Leonard A. Bellavia, Esq.
There are compelling business reasons for pre-printing fees on deal paperwork. Because the fees are already printed on forms such as they buyers order, buyers are less likely to negotiate to lower or remove them. Moreover, these fees can be a source of substantial, incremental profit. Attorneys in our firm frequently receive calls from companies inquiring about the legality of pre-printed fees. Our answer depends on the fee the business is trying to collect, and the laws of their state.
Fees can be separated into two categories: mandatory and optional fees. Mandatory fees are those imposed by local or state law. Optional fees, on the other hand, are fees the company charges to offset other expenses or to generate additional profit. Examples include fees for preparing the product for display and transportation fees.
The most popular optional fees are “processing fees,” or “doc fees.” Generally, mandatory fees may be pre-printed on a buyers order. However, a particular state’s law may limit or prohibit pre-printed optional fees. For example, New York only permits pre-printed mandatory fees. Optional pre-printed fees are often considered deceptive under New York’s consumer protection laws. Because consumers are unlikely to question the validity of these fees, and they receive no additional benefit for their imposition, the Attorney General argues that consumers end up pay more than they would have otherwise paid for the product or service.
Some states allow dealers to charge certain optional fees, like processing fees or doc fees, up to a certain amount, while others allow businesses to charge an unlimited amount for these fees. You should not assume that pre-printed fees are lawful in your state even if other businesses in your area have them on their paperwork. Failure to comply with the law is costly. The Attorney General may seek civil penalties (fines) and restitution for affected plaintiffs. In civil cases, consumers may recover attorneys’ fees, and other damages.
Before including pre-printed fees on your paperwork, you should consult with legal counsel to determine whether your state allows it, and, if so, if any restrictions exist on the type and amount of fees permitted. We can make sure your paperwork is compliant with the law. Please call us at 631-224-7000.