Can a car dealer charge a separate 'documentation fee' on top of the sale price in Maryland?

Plain-English summary

In 1988, the Commissioner of Consumer Credit asked the Attorney General whether a car dealer could add a separately stated "seller documentation fee," or its relabeled cousin the "consumer service charge," to the price of a financed vehicle sale. The complaint that prompted the question involved a $99 fee a dealer listed separately from the negotiated price on a new car sold with financing. The dealer first said the fee covered filing title documents and arranging registration, then later described it as covering data entry, insurance-data collection, post-delivery follow-up calls, and final cleanup and inspection before delivery. The Attorney General concluded that Maryland's Retail Installment Sales Act (RISA) prohibited the fee as charged, since none of the listed purposes fit within the specific charges RISA allows a dealer to add on top of a car's cash price, with the possible narrow exception of a charge for genuine optional add-on services, which this fee was not. The opinion also set out how the Commissioner should enforce the prohibition: a seller who overcharged in good faith and refunded promptly upon discovery would have cured the violation, but a seller who charged the fee knowingly or failed to refund it promptly could be ordered to forfeit all finance charges on the loan.

Currency note

This opinion was issued in 1988. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

Could a Maryland car dealer add a separate "documentation fee" to a financed car sale in 1988?
No, according to this opinion. The Attorney General concluded that RISA's list of specifically authorized charges did not include a "seller documentation fee" or "consumer service charge" covering things like paperwork filing, insurance-data collection, or routine pre-delivery cleaning, so a dealer who added such a fee separately from the negotiated price was violating the statute.

Did it matter that the buyer made a cash down payment instead of financing the whole purchase?
No. The opinion concluded that RISA's definition of "installment sale agreement" covered any sale where part of the price was paid later and the seller kept a security interest in the vehicle, so a fee collected up front in cash at the time of an otherwise-financed sale was still governed by RISA's restrictions on separate charges.

Were fees like the vehicle excise tax or title and registration fees also prohibited?
No. The opinion concluded that the excise tax and title/registration fees fell under other, more specific statutes that expressly authorized a dealer to collect them on the state's behalf, so RISA's general restriction on unlisted "service or other" charges did not reach those particular fees.

What could happen to a dealer who charged an illegal documentation fee?
The opinion concluded that if the seller had imposed the charge in good faith and refunded it promptly once the overcharge was discovered, the violation would be considered corrected. But if the Commissioner found the seller knowingly imposed the fee, or failed to refund it promptly, the opinion concluded the Commissioner could order forfeiture of all finance charges on the buyer's loan.

Background and statutory framework

The opinion arose from a specific complaint: a new-car buyer was charged a $99 "seller documentation fee," listed separately from the vehicle's discounted price on the dealer's combined sale contract and truth-in-lending disclosure. When the dealer's justification for the fee was challenged, its attorney produced a printed definition describing it as a "consumer service charge" covering data entry of vehicle and warranty information, collection of insurance data required by the Motor Vehicle Administration, post-delivery follow-up contact, and final delivery preparation (washing, "pointing up," vacuuming, and a final check).

The opinion first rejected the argument that the fee fell outside RISA entirely because it was paid in cash rather than financed. Under CL §12-601(e)'s definition of "installment sale agreement," any sale where part of the price is paid later and the seller retains a security interest in the goods is covered, so a fee collected in cash at the start of an otherwise-financed transaction did not escape RISA's reach.

Turning to RISA's substantive limits, the opinion read CL §12-609(b) ("[a] service or other charge not specifically provided for in this section may not be included in a retail installment sale of a motor vehicle") together with CL §12-614, which lists the specific charges a seller may impose (mostly related to collecting the debt) and bars any charge not on that list. The opinion found none of the dealer's stated purposes for the charge, including the collection of insurance data, fit within either section's specific authorizations, relying on the office's own 1977 opinion reaching the same conclusion about a similar "settlement fee," 62 Opinions of the Attorney General 181 (1977), and noting the General Assembly's years of inaction on that interpretation as a sign of legislative acquiescence, citing Nelson v. Real Estate Comm'n.

