Vehicle dealers: document processing charge.

Senator Cortese, joined by a broad coalition of coauthors, takes a targeted approach to how California vehicle dealers handle document processing charges and price advertising, pairing a temporary, more flexible framework with strengthened disclosures and advertising rules. The centerpiece is a revised document processing charge regime that allows higher caps only under specific boundaries and temporarily, while preserving existing government-seller exemptions. The proposal also creates clear display and pre-contract disclosure requirements and adds distinct rules governing electronic filing charges tied to DMV services.

Under the plan, a dealer may charge a document processing charge that, when allowed to exceed baseline limits, must not exceed 1 percent of the vehicle’s total price and may not surpass 260 dollars, with separate, lower base caps applying to dealers with or without a private industry partner agreement with the DMV. Vehicles sold to state or local government entities are expressly exempt from these provisions. An electronic filing charge is authorized to equal the actual amount charged by the first-line service provider for DMV-related processing, and may not be used to finance unrelated goods or services; the charge is not to be represented as a government fee. To accompany any higher-DPC scenario, dealers must post an 8-by-10 inch conspicuous notice in sales areas and provide a pre-contract disclosure of the exact amount, stating in bold that the charge is not a government fee. The framework also contemplates a transition to operative status on a future date, ensuring continuity of the provisions beyond the initial period.

The advertising provisions extend beyond pricing to a comprehensive set of dealer conduct rules, prohibiting misrepresentation and mandating precise disclosures in vehicle advertisements. Dealers must identify each vehicle by model, model-year, and a distinguishable VIN or license number, except under specified conditions for large-class ads. Advertised totals must include all costs at the time of sale, with explicit enumerations of permitted exclusions (taxes, registration, certain fees, finance charges, and allowed dealer charges such as the document processing and electronic filing fees). The bill prohibits portraying dealer charges as governmental fees, requires explicit stock and price disclosures in qualifying ads, and imposes a range of prohibitions designed to curb bait-and-switch, underselling claims, and misleading incentives. The advertising provisions are structured to align with federal and state disclosure norms, including references to the FTC Buyer’s Guide for used vehicles and other established standards, and they assign enforcement responsibility to the department for dealer-licensed violations.

Taken together, the proposal embeds a two-stage policy trajectory: a temporary, capped, and highly disclosed document processing regime through a defined date, followed by a transition to a continuing framework, while simultaneously elevating the strictness and transparency of vehicle advertising practices. The bill envisages regulation and oversight primarily through the department, with the dealer license framework underpinning enforcement; it explicitly notes no new appropriation is requested. For dealers, the changes imply recalculations of charges to remain within the caps, signage updates, staff training on disclosures, and careful adherence to the expanded advertising rules. For purchasers, the reforms aim to deliver clearer terms and disclosures at the point of sale, reducing opportunities for misrepresentation in advertised prices. The drafting structure also signals a need for consolidation of duplicate provisions and potential calibration of penalties within the final enacted text, as the current draft presents parallel versions of key sections that would require harmonization.