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DOC fee suits swamp Missouri dealers; 'processing' = lawyering

November 17, 2010

Auto dealers across America do it every day. But retailers in Missouri who charge customers a "document processing fee" find themselves in the cross hairs of lawsuits that allege they are practicing law without a license.

Law firms in St. Louis, Kansas City, Springfield and other Missouri cities are going after dozens of dealers in state and federal courts. One Kansas City plaintiff’s lawyer warns the issue could result in civil penalties of $1 million to $4 million per dealership.

The Missouri Supreme Court last year upheld that only lawyers can charge for handling documents, in a challenge unrelated to auto dealerships. But interpretations of the law are being worked out, and judgments against dealerships could be years away.

More than 50 dealerships already have been named as defendants in the document-fee suits, says Johnny Richardson, legal counsel for the Missouri Automobile Dealers Association. "Eventually, I think we’re going to see these suits filed against every dealership in the state that ever charged a fee," Richardson said.

Illinois dealers may charge DOC fees up to $150. But retailers across the United States use — and sometimes abuse — the practice of tacking dealer charges of $200 to $500 onto sales contracts under the guise of document handling. Consumers in New Jersey, Tennessee and Arkansas have challenged the practice on a case-by-case basis.

But the situation in Missouri is different. Under Missouri law, charging consumers for "document processing" is something only lawyers can do. State law requires that any nonlawyer who collects such a fee effectively is practicing law without a license and, therefore, must refund it at three times the amount collected, say plaintiffs’ lawyers.

Keith Lamb, a lawyer whose Kansas City firm is, by itself, representing consumers in lawsuits against as many as 40 dealerships, speculates that the refunding of fees could be made retroactive for five years.

"Do the math and you can see that this could get extraordinarily expensive for some of these dealers," Lamb said.

The state Supreme Court’s ruling last year triggered a wave of lawsuits around the state in which consumers are now suing mortgage companies, boat dealerships, motorcycle retailers, RV dealers and other big-ticket retailers to refund their DOC fees.

Some of the lawyers now seek to bring the state’s vehicle consumers together in a class action case over the document fees, but that plan is under review. Richardson says there has been no decision in any of the consumer complaints.