The opinion separately rejected the dealer's argument that the charge was really part of the vehicle's "cash price" rather than a separate fee, since a dealer cannot have it both ways: list a charge separately on the disclosure statement while also arguing it is not truly separate from the price. It also considered, and rejected on this record, whether CL §12-606(b)(2)'s allowance for disclosed charges covering "delivery, installation, or repair of or other services to the goods" could cover the fee, reasoning that routine cleaning and inspection needed to sell any car as "new" (citing the Court of Special Appeals' description of a "new" vehicle in Wheaton Dodge City v. Baltes) are not optional add-on services of the kind that provision contemplates. By contrast, the opinion found that the vehicle excise tax and title/registration fees were separately authorized under other statutes, specifically TR §13-812 and CL §12-616(a), so RISA's general restriction did not bar a dealer from also collecting those.

On enforcement, the opinion read CL §12-631's cease-and-desist power together with CL §12-609(c)'s forfeiture-of-finance-charges penalty, drawing on a 1969 opinion construing a similarly worded cease-and-desist statute for usurious loans, 54 Opinions of the Attorney General 281 (1969), and the Court of Appeals' decision in Beneficial Finance Co. v. Administrator of Loan Laws. It concluded the Commissioner could order forfeiture of all finance charges on a loan where the seller knowingly charged an illegal fee or failed to refund one promptly after discovery, while a good-faith overcharge corrected promptly would not trigger that penalty. The opinion closed by recommending that the General Assembly clarify RISA's treatment of these dealer charges going forward, and an editor's note recorded that the underlying issue was also being litigated in a pending Harford County case, Maryland New Car and Truck Dealers Ass'n v. State of Maryland.

Citations and references

Statutes:

• CL §12-601(e)
• CL §12-601(d)
• CL §12-606(b)(1)
• CL §12-606(b)(2)
• CL §12-609(a)
• CL §12-609(b)
• CL §12-609(c)
• CL §12-609(d)(1)
• CL §12-614(a)
• CL §12-614(b)
• CL §12-616(a)
• CL §12-630(c)
• CL §12-631
• CL §12-631(c)(2)
• CL §13-301(2)(iii)
• CL §10-1013
• CL §12-1005(c)(2)
• Article 81, §326(g)
• TR §13-809(c)(1)
• TR §13-810
• TR §13-812
• TR §11-138
• TR §§15-312(b) and 15-313(a) and (b)
• Former Article 58A, §11(c)
• 12 C.F.R. §226.4(a)
• Chapter 80, Laws of Maryland 1954
• Chapter 1007, Laws of Maryland 1943
• Chapter 672, Laws of Maryland 1977

Cases:

• Griffin v. Baltimore Federal Savings and Loan Assn., 204 Md. 154, 102 A.2d 804 (1954)
• Stride v. Martin, 184 Md. 446, 41 A.2d 489 (1945)
• Kaczorowski v. City of Baltimore, 309 Md. 505, 515, 525 A.2d 628 (1987)
• Nelson v. Real Estate Comm'n, 35 Md. App. 334, 342, 370 A.2d 608 (1977)
• Rocky Mountain Fire & Cas. Co. v. Goetz, 633 P.2d 109, 112 (Wash. App. 1981)
• Town of Greenland v. Bunker, 394 A.2d 321, 322 (N.H. 1978)
• Tesche v. Best Concrete Products, Inc., 325 P.2d 150, 155 (Cal. App. 1958)
• Wheaton Dodge City v. Baltes, 55 Md. App. 129, 132 (1983)
• Beneficial Finance Co. v. Administrator of Loan Laws, 260 Md. 430, 272 A.2d 649 (1971)

Source

• Landing page: https://oag.maryland.gov/resources-info/Pages/attorney-general%E2%80%99s-opinions.aspx
• Original PDF: https://oag.maryland.gov/resources-info/Documents/pdfs/Opinions/1988/Volume73_1988.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain, the linked PDF is authoritative.

CREDIT REGULATION

Retail Installment Sales Act ("RISA") — Vehicle Sales — RISA Prohibits Separately Stated "Seller Documentation Fee" or "Consumer Service Charge."

August 10, 1988

The Honorable Alan T. Fell
Commissioner of Consumer Credit

You have requested our opinion on two issues involving retail installment sales of automobiles under Subtitle 6 of Title 12 of the Commercial Law Article ("CL" Article), the Retail Installment Sales Act ("RISA"):

1. Does RISA prohibit the inclusion of a "seller documentation fee" or "consumer service charge" as a separate charge for a vehicle, the purchase of which is financed by the seller?
2. If a fee of this kind is prohibited, what sanctions may be imposed against the seller or lender by the Commissioner of Consumer Credit?
   For the reasons stated below, we conclude as follows:
3. RISA prohibits a separately stated "seller documentation fee." RISA also prohibits a separately stated "consumer service charge" unless the charge is levied for bona fide optional services performed on the vehicle, rather than for services that must be provided in any event when a dealer sells a new car.

4. If the seller imposed a prohibited charge in good faith and, after discovery of the overcharge, the seller (or subsequent holder of the installment sale agreement) acts promptly to refund it, the violation of RISA will have been corrected. If, however, the Commissioner of Consumer Credit finds either that the seller imposed the charge in knowing violation of RISA or that the seller (or subsequent holder) failed to make a refund promptly after discovery, the Commissioner may order the forfeiture of all finance charges on the loan.
   These conclusions reflect what we believe is the better reading of RISA. Nevertheless, RISA does not address the problem as clearly as we would wish. This opinion tries to identify and honor the underlying legislative objective, but we strongly recommend that the General Assembly clarify its intent concerning the kinds of separate charges discussed in this opinion.

                                         I
                   The Dealer Charge In Question
   

   Your questions arise because of a complaint filed with your office by a new car purchaser who was charged a $99 "seller documentation fee." The dealer listed this fee on the first page of its consolidated conditional sale contract and truth in lending disclosure statement separately from the discounted price of the automobile.1
   At first, the dealer explained that the documentation fee was for the filing of title documents to perfect the seller's lien on the vehicle and arrange vehicle registration for the purchaser. Subsequently, the dealer's attorney provided us with a copy of the second page of the dealer's purchase order form, presumably used in the complainant's transaction, which sets out the following definition:

     Consumer service charge. This charge is a one-time charge by the seller covering the following services provided to the customer in conjunction with the delivery of a new and [sic] used automobile to the customer: data entry of warranty information, key number, and vehicle information for future consumer, service, and manufacturer use; collection and processing of liability insurance information required by Maryland Motor Vehicle Administration; post delivery follow-up by employees or contractors of the seller with the customer; final delivery preparation including washing, pointing up, vacuuming and final pre-delivery check.
   

The seller asserts that the "consumer service charge" and the "seller documentation fee" are one and the same and relies on the printed definition as a listing of the actual purposes for the charge. The question is whether such a fee, however labeled, is permitted under RISA.

1
On page one of the statement, the dealer showed a "Total Cash Sale Price" of $9,238.95, calculated by adding the vehicle price ($8,700.00) the excise tax ($439.95), and the "Seller Documentation Fee" ($99.00). On page two of the statement, the dealer showed the "Time Balance Owed" as $10,243.20, calculated by deducting the buyer's $1,000 down payment from the cash price, then adding an "Amount Paid to Public Officials" ($57.00) and the finance charge ($1,947.25).

                               II

                    Applicability of RISA

One threshold question is whether RISA's restrictions apply to the fee at all. The dealer's attorney suggests that the "documentation fee" or "service charge" is not part of the installment sales contract because the purchaser made a cash downpayment. That is, because the $99 fee was paid in cash from the downpayment amount, it was not part of the amount financed. Hence, the dealer's attorney concludes, the charge is not a part of the financing transaction.
Whatever the merits generally of the theory that fees charged contemporaneously with an installment sale but paid by borrower in cash are somehow outside the financing transaction, in this case the statute settles the matter. CL §12-601(e) defines "installment sale agreement" to mean:

  [A] contract for the retail sale of goods, negotiated or entered into in this State under which:
  (i) Part or all of the price is payable in one or more payments after the making of the contract; and
   (ii) The seller takes collateral security or keeps a security interest in the goods sold.

(Emphasis added.)
By including in the definition of "installment sale agreement" a transaction in which the purchaser makes a partial cash payment, the General Assembly has applied the provisions of RISA to all aspects of a sale involving any sort of time payment. We cannot interpret the statute to permit the seller to impose charges that would otherwise be prohibited in an installment sale agreement, simply because those fees are collected in cash at the inception of the deferred payment contract.
Secondly, the seller's counsel argues that because this fee is charged to every automobile buyer, whether or not the buyer obtains financing through the dealer, the fee should be considered part of the purchase price of the car and not part of the financing agreement. Indeed, under the federal Truth in Lending Act, this type of universally applicable fee would not be included in the finance charge. See 12 C.F.R. §226.4(a) (finance charge does not include any charge of a type payable in a comparable cash transaction). However, the Maryland RISA does not set forth a similar exemption for such charges. RISA governs all aspects of the sale of a motor vehicle that is financed by or through the seller. Therefore, a charge that might be permitted in a cash transaction nevertheless might violate RISA if the dealer finances any part of the purchase price. We address another aspect of this issue in more detail in Part III B below.
In short, we conclude that the legality of the "documentation fee" or "consumer service charge" must be determined by applying RISA's prohibitions and authorizations. The charge is not outside the purview of RISA.

                                      III
          Charges Under RISA — Express Delineations

A. Applicability of CL §§12-609 and 12-614
RISA contains a specific provision, CL §12-609, governing the charges that may be imposed in a retail installment sale of a motor vehicle. CL §12-609(a) establishes maximum finance charge rates applicable to sales of new and used vehicles, and permits the collection of insurance premiums. CL §12-609(b) provides that "[a] service or other charge not specifically provided for in this section may not be included in a retail installment sale of a motor vehicle."
The General Assembly's use of the words "service or other charge" indicates an intention to cover a wide range of charges, whether or not part of the finance charge itself.2 The legislative goal in framing special restrictions applicable to vehicle financing is clear. Bargaining over a car centers around the dealer's cash price. The buyer is at a significant disadvantage when other charges are kept out of that figure, as if they were not subject to bargaining (which is true, of course, about taxes and governmental fees but is assuredly not true of charges levied and kept by the seller). A related legislative goal, we infer, is to create a "level playing field" among dealers, so advertised cash prices will be fairly comparable, not artificially deflated by a dealer's shifting part of the price to a separate charge.3

2 RISA was amended to provide this special protection for automobile buyers. As originally phrased, what is now CL §12-609(b) provided that, "No service charge or other charge not specifically provided for herein shall be included in a retail installment sale of motor vehicles." Chapter 80, Laws of Maryland 1954 (emphasis added).
3
See note 16 below.

RISA "is remedial in character and was intended to curb serious actual or potential evils. It was passed to protect installment plan buyers and was intended not only to prevent actual frauds, but to close avenues to fraud." 62 Opinions of the Attorney General 181,183 (1977). See Griffin v. Baltimore Federal Savings and Loan Assn., 204 Md. 154, 102 A.2d 804 (1954); Stride v. Martin, 184 Md. 446, 41 A.2d 489 (1945). The "documentation fee" or "consumer service charge" in question here is a "service or other charge" within the meaning of CL §12-609(b).
The only asserted purpose for the charge that is even conceivably within the scope of CL §12-609 is the collection of insurance data. However, CL §12-609(d)(1) prohibits the collection of any charge in excess of the actual premium for the insurance coverage: "A holder of the installment payment obligation may not collect from the buyer a greater amount than that allowed by the State Insurance Department for the insurer carrying the risk." Thus, a separate charge for collection of insurance data is prohibited.
We conclude, therefore, that none of the asserted purposes for the "consumer service charge" qualifies the fee as a permitted service charge under CL §12-609. Accordingly, the charge is prohibited unless some other provision of law authorizes it.4
CL §12-614 enumerates certain permitted charges, mostly in connection with collection of the debt, none of which is relevant here. This section prohibits the "direct or indirect" imposition of any charge or fee not specifically listed in CL §12-614(b).5 Thus, under both sections of RISA that expressly authorize the collection of fees, the "consumer service charge," for the purposes listed by the dealer, is prohibited.

4
CL §12-609(b) prohibits charges "not specifically provided for in this section ...." (Emphasis added.) Read literally, this language would prohibit the dealer's collection of even those charges otherwise authorized by law. But a literal reading that ignores this provision's "relationship to earlier and subsequent legislation" would disserve the goal of statutory construction, to discern the overall "legislative purpose or goal." Kaczorowski v. City of Baltimore, 309 Md. 505, 515, 525 A.2d 628 (1987). This problem in the wording of RISA, nevertheless, suggests the need for legislative correction. See also note 11 below.
5
Apart from enumerated exceptions inapplicable here, CL §12-614(a) prohibits, "in connection with any agreement, any charge or amount for the extension of credit, interest, fees, commissions, delinquency, collection, repossession, and foreclosure or otherwise."(Emphasis added.)

This office previously reached the same conclusion about a "settlement fee" included by an automobile dealer in a retail installment sale transaction. In 62 Opinions of the Attorney General 181, 184 (1977), this office considered the same statutes at issue here and advised you as follows:

  [W]e conclude that the "settlement fee" is not specifically provided for in Section 12-609 and, therefore, is barred under Section 12-609(b). We further conclude that the "settlement fee" is a "direct or indirect" charge which is barred under Section 12-614(a) and that it falls within none of the exceptions in Section 12-614(b).6

Relying on that opinion's construction of CL §12-609, this office later advised that RISA prohibited "a fee to cover the delivery of titling documents to the Motor Vehicle Administration." Letter from Attorney General Sachs to Mr. Benno Hurwitz at 1 (June 23, 1982).
Since the 1977 opinion, the General Assembly has amended CL §12-609 several times. It has not, however, changed the pertinent restriction in CL §12-609(b). Although we recommend that the General Assembly revisit the issue and clarify the scope of the restriction, this legislative acquiescence in the Attorney General's interpretation for over a decade is significant.7

B. Separate Charges and the "Cash Price"
The dealer's attorney has suggested that, because the "consumer service charge" is assessed in comparable cash transactions, it is therefore part of the "cash price" of the vehicle rather than a fee "separate from the cash price" subject to the disclosure provisions of CL §12-606(b)(2). The definition of "cash price" in §12-601 reads as follows:

6
The opinion contained no description of the purpose for the "settlement fee." From the context, it appears to have been simply a post-bargaining extraction by the dealer.
7
As the Court of Special Appeals observed:

 "The Legislature, which is presumed to know of the interpretations made of statutes by the Attorney General, has met at least annually since Attorney General Hammond handed down his opinion in 1951, but that body has not changed the statute. Thus, the General Assembly has sub silentio tacitly approved the Attorney General's interpretation."

Nelson v. Real Estate Comm'n, 35 Md. App. 334, 342, 370 A.2d 608 (1977) (citations omitted).

"Cash price" means the minimum price for which goods subject to an installment sale agreement, or other goods of like kind and quality, may be purchased for cash from the seller by the buyer.

Because the fee is part of the cash price, the argument goes, the fee is not a "service or other charge" prohibited by CL §§12-609 or 12-614.
The cash price of a vehicle offered for sale presumably includes an amount that covers the dealer's cost of goods and business overhead, together with a profit margin. The services that underlie the "consumer service charge" are a part of that overhead and thus may properly be included in the dealer's calculation of the lowest price for which the dealer is willing to sell the goods. But if the charge is part of the cash price, the dealer cannot list it as a separate fee, as was done here.8 RISA requires a disclosure of the "cash price of the goods sold," and, as a separately tabulated item, "[a]ll charges for delivery, installation, or repair of or other services to the goods which, separate from the cash price, are included in the installment sale agreement." CL §12-606(b)(1) and (2) (emphasis added). If a charge is part of the vehicle's cash price, CL §12-606(b)(1) requires that it be included in that element of the price disclosure. If it is separate from the vehicle's cash price, CL §12-606(b)(2) requires that it be disclosed separately and be subject to RISA's limits on other charges. In other words, a fee cannot be justified on the theory that it is not really distinct from the vehicle's cash price but then also be listed "separate[ly] from the cash price."
We recognize that, in some measure, this analysis emphasizes form over substance. However, in the field of credit regulation, the form of the transaction is extremely important. In fact, most credit laws impose specific formats for lending transactions, to standardize the terms of credit products so that the consumer can understand the true cost of a transaction, make meaningful comparisons, and bargain if possible. RISA seeks, in particular, to eliminate ambiguities and uncertainties in credit sales of goods. See Griffin v. Baltimore Federal, 204 Md. at 158-59.

8
See note 1 above.

C. Implied Authorization
The seller's counsel has also suggested that other charges typically collected by new car dealers are not listed in CL §§12-609 or 12-614 and yet nevertheless are considered legal. A dealer collects the excise tax, fees paid to the Motor Vehicle Administration for title and vehicle registration, and sometimes a charge for optional items added by the dealership or its contