Brooke Conkle and Chris Capurso delve into the intricacies of "doc" fees in vehicle transactions, focusing on recent legislative developments in California and Louisiana.
In this episode of Moving the Metal: The Auto Finance Podcast, hosts Brooke Conkle and Chris Capurso delve into the intricacies of "doc" fees in vehicle transactions, focusing on recent legislative developments in California and Louisiana. They explore how these changes could affect dealers' ability to charge doc fees and discuss potential caps on these fees. The conversation highlights the dual challenges of ensuring compliance with varying state regulations and addressing litigation risks associated with fee disclosures. Brooke and Chris also examine the broader implications of these legislative shifts, including the balance between consumer transparency and business cost recovery. This episode provides a comprehensive overview of the evolving landscape of doc fees, offering insights into the complexities faced by dealers and finance companies in the auto finance industry.
Moving the Metal: The Auto Finance Podcast — Doc Fees Decoded: The Price of Paperwork in Auto Sales
Hosts: Brooke Conkle and Chris Capurso
Recorded: June 17, 2025
Aired: June 24, 2025
Brooke Conkle:
Welcome to Moving the Metal, the premier legally focused podcast for the auto finance industry. I'm Brooke Conkle, a partner in Troutman Pepper Locke's Consumer Financial Services Practice Group.
Chris Capurso:
And I'm Chris Capurso, an associate in Troutman Pepper Locke's Consumer Financial Services Practice Group.
Brooke Conkle:
Today we'll be talking about doc fees and vehicle transactions and pending legislation in California and Louisiana that could impact dealers ability to charge doc fees and potential caps on doc fees. But before we jump in, let me remind you to please visit and subscribe to our blogs. We have two great ones that may be of interest to you, TroutmanFinancialServices.com and ConsumerFinancialServicesLawMonitor.com. Also, we have a bevy of other podcasts that you might find interesting. The Consumer Finance Podcast, which as you might guess is all things consumer finance related. The Crypto Exchange, devoted to trends, challenges, and legal issues in Bitcoin, Blockchain, Intech and RegTech. FCRA Focus, a podcast dedicated to all things credit reporting. Unauthorized Access, a deep dive into the personalities and issues in the privacy, data and cybersecurity industry. And finally, Payments Pros, a great podcast focused exclusively on the payments industry. All of these insightful shows are available on your favorite podcast platform so check them out.
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For today, as I mentioned, we'll be discussing the ever-controversial doc fees. And Chris, I'll set it off by setting the stage and answering the age-old question, what is a doc fee? And of course, a doc fee is essentially the fees that dealers can assess for preparing the documents associated with a vehicle sale. So really there are two questions that spring up with regard to doc fees. One, are they necessary? And two, how are they disclosed? For the first question necessary may be sort of a loaded term here, but a transaction costs money and the paper costs money. Recording information with a state or a Commonwealth takes time and doc fees can be a method to recapture some of that time and effort that the dealer has to expend essentially to finalize the sale to get it going.
There does tend to be a tipping point though. When is a doc fee an effort to truly recapture that money associated with documenting the transaction, getting everything on file with the state, and when is it an effort to just add more money to the vehicle price? So that's cabined off as one issue with doc fees. And then the second issue, how are they disclosed? And Chris, we know that consumers are extremely sensitive to price. So a doc fee can range in some states anywhere from $0 up to potentially $1,000. And so if consumers are sensitive to the point of 25 and $50 in a vehicle price making a difference with where a consumer purchases a vehicle, that doc fee really makes a difference, frankly.
And for those dealers who feel like they are being conscientious and upfront with doc fee disclosures, they may feel a little bit like they're being penalized. There are consumers who are choosing to go to other dealers because those doc fees aren't necessarily disclosed and they're not being put into the vehicle price. The consumer doesn't know until we're at the point of sale, we're finalizing the sale, "Oh, here's this doc fee, that's a substantial amount of money." For a lot of consumers the doc fee could be essentially tantamount to one monthly payment on the vehicle. All of that is going for a doc fee.
And this is briefly one of the concerns that the FTC had with the cars rule. How are doc fees being disclosed? Do consumers know that they're going to be part of the vehicle transaction? And do the consumers have that full and fair knowledge before finalizing a transaction that they could be assessed this fee?
Chris Capurso:
With that basic information that Brooke just provided, we wanted to highlight a couple big pieces of legislation that have come through in recent weeks really that have had some real movement. And the first one, which a lot of folks are talking about is California and Senate Bill 791.
To set the stage, California law already provides specific authority for doc fees, specifically a fee for, and I'm using quote fingers that nobody's going to see and it's going to said, "The preparation and processing of documents, disclosures and titling, registration and information security obligations imposed by state and federal law." Now, under the current law, there are two different levels, so to speak, of fee that you can charge. It's either $85 if there is a contractual agreement with a "private industry partner," which is a vendor that has a contract with the state to provide these types of services, or a max of $70 if there is not a contractual agreement with a private industry partner.
So those two amounts are on the very low end of specifically outlined doc fees nationwide. But now there's a proposed alternative. The law would still keep... And this is one of my favorite things in statutory construction when they keep the prior law, but then they say, "In lieu of everything that's written above, you can do this." Now there's this proposed alternative where you can charge a different level of doc fee if both of the following conditions are met. First, that the document processing charge does not exceed 1% of the "total price of the vehicle," which we'll discuss with a little bit. And two, the document processing charge does not exceed $500. So huge difference from max 85 if you have that contract with a private industry partner.
Now, for the purposes of determining this fee, the total price of the vehicle means the price of the vehicle before the addition of government charges and any additional accessories and services ordered by the purchaser or lessee. Notably, this new max fee structure does not apply to the sale of vehicles to the state. So the state still gets this nice low doc fee amount. And in the Senate, the bill had quite a bit of bipartisan support. It was actually authored by a Democrat, and there was only one vote against it in the Senate. And the bill's author, Democrat Dave Cortese, noted that the max may have to be lowered in the assembly to avoid a veto from Governor Newsom who's in the midst of all sorts of other things he's dealing with. But when he eventually turns his attention to this, there's a thought he could veto this. Senator Cortese is working with the Dealers Association in California to try to lower that maximum a little bit to make it a little bit more palatable to Governor Newsom.
But notably in interviews, Senator Cortese has noted that the bill was necessary because the max fee in California was not keeping up with the rising costs for dealers and business in general. It was such a low static amount that didn't move. And that's a good segue to Louisiana because Louisiana's bill took a different approach to that exact same problem. And this is an approach that states such as Pennsylvania have already adopted.
This is HB, house bill, 476, and that would make the current maximum fee in the statutory authority of $425 a base fee that would be adjusted annually based on the lesser of the following, the year-over-year percentage change in the urban consumer price index or a 3% growth rate from the prior year's fee. So the lesser of those two. And if the year-over-year change in the urban CPI is negative, the fee would remain the same. So they've proposed putting in a mechanism where the fee can rise based on how the CPI is doing. And they've also put in, which I think is interesting, just a base rate if the CPI varies beyond what they would expect.
And the fee adjustment would begin on January 1st, 2026. And as of recording, this bill has made it out of the legislature and it is sitting on the governor's desk waiting for signatures. So that one's a little bit further along than California, but a similar type of change worries about the fee being too static being just written into the statute and there needing to be change based on rising costs for businesses. And I know specifically in California's instance, some of the talk has been "You don't want to make costs higher for consumers," and Brooke noted that earlier, but there are also rising costs for businesses.
All of these types of services are going up in price. Prices for everything are going up. Businesses are also dealing with that kind of a pinch, and they need to be able to compete. And both California and Louisiana are looking at this and saying, "Okay, we need to have some mechanisms in place so that dealers can be equipped to charge a little bit higher to be able to cover their costs."
Brooke Conkle:
I think what I find so interesting frankly, is the California bill because as we both know, California was one of the states that really took the mantle of the FTC specifically with regard to the car's rule. And as the car's rule has died, California is one of those states where we anticipate we're going to see legislation that mimics the car's rule.
And yet in this bill, essentially there's a validation from the business standpoint that this is a legitimate fee. This does not fall totally under the umbrella of a junk fee, as we know, was a huge focus for both Director Chopra and Lina Khan. There still is, I guess, an understanding from state regulators at least that this fee does have legitimacy. This is a real cost, a real burden on dealers that they have frankly a right to recover.
And just as you said, it really does come down to one, how it's disclosed, and two, this can be a lot of money in some instances. But it really is important I think that we all note that this shows states signing on with the legitimacy of a doc fee to begin with, that this is a way that dealers can recover some of their costs.
Chris Capurso:
And that's such a great point because of all states, it's California with bipartisan support for this. So if you ever wanted to hammer home that point that doc fees are not junk fees and they're covering actual costs, look no further than a unified California Senate putting forth a bill and voting on it with one no.
Like I said, the amount is up for debate and they're looking to lower it in conjunction with industry, which is exactly what you want. You want the legislature to be talking to industry trying to figure out what's a good amount. This may not fly with our governor, but we agree this needs to be higher. Where can we go where it's going to make industry be able to compete and still be able to go through the process? It's a very bizarre look at politics working and parties doing what they should to try to push this across the line.
Brooke Conkle:
What's that like? I don't know that we've seen that in quite some time.
Chris Capurso:
California, the shining beacon for all.
Brooke Conkle:
Chris, what does this mean for litigation essentially? We have, just as we've talked about, states legitimizing the doc fee, but also we have guidance from the FTC and federal agencies characterizing these as junk fees. So where do we go from here? The litigation could be in places like California if this bill is passed, anything beyond the cap that's set by the statute or litigation related to how that fee is disclosed.
Just as the FTC said, packing it into the deal there at the very end without giving consumers a clear and conspicuous disclosure that this is a fee that is associated with the deal that the consumer cannot avoid. This is not an add-on. This is not a fee that is being driven by consumer choice and adding something onto, whether it's a product, whether it's a service, adding that on to the full price of the vehicle. This is a fee that's going to happen regardless of whether or not the consumer adds any additional services to the deal. It's really how it's disclosed. Does the consumer know upfront that this is the fee, this is the amount, and this is what the fee is for? This is where the fee is adding value essentially to the transaction. That is where I see litigation going forward.
And if we've said it once, we've said it a million times, the FTC when they proposed the cars rule, they proposed that doc fees would be included in the all-in offering price. Chris, when you talked about the definitions earlier, talking about the vehicle price, I was thinking, "Oh, wow, this sounds so much like the offering price that the FTC included in the car's rule." Let's not forget, the FTC's position was that the car's rule is already law. It's already the state of UDAP law. So if a doc fee is not properly disclosed, then that could potentially be seen as a UDAP violation. So if I'm looking to defend against litigation risks for dealers and for auto finance companies, that really is what I'm going to focus on. How is that doc fee disclosed to consumers?
Chris Capurso:
Yeah. And on top of litigation risks, there are a lot of compliance challenges with doc fees that I'm sure everybody listening to this is aware of. But one of the big ones is the fact that these things differ from state to state. I mean, we've already talked about California and Louisiana having different mechanisms for how to deal with this, but there can be differences in the amounts.
As noted, California is currently below 100. Some states have permitted fees in the several hundreds of dollars, and some states don't even have caps. So you're looking at a 50-state patchwork of amounts where you likely need a matrix to be able to figure all this out. There could be disclosures associated with the doc fees. Those disclosures could be required in the RICs, they could be signage in the dealership. You might need them in the advertisements, either A, statutorily required like, "Hey, this price doesn't include a doc fee." Or to Brooke's point, just to avoid UDAP risk, just having a disclosure that clarifies everything that the consumer is seeing.
And finally, the applicability of doc fees could vary depending on the type of collateral. I mean, most if not all of these statutes will apply to a traditional motor vehicle, what we think of when we're driving to work or driving anywhere, the typical passenger vehicle. But some questions of applicability could arise with other types of collaterals such as boats or ATVs, trailers, RVs, things like that. Some state laws are very specific about what a motor vehicle is and that the doc fee applies to a motor vehicle. Some other states aren't. And it's a question, does the doc fee cap here or the doc fee disclosure apply if I'm selling a boat or anything like that? So these are all considerations that are very important from a state to state level.
And with that comes the important compliance challenge that I feel like we harp on quite a bit for finance companies specifically, dealer oversight, because Brooke mentioned litigation, the holder rule is a thing. And if a dealer is charging something while in excess of what the fee amount is or not disclosing or any of those types of issues that are running afoul of the law as it's currently written, holder rule risk exists for the finance company. And there should be some level of oversight to ensure that these state specific requirements are being followed so that that risk doesn't flow back up.
But again, it's tough because it's a state-by-state grind. It's a state-by-state patchwork. And this is one of those areas in auto finance that is particularly difficult from state to state because it can just be so wildly different when you have one state like Pennsylvania and probably soon to be Louisiana where it changes yearly, to other states where it's static and low like California currently is. You've got to have some visibility on every state where you're doing business on the wall there and the requirements.
And with that, we'll wrap it up for today's podcast. Thank you to our audience for tuning in. Don't forget to check out our blogs where you can subscribe to the entire blog or just the specific content you find most helpful. That's the ConsumerFinancialServicesLawMonitor.com and the TroutmanFinancialServices.com blogs. And while you're at it, why don't you head on over to Troutman.com and sign up for our consumer financial services mailing list so that you can stay abreast of current issues with our insightful alerts and advisories and receive invitations to our Industry Insider webinars. And of course, please mark your calendars for this podcast, Moving the Metal, which we will be releasing every two weeks in 2025. That will be generally on the second and fourth Tuesdays of each month, except for the last one, which dropped on a Wednesday. Surprise for everybody. And as always, if you have any questions or if we can help in any way, please reach out to us. Until next time.
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