  In South Carolina the law allows a fee with certain guidelines when advertising and mandates that notice must be given the buyer and included on the invoice.  Fees vary at dealerships from those that charge nothing to some over $400.  What should be charged and is the charge based on cost recovery?  At the Gene Reed group of dealerships the fees were increased at times and were increased for the purpose of increasing profits and not based on any analysis of cost involved.  In 2003 the managers of 2 dealerships wanted to increase profits and were told to check the market to see what other dealers were charging.  They did and the increases were approved at $399 at Gene Reed Toyota and $499 at Lexus of Charleston.

I believe it was in 2006 that a lawsuit was filed in Bamberg County challenging numerous aspects of the validity of the closing fee.  The majority of the dealerships in the state were eventually included in the lawsuit.  This set in motion the dealers and there powerful lobbing group, the SC Auto Dealers Association, to hire numerous lawyers to fight this lawsuit.  Significant attorney fees have been spent in the last few years to fight this battle to protect million of dollars in dealer profits.  If the intent of the law is for a closing fee to represent an amount that can be charged to recover cost the intent of the law is being abused.  The dealer group has been fighting class action status but certainly some dealers are an using the intent of the law.

The amazing thing to me is that the news media has not taken up the cause of the car buyer in South Carolina.  The only possible reason for the media not reporting on this lawsuit must be the lost advertising revenues they might be risking by exposing the auto dealers.  Any law makers in the state that might try to change the law would surely lose campaign funds from dealers.  At one time the SC law prevented charging a closing fee but the auto dealer lobby group managed to get the fees back into law.

The amount being charged as a closing fee to the SC car buyer is definitely being abused by some dealerships!