South Carolina Lawmakers Create Bills To Help Dealers

Two South Carolina lawmakers are pushing for  bills that would preserve the right for dealers to notify customers of potential additions to their transaction price without a requirement to represent what the  fee is for it “down to the penny.” This news comes on the heels of the story we reported on previously, in which a dealership was sued by former customer Julie Freeman for charging a closing fee between $249 and $399 per vehicle. The dealership involved, Hendrick Honda in Easley, South Carolina, lost the lawsuit. The South Carolina state Supreme Court ruled 3-2 in favor of Freeman, forcing the dealership to payout $2.8 million, or around $525 for each of the 5,315 customers who purchased a vehicle at the store between August 2002 and August 2006.

With the recent Supreme Court ruling in mind, two lawmakers in South Carolina, Senator Larry Martin and Representative Bill Sandifer are pushing for legislation that protects dealers’ rights. The two senators told the Independent Mail they want “customers to have the ability to negotiate with car dealers about every aspect of a vehicle sale, including the type and amount of fees that the customer is willing to pay.” The fear being that when the state Supreme Court rules in opposition to a closing fee, some of the negotiation capacity is lost.

Martin’s bill is co-sponsored by 17 GOP senators in South Carolina. While Sandifer’s measure is seeking support in the palmetto state. According to IM, the language in the bill shows concern that the economic stability and ongoing viability” of the 282 dealers and 22,568 employees is threatened by the recent Supreme Court ruling. The legislation would turn regulatory power of dealership closing costs over to the South Carolina state Department of Consumer Affairs. An interesting provision in Martin’s bill is that it specifically prohibits class action lawsuits involving closing fees from dealerships, such as the one to be paid out by Hendrick Honda.

What kind of precedent could this type of dealership legislation set? Do you think dealers from other states put pressure on their local representatives to create measures to help protect them from further government regulation and potential class action lawsuits down the road?