Car people speak in their own shorthand that is not always precise. For example, a franchisor is the “factory”, even though the franchisor may simply be a distributor that does not manufacture anything. Or an extended service contract is often referred to as an “extended warranty”, even though it is not a warranty at all from a legal standpoint.
One of the most prevalent shorthand terms today is “doc fee” to refer to the fee a dealership may charge in connection with the sale of a vehicle. Each state that permits such a fee has its own proper label whether it is a “processing fee”, a “processing charge” or a “documentary service charge”. “Doc fee” is just a generalized label. What problems could that cause? A recent case in Ohio is an example of the problems that can arise from careless shorthand about fees.
An Ohio dealer sold a vehicle and charged a $250.00 “documentary fee”. Noting that the Ohio law permits a “documentary service charge” up to $250.00, the plaintiff sued claiming that he was charged a documentary fee that, because of the difference in label, must be some other fee than the documentary service charge that is the only fee legal under Ohio law. The suit was filed as a class action in 2009. After a tortured procedural history, on August 16, 2012 the Court of Appeals of Ohio for the Eighth Appellate District upheld the dismissal of the case by the trial court because a documentary service charge and a documentary fee are one and the same.
Dealership personnel should be trained to use the proper state label for the fee permitted in connection with sale of a vehicle. More importantly, the proper term should be used on all documents produced by the dealership. Often, dealer personnel pay no attention to what is printed by the dealership’s computer system on the retail installment sale contract or lease in the itemization of the state permitted charge. Often it simply prints “doc fee”. So what difference does it make?
The dealer in Ohio knows what difference it makes. Even though it has so far won the case, it has been defending it for almost three years because it used the term “documentary fee” instead of “documentary service charge”. And potentially the case may not be over. There is still a possibility of an appeal to the Supreme Court of Ohio.
Without question, it is difficult to change the slang used by dealer personnel. However, on the issue of the state permitted fee in connection with the sale of a vehicle, it is important to educate dealership personnel and insist on use of the proper phrase. So-called “doc fee” litigation has ensnared many dealers over the course of the last two decades. When the state gives your dealership a safe harbor for charging a fee, why not make sure you are in strict compliance with that?