Monday, March 09, 2015

"Electronic Filing Fee" (aka "Dealer Fee")

After a decade of authoring newspaper columns, blog posts, and hosting radio talk shows, I like to think that I’ve contributed somewhat to Floridians’ awareness of the “Dealer Fee”. For those who still don’t know what a “dealer fee” is, it’s extra profit to car dealers that they take from you by adding an amount to the price of the car they advertise or quote you when you ask for the price. The Florida legislature has addressed this issue by making a law that car dealers must include their “dealer fee” in the price of the cars they advertise. There is no limit on the amount a car dealer can charge for dealer fee and there is no regulation on what the dealer can name his dealer fee. Most other states do have limits and do require that that the dealer fee be identified by name. 

Some of the other names for the Dealer Fee are Doc Fee, Documentary Fee, Notary and Closing Fee, Administrative Fee, Handling Fee, Dealer Prep Fee, Dealer Pre-Delivery Fee, and Dealer Services Fee. Oftentimes dealers use more than one dealer fee. I’ve seen three dealer fees by different names on the same buyer’s order. The dealer in this illustration has two, “Dealer Services and “Electronic Filing Fee.” These two dealer fees total $1,597.99. Bear in mind that this is additional price mark-up, profit to the dealer in addition to the price you were quoted. 

A few years ago with the advent of data processing technology, companies were formed that offered a new service to car dealers. These companies take the raw data from the car sale transaction and automatically register and title the car that the dealer sells. Up until this time, car dealers had been performing this task in-house and paying someone called a “title clerk” for this. The new automated service saved car dealers lots of time and money and today every car dealer now uses this service. The cost to the dealer is minimal, about $10 per car sale. These data processing companies take the data directly from the car dealers’ computers when they process the sales transaction and almost instantaneously register and title the car. I would estimate the dollar-savings in time and the clerical cost to be over $100 per car sale. My dealership sells over 400 new and used vehicles per month and this service is saving me about $40,000 monthly! 

What most businesses would do with this windfall savings in expense would be one of two things. (1) Pass the savings along to the customer to increase the sales volume and/or (2) take the $100 expense reduction to immediately increase the profit. 

Unfortunately, that’s not enough for most car dealers. Almost all car dealers in Florida took this cost savings, called it an expense, marked it up, and charged it to their customers! Only some dealers disclose this on their vehicle’ buyer’s order as Florida law requires, disclosing that this charge represents “profit to the dealer”. Florida law considers the “Electronic Filing Fee” just another dealer fee. Soon dealers realized that this windfall “cost savings” to them could be multiplied thousands of times by marking it up and charging their customers. The “beauty” of the electronic filing fee (aka e-filing fee) is that it sounds/looks like it is the charge for the dealers registering and titling your car. Remember that in the past this expense was absorbed by the dealer and the companies that automated this for only $10 per transaction represents a $100 cost savings! The example that you see in the illustration in this article marks up this dealer’s cost of the automated data service by 5,989%! 

Many car dealers do not disclose the fact that the electronic filing fee is, in fact, just another dealer fee. This is illegal but our regulators claim they are understaffed and too busy to enforce this law, or they claim that they aren’t receiving complaints on this issue. If you have paid an electronic filing fee that was not legally disclosed you can access the method to file complaints at this website, www.FloridaCarDealerComplaints.com.

23 comments:

  1. This is a great article, very informative. I was just looking on autotrader and noticed a nice car under market with decent miles only to browse to the disclaimer and find $3,000 (EFF, Dealer fee, NITRO fee, and private tag agency fee)in fees NOT including tax & title all of which being bogus and some illegal (according to FLHSMV a tag agency fee is considered misrepresentation, false and deceptive and is subject to dealer license penalties). Where was this dealership located? You guessed it. Florida.

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  2. CONGRATULATIONS on being an educated consumer.

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  3. So, can you just refuse to pay it? Is it always negotiable because if it's listed.as an EFF, it's essentially double dipping? What about a Nitro fill fee for $899? I'm a Costco member and I get that for free, can I ask the dealership to remove that charge as well?

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  4. LB, as a Costco member you're entitled to the Costco price which is a very low price. The dealer's contract with Costco requires that he sell you the car at this price without adding any extra profit to that price. Dealer fees are extra profit and "electronic filing fee" is just another name for dealer fee. Ask to see the official Costco price sheet. The dealer can add only government fees, sales tax and license/registration to this price. If the dealer doesn't agree, immediately contact Costco and report him. They will force the dealer to comply.

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  5. LB, regarding the $899 Nitro fee, this cannot be added to the Costco price either...it's a total rip-off. Consumer Reports did a thorough study on the usefulness of Nitrogen and tires and their conclusion was that it is "worthless". That's why Costco gives it to you free. Their other motivation is to cause you to return to them for service which is one of the few things that Costco does that I disapprove of.

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  6. I'm sorry, I wasn't clear on my first post. I'm looking at a pre-owned car through a dealer that is not a Costco certified dealership. It's actually a car buying service through my insurance company. The dealership provided my "member price" then added the following to that: dealer svc and handling fee of $700, Private tag agency fee of $150, EFF Fee of $1,500. (wow!), and Nitro fill unlimited for $900 (double wow). I am wondering which of these fees are non-negotiable and which ones I can confidently tell them I'm not paying, and the reasons for not paying. Because I am a Costco member (outside of this car buying transaction) I can have nitro fill performed at Costco so I don't see the point in paying someone else for it, besides, I also agree Nitro fill is useless. Thanks. Sorry for the confusion!

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  7. LB, my advice to you is to contact your insurance company and report this car dealer. What they are doing has to be a gross violation of their agreement with your insurance company. Everything you've listed in added "fees" is nothing more than disguised additional profit to the dealer. You also might try speaking to the owner or general manager of the dealership. Oftentimes sales people will try to increase the price of a car that is discounted by plans like Costco, True Car, and insurance companies so that they can increase their commission.

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  8. This is an interesting article. You state that many dealers do not disclose the fact that the electronic filing fee is, in fact, just another dealer fee, and that this is an illegal practice. What Florida law supports this assertion? Is there a statute? Administrative Code? I'm trying to gain a deeper understanding of this issue. Thanks!

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  9. Florida statute 501.976 is the applicable law making charging a dealer fee without full did closure illegal.

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  10. Earl, thank you for such an informative article. I have the following fees listed on a car I am considering buying in Florida.

    Just to make sure I'm clear - which ones are dealer fees? And can any of these fees be negotiated/waived?

    Dealer Fee $799.00
    New License Plate Fee $430.00
    Title Fee $89.00
    EFF (Electronic Filing Fee) $129.95
    Battery & Tire Fee $5.50
    MVWEA $2.00

    Thanks for all your help,
    JG

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  11. Dear JG,
    The $899 dealer fee and $129.95 Electronic Filing Fee are both bogus fees which are just pure profit to the dealer. Florida law requires that they be included in the advertised price of the car.

    The only sure way to get the dealer to waive these fees is to find another dealer that will sell you the same car at a lower price which compensates for the "extra profit fees" added by the first dealer.

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  12. Thank you Earl.

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  13. You're most welcome...thanks for reading my blog. :)

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  14. Interesting that in shopping for cars this week, noticed that a Florida dealer well known for 'No Dealer Fees' slips in an 'etag filing fee ($130)' and 'delivery prep ($95)'. Granted, those are relatively small, but profit nonetheless.

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  15. Dear Mr. Parks,

    Thanks for that information. Will you please share the name of that dealership? He should be reported to the Florida Department of motor vehicles. Electronic filing fees and dealer prep fees are legally dealer fees. They should be disclosed as such, as required by Florida law. Advertising that he charges No Dealer Fee's is totally deceptive and illegal.

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  16. From the Sport Mazda Orlando website disclaimer: 'New Vehicle pricing includes available manufacturer rebate and dealer discounts. New Vehicle Prices do not include tax, tag, etag filing fee ($130), pre-delivery service charge ($95) or Dealer Fee ($0). Used Vehicle Prices do not include tax, tag, etag filing fee ($130), pre-delivery service charge ($95) or Dealer Fee ($699). See dealer for complete details.'

    Photos of new cars are clearly bannered with 'No Dealer Fees'.

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  17. Dear Mr. Parks,

    You should file a complaint with the Florida of Motor vehicles and the Attorney General. I'll post the link that you can download the complaint forms from shortly.

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  18. Mr. Parks, here you go
    http://www.floridacardealercomplaints.com

    I also wrote a blog on filing complaints:

    http://oncars.blogspot.com/2016/06/treated-badly-by-car-dealer-5-steps-you.html

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  19. Great article, thanks!!
    Straight from Al Hendrickson Toyota Fl ad on Autotrader.
    "ALL ADVERTISED VEHICLES EXCLUDE TAX, TAG, REGISTRATION,TITLE FEES, $1799.99 EFF FEE, $899.99 NITRO FEE, $149 PRIVATE TAG AGENCY FEE, AND DEALER FEE OF $695"
    And yet they claim to save you "thousands"

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  20. Dave, thanks for sharing that advertisement from Al Hendrickson on Auto Trader. You have to hand it to Al for pure "CHUTZPAH". Most car dealers hide there dealer fees but Al actually openly advertises them. He also has higher dealer fees then any dealer in the United States, as far as I know. Somehow, in spite of this. he sells a huge volume of cars... top 10 Toyota dealers in the USA. Needless to say he also makes an OBSCENE amount of money! 😃

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  21. Earl,
    I just came across your article. I'm in the market for a used car in pretty good condition. I see the advertised price on their website as:

    "MSRP: $39,480
    Your Savings: $16,485
    Buy Now: $22,995"

    but then an asterix stating: "All prices are before any additional taxes, titling / registration fees, $595 dealer and $108 electronic filing fee"

    I am reading through the Florida Statute that you referenced earlier: 501.976 Actionable, unfair, or deceptive acts or practices

    Do they get to still charge this fee because it's "disclosed" on their site?

    What is my recourse if I were to pursue this or other similar cars?

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  22. Unfortunately the Florida law is written to make it easy for car dealers to deceive their customers and this dealer's advertisement is (sadly) legal. Florida law does not specify what a dealer can call his dealer fee. They choose names like "electronic filing fee" to trick their customers into believing its an official government fee. The Florida Auto Dealers Association, FADA, is the powerful lobbying group that influences all laws passed in Tallahassee affecting car dealers. Unfortunately we don't have an equally powerful lobbying group for the consumer in Tallahassee.

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  23. So simply stating on their website makes the whole dealer fee/electronic filing fee legal? Or is it something more?

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