Note from Rep. Gara: Taking A Bite Out of Car Dealer Fraud – Those Pesky “Doc Fees”
Below you'll see a press release we issued this week on legislation to bar car dealers from charging a fee many consumers believe is a legitimate government fee. It's called "Doc". It sounds official, but is nothing more than profit for car dealers. Shocked that a car dealer would ever try to employ a negotiating tactic that takes advantage of honest consumers? I know you are.
Our bill to outlaw this passed the House a few years back, but was opposed – again shockingly – by a car dealer in the legislature at the time – Ralph Seekins of Seekins Ford in Fairbanks, and others.
Here's how the "Doc” fee works. After you've negotiated your deal with your car dealer, many of them will say you then have to pay Title, Registration and Doc. According to a recent Alaska Public Interest Research Group report, most car dealers in the Anchorage area charge this fee, which is usually around $200. Consumers, thinking these are all legitimate government fees, pay them.
While we believe many car dealers tell the truth – they don't lie and specifically say "Doc" is a government fee, or some other meaningful, required fee – many consumers naturally think the fee is real, and required. Those dealers who feed on this misperception, I believe, are misusing their power over consumers in a very unequal transaction. I'm sure some dealers are forthright about this fee, and I have no information that Mr. Seekins isn't part of this latter group. But employing this pricing strategy helps add the extra cost into the negotiated price, and hurts unwary consumers.
The Legislature tried to ban this practice in 2000, but car dealers got the courts to essentially gut the law with a unique interpretation.
We think car dealers have the right to charge what they want. It's a free country. But the negotiation should be fair, and letting the dealer add the official sounding "Doc" fee at the end of the negotiation is, intentionally or not, an abusive practice.
If you'd like more information, read on. As always, I hope all's well. Soon I'll send a Beginning of Session newsletter.
Representative Les Gara
PRESS RELEASE • January 13, 2011
http://gara.akhouse.org • Contact: Rose Foley, Aide • firstname.lastname@example.org
Phone: 465-2647 • Fax: 465-3518 • Room #500 Capitol Bldg. Juneau, AK 99801 • House District 23
FOR IMMEDIATE RELEASE
Taking A Bite Out of Car Dealer Fraud:
Consumer Rights Bill To Be Filed This week
Unsubstantiated fees can add hundreds of dollars to the price of a vehicle
Today Representative Les Gara (D-Anchorage) announced he has pre-filed legislation to stop an often-fraudulent practice employed by used car dealers. According to a preliminary report by the Alaska Public Interest Research Group (AKPIRG), the practice remains widespread. Fifteen of eighteen surveyed Anchorage and Mat-Su car dealers add what they call a "Doc Fee" to the price of a car they sell. Many consumers think this is an official government fee, or is otherwise non-negotiable, and don't question the fee. In truth, the fee is simply added profit, and, at most dealers, amounts to a $200 add-on to the price of a car.
"Getting a good deal on a car or truck is hard enough without tricks and traps taking money from your pocket. Doc Fees add hundreds of dollars to the typical car purchase, and they do so in a way that harms consumers’ ability to make informed decisions in the marketplace. This bill means a little more money in the bank for Alaska's consumers," said Matt Wallace, executive director of AKPIRG.
Gara's legislation allows dealers to charge whatever price they feel is fair for a car, and does not interfere with honest negotiations. It does ban dealers from adding a "doc fee" to the price after the negotiation.
"Doc fees sound like an official cost to many consumers. These are not required government fees, as many consumers think, and we should end this practice. It will place buyers and sellers back on an even playing field," said Rep. Gara.
Rep. Gara has pre-filed this legislation which will be released Friday.
For any questions, please contact Rep. Les Gara at 250-0106; or Matt Wallace at 278-3661.