Are Your Employees Jeopardizing Your Right To Charge A Processing Fee?

Team VADA eViews
The Digital Newsletter of Your Virginia Automobile Dealers Association
April 2008
 
 
  • Processing Fees are a chief source of complaints
  • Dealers in other states have lost the privilege of charging processing fees due to abuses
  • Clear and accurate representation of what the processing fee is and is not will help us preserve this privilege in Virginia
 
Processing fees have been a lightning rod for complaints for years. This association regularly hears from legislators who hear complaints about processing fees. Those complaints are generally not about the requirements of the Code such as posting a sign, advertising, and printing the fee on the buyers order. The complaints are almost always about the presentation of the fee by salespeople or F&I people.
 
Virginia dealers have the privilege of charging processing fees based on the business decision of each dealer. It is a privilege that should not be abused. Legislators who hear complaints of misstatements about the purpose the processing fee can get the message that dealers are abusing the privilege to make their own decisions concerning whether to charge a processing fee and the amount. It is important that each dealer train its employees concerning a proper presentation of the processing fee.
 
 
Call it a processing fee. 
The statute defines the allowable fee as a processing fee. Call it that. It is not a document fee. Use the proper term, “processing fee,” on all dealer documents, in dealer advertising, and on the sales floor. Some dealer printers are still programmed to print “doc fee” on a retail installment sale contracts. Change that.
 
 
Train employees about the purpose of the processing fee. 
It is an amount the dealership is allowed to charge to compensate for services not otherwise paid for in the transaction.
 
 
Train employees what they may not say about the processing fee. 

  • It is not a fee that the dealership is required to charge by the DMV or the Governor.

     

  • It is not for processing tags and doing title work. The dealer is separately compensated for that by the on-line systems filing fee. 

     

  • It is not for processing financing. That would make the charge a financing charge that would have to be disclosed as part of the finance charge under the Truth in Lending Act.
 
 
Use a brochure that explains the processing fee. 
VADA has brochures available that explain the processing fee. If you do not use a VADA brochure, design your own brochure. When asked to further explain the processing fee, salespeople should hand out the brochure. 
 
 
File the dealership’s buyers order with the MVDB. 

When changing the processing fee, make sure you file a copy of the buyers order with the revised processing fee printed on it with the Motor Vehicle Dealer Board, as required by Virginia law. 

 

 
As we always warn when discussing processing fees, each dealer must make his or her own decision whether to charge a processing fee and how much. As in all pricing decisions in a dealership, agreements among competitors are illegal. 
 
If you do decide that your dealership will charge a processing fee, however, carefully train personnel in presentation of that fee. If the dealers of Virginia do not protect their privilege to make their own processing fee decisions, the dealers may very well one day lose that privilege based on legislative action. 
 
 
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