Increase In Car-Buying Fee Has Advocates Up In Arms

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SACRAMENTO, CA — By agreeing to carry a bill that would slightly raise a document fee that car buyers pay, Assemblyman Mark DeSaulnier, D-Concord, put himself squarely at odds with consumer groups to which he’s endeared himself in his first year at the Capitol.

It also put him in the middle of a long-running feud between car dealers and consumer advocates.

Under Assembly Bill 1939, the cap on the fee would jump to $65 from $45 for car sales and $65 from $55 for leased cars — marking the second fee hike in two years.

On the face of it, the increases are hardly earth-shaking, but critics say it’s just another example of car dealers using their vast political influence at the Capitol to line their pockets with profits as a way to make up for losses the auto industry is taking in the sagging economy.

"This would be a big favor to auto dealers at the expense of car buyers," said Rosemary Shahan, president of Davis-based Consumers for Auto Reliability and Safety. "If it was important to cut the car tax, why are we adding onto what consumers are having to pay with these fees?"

DeSaulnier, who was highly rated by two consumer groups last year, said he was unaware that consumer advocates would oppose the bill. He might reconsider the bill after he meets with Shahan when he gets back from the Legislature’s
spring recess next week.

A freshman who is preparing to run unopposed in the June 3 primary for the Senate, DeSaulnier was one of 28 Assembly members to get a 100 percent rating on the Consumer Federation of California scorecard, and he tied with 10 others for the top score in public interest group CALPIRG’s scorecard for 2007.

But DeSaulnier said he saw no reason to oppose the bill to increase fees when a lobbyist for the California Motor Auto Dealers Association approached him with it. He saw, too, that Sen. Tom Torlakson, D-Antioch, had sponsored a similar
bill in 2006 — added in last-minute negotiations to get auto dealers to sign off on a consumer bill of rights bill.

"It seemed like a common sense thing to do," DeSaulnier said. "There was no opposition, and it was making the fees consistent. The fees seem low compared to other states."

Auto dealers say that documents that the state requires for car purchases have become increasingly complex and burdensome, while California’s fee caps are among the lowest in the nation.

DeSaulnier noted that car dealers are having a tough time and independent dealers are part of the community, too.

"With each new requirement imposed on auto dealers, it makes the burden tougher," said Brian Maas, lobbyist for the auto dealers. "Most of the time, we’re happy to comply, but there are not a lot of opportunities to get relief with financial costs associated with these burdens."

Mark Anderson, a San Francisco consumer attorney, estimates that car dealers would get a $41 million annual windfall from the new fees — money they can use to buttress their increasing political influence in Sacramento.

Maas disputed the estimate, saying it was "way off," and added that there’s no evidence that auto dealers have used the proceeds of document fees for political slush funds.

Shahan believes the dealers are in a roundabout way trying to recoup future losses from a law that takes effect in July that requires them to put $1 for every car sale into a fund that compensates consumers wronged in vehicle trade-ins involving dealers who go out of business.

Dealers will be required to contribute up to $2,500 each to the fund until it reaches $5 million. The law stipulates that dealers can’t pass the costs onto consumers.

"So, here they are coming back more than recouping that charge," said Shahan, known for spurring "lemon laws" around the country. "It does start looking like a quid pro quo."

Auto dealers wield significant political influence in the Capitol. They’ve contributed over $3 million to Gov. Arnold Schwarzenegger, whose first act as governor was to rescind the car tax — after winning the recall of Gray Davis on
the issue. Shortly after his 2003 inauguration, Schwarzenegger sacked the DMV chief, Steve Gourley, who was nicknamed "the enforcer" for his aggressive enforcement of consumer protections — revoking or suspending more than 400 dealership licenses for various unethical or illegal practices.

Car dealers were key in preventing unions from financing a 2005 auto consumer bill of rights ballot initiative. The car dealers threatened to pour money into Proposition 75, the so-called paycheck protection initiative, which the unions wanted defeated, unless the unions backed off their support for the consumer bill of rights measure.

In the end, the unions pulled their support of the consumer bill of rights measure, which never made it to the ballot. And car dealers got a bill out of the Legislature the next year that was far less consumer-friendly.

In that bill, signed by Schwarzenegger in 2006, instead of providing consumers the right to return a used car for up to three days after purchase, consumers were instead given the option of returning the car for up to two days
after purchase. But, they’d have to pay for that option — between $100 and $250, depending on the cost of the car.

Enforcement of consumer protections was moved from the Civil Code to the Vehicle Code, which put the onus on the already overburdened DMV.

The increased document fee, critics say, is just another example of the car dealership lobby wielding its influence.

"It’s worse than a car tax," said Jamie Court, director of the Foundation for Taxpayer and Consumer Rights. "If government was getting the money as a budget fix, there would be a more honest debate. Why should government be sanctioning this, especially if it’s not benefiting from it? Because dealers have a lot of clout in Sacramento. Politicians should not be salesmen for car dealers."
Steven Harmon can be reached at 916-441-2101 or [email protected]

Consumer Watchdog
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