FTC “Junk Fee” Enforcement Actions Raise Questions About Automotive Documentation Fees, Says Thompson & Associates CPAs

ROSWELL, Ga.--(BUSINESS WIRE)--Thompson & Associates CPAs, an accounting and consulting firm with experience involving automotive dealership operations and dealership fee analyses, says recent Federal Trade Commission enforcement actions involving automotive “junk fees” have generated increased discussion regarding dealership documentation fees and whether certain charges may withstand heightened regulatory scrutiny.

According to the firm, the issue may ultimately center on whether dealerships can substantiate the relationship between documentation fees and the administrative work being performed.

“The FTC does not appear to be focused solely on whether consumers dislike a fee,” said Michael Thompson, CPA, Managing Director of Thompson & Associates CPAs. “The issue increasingly appears to involve whether a dealership can demonstrate that the fee bears a reasonable relationship to actual transaction related administrative costs and whether the fee is clearly disclosed.”

The FTC has recently increased enforcement activity involving automotive pricing practices, including actions involving pricing disclosures, add on products, and allegedly unsupported charges.

Thompson & Associates CPAs notes that many dealership documentation fees may be associated with operational and administrative functions such as: • title processing, • registration work, • compliance procedures, • lender documentation, • electronic filing systems, • records retention, • and personnel involved in transaction administration.

“In many respects, dealership documentation fees are not conceptually different from administrative or closing related fees charged in other industries, including real estate transactions,” Thompson said.

According to the firm, one distinction regulators may increasingly examine is whether a dealership can reasonably support the fee through documented administrative costs, established operational procedures, and consistent disclosure practices.

“Regulatory attention has increasingly focused on undisclosed add ons, misleading pricing practices, and charges that may lack substantiation,” Thompson said. “The issue is not necessarily the existence of a fee itself, but whether the fee can be supported and properly disclosed.”

Thompson & Associates CPAs has performed dealership documentation fee cost analyses in more than 20 states. Michael Thompson, CPA has also provided testimony and consulting services involving dealership documentation fee structures and related automotive retail practices in multiple jurisdictions, including South Carolina and Texas.

The firm notes that dealerships facing increased scrutiny may benefit from maintaining: • documented cost analyses, • written fee policies, • consistent disclosure procedures, • and operational support demonstrating the administrative activities associated with vehicle transactions.

About Thompson & Associates CPAs

Thompson & Associates CPAs is an Atlanta area accounting and consulting firm with experience involving automotive dealership operations, cost analysis, economic damages, fraud investigations, litigation support, and regulatory related financial matters. The firm has conducted dealership documentation fee studies in multiple states and has provided consulting and expert witness services involving dealership fee structures and administrative cost substantiation.