Please pay special attention to how you are listing and disclosing your various dealer fees in your sales documents – buyer’s order, lease order, lease agreement and retail installment contract (ex. LAW).
Lawsuits and regulatory activity have increased due to how and where these fees are listed and disclosed. We understand that in some instances, you are itemizing these fees on your finance documents in order to overcome lending constraints (presumably to secure more advantageous financing terms for your customer) rather than including those fees in Line 1 (i.e., the price of the car).
This creates two problems that have recently received a lot of attention. If you are listing dealer fees on contracts other than your buyers order and you are not including the required statutory language from Chapter 501, then you may be exposed to lawsuits as Florida statutes require the disclosure on “all” documents where you itemize the dealer fee. In this regard, please remember that other fees (ex. Electronic Filing Fee) are secondary dealer fees in spite of their names and should be accompanied by the same disclosure.
In addition, the Office of Financial Regulation is now auditing stores and has taken the position that these fees must not be separately shown and instead must be in Line 1 of the retail installment contract (i.e., included in the total selling price). FADA does not agree with the OFR opinion on the required placement on Line 1; however, we have not engaged on this to date. In the interim, with an OFR statement against this practice, Reynolds will not change the LAW contract to include the Chapter 501 required disclosures. So, if you are itemizing these fees out, you may be cited by OFR and you will need to add the proper disclosures to your retail installment contract or captive finance contract.
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