Holcomb signs bill that loosens car dealership rules on document-prep fees

Gov. Eric Holcomb signed a bill this week that loosens the rules under which car dealerships can charge consumers document fees, a practice that a flurry of recent class-action lawsuits have alleged is unfair. 

House Enrolled Act 1237 removes the standard that document preparation fees charged by car dealerships reflect real dealership expenses, as long as those fees are less than $200.

Previously, charging document fees that exceeded the real cost for dealers to prepare those documents was considered an unfair sales practice under the Indiana Deceptive Consumer Sales Act.

Holcomb declined a request for comment from IBJ through his spokesman about why he signed the bill.

Despite the previous law, several dealerships charged seemingly-exorbitant document fees anyway, according to at least seven lawsuits making their way through Indiana courts against numerous local auto dealers. Those suits seek class action for customers who paid those fees.

The lawsuits allege that car dealerships charge the fees—many approaching $200 per transaction—as a way to “extract additional profits from consumers in an unfair and prohibited manner,” when they instead should be charging only a few dollars to cover the real cost of paperwork.

However, car dealerships have said they’re simply following along with an agreement worked out with the Indiana Attorney General’s Office.

The Attorney General’s Office previously told IBJ it “previously agreed to a safe harbor where fees under $200 would not typically be investigated after receiving information and input from auto dealers.”

The law signed by Holcomb makes that change retroactive to 2013. Six years Is the statute of limitations for unjust enrichment.

At least one class-action lawyer previously told IBJ that the law will be fought in court.

“I think it’s unconstitutional,” Vess Miller of the Indianapolis firm Cohen & Malad LLP previously told IBJ. “There’s a whole body of case law that says the legislature can’t pass retroactive laws that take away people’s vested rights.”

Please enable JavaScript to view this content.

Editor's note: IBJ is now using a new comment system. Your Disqus account will no longer work on the IBJ site. Instead, you can leave a comment on stories by signing in to your IBJ account. If you have not registered, please sign up for a free account now. Past comments are not currently showing up on stories, but they will be added in the coming weeks. Please note our updated comment policy that will govern how comments are moderated.