My Turn: Auto dealers need to address document fees

By JIM BAER

For the Monitor

Published: 01-14-2017 12:05 AM

New Hampshire is among many states that have a history of animosity toward trade unions.

I use the definition of “union” in its broadest sense, specifically “a confederation of independent individuals organized to promote a common purpose.”

The general premise of anti-unionism is based on a belief that it is not fair or equitable for those who work in a union shop and do not wish to join the “union” must pay union dues. It is sheltered under right-to-work legislation.

Using the same definition of “union” that I have chosen, I wish to confront a gross abuse by some members of one particular trade union.

The New Hampshire Automobile Dealers Association is a well-respected and honorable union dedicated to promoting and advancing the interests of a wide range of legitimate businesses. The group represents more than 550 businesses in the motor vehicle industry in New Hampshire, including motor vehicle dealerships and auto body shops. Together, according to its website, members employ more than 13,000 individuals and represent 25 percent of all annual retail sales in New Hampshire. NHADA members are independent businesses that operate under the umbrella of this trade union and use the lobbying efforts of the NHADA to influence government oversight and regulations on issues that are important to members.

The NHADA has championed many worthwhile causes and has received many accolades, including awards from the U.S. Environmental Protection Agency.

Its members include some of the most generous and civic-minded businesses in dozens of communities in New Hampshire.

Here’s the rub. Many members of the dealers union have managed to craft a device to extort some of the costs of doing business from customers who derive no value for their involuntary contribution. It is an inverted relationship. The customer is willing to purchase a vehicle at an agreed price and then finds that they are being charged an administrative fee to give the dealer lots of extra money for the privilege of buying a vehicle from them.

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In Las Vegas, they figured out how to do that eons ago. They at least give a sucker a slim chance of receiving something in exchange for playing.

This money is in the form of “document fees,” commonly referred to as “doc fees.” They can have a lot of different names, including conveyance, processing, accounting, administrative and handling fees.

In New Hampshire, some of these document fees in the motor vehicle industry are nonnegotiable. They have the imprimatur of the state government.

A motor vehicle dealer in New Hampshire may charge any amount in a doc fee, without a cap, as long as it is applied evenly among its customers.

This is a common practice in motor vehicle dealerships across the nation. Average doc fees can vary from a low of $75 in New York to $607 in Florida. The average doc fee in New Hampshire was $304 in 2011 and has risen since then, with some dealers charging as much as $495. Some states have a cap on doc fees. New Hampshire has a state-mandated cap of $27 on state document fees but dealers are allowed to charge additional “administrative fees” to cover their own processing costs, according to TrueCar.com.

Before 1960, automobile dealerships rarely had administrative fees.

Dealerships then began to separate their finance and insurance departments from the rest of the dealership business. Unlike the front end of the shop, which generated money off of various parts of the sales transactions, the F&l department had little money to pay for itself. Hence, the genesis of the doc fee. It has now morphed into an important profit-generating component in many dealerships.

Call me old-fashioned, but I always thought that processing documents in most businesses is a part of the cost of doing business. Processing documents should be included in the price of the vehicle like all other overhead expenses, such as lights, heating, advertising, insurance, etc.

Without industry reform, motor vehicle customers nationwide will continue to be forced to shell out millions of dollars in fees from which they derive no benefit.

The greatest gift that NHADA dealer members could give to their customers in 2017 is to honor the cap on the state-mandated amount of $27 for document fees when buying a vehicle and call it a day. I believe that they would find that their customers would reward them with loyalty and would hold a more positive opinion of an industry that is not held in high esteem by many people. It would also be a huge incentive for customers from surrounding states to purchase motor vehicles here in New Hampshire.

We have come full circle. Anti-union protagonists (right-to-work supporters) claim that in a union shop, an employee who does not wish to join the union should not be forced to pay union dues. Using the same logic, customers who do not wish to contribute to the enrichment of motor vehicle dealerships should not be forced to pay a fee to purchase a vehicle from them.

It is an option for motor vehicle shoppers to find a dealership that does not charge a doc fee. Virtually all major brand dealerships charge an administrative fee. These fees affect every family and individual in New Hampshire who needs a motor vehicle. It is unfair, repugnant, greedy and unnecessary to enforce these doc fees to improve the bottom line at dealerships.

The NHADA should champion reform among its dealership members and encourage them to moderate or eliminate doc fees. It’s the right thing to do.

(Jim Baer lives in Concord.)

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