Indiana Gov. Eric Holcomb signed a bill this month that allows dealerships to charge customers document preparation fees but caps those fees at $199.
The change legalizes a practice some Indiana dealerships have had of charging document fees in the range of $150 to $199. It follows several recent class-action lawsuits against Indiana dealership groups that alleged that charging document preparation fees that high violates Indiana law limiting the fees to the expenses actually incurred in preparing documents.
Indiana state Sen. Aaron Freeman last month told local television station WRTV that the legislation was meant to formalize a "gentleman's agreement" between dealers in the state and the Indiana Attorney General's office. As long as dealerships kept the fee under $200, the attorney general wouldn't investigate, Freeman told the station.
House Bill 1237, which was signed on May 5, retroactively applies the less-than-$200 guideline to any vehicle sale since July 1, 2013. The legislation also extended Indiana's moratorium on vehicle subscription plans to May 1, 2020.
The document preparation fee must be included in the advertised sales price of a vehicle and affirmatively disclosed in writing by the dealer during negotiations and as a separate line item on the bill of sale or another purchase contract, according to the bill.
Holcomb declined a request for comment from Automotive News through his spokeswoman.
Car buyers in Indiana have expressed their dissatisfaction with the document-prep fees charged by dealerships.
At least two class-action lawsuits were filed in April against dealerships in the state for the practice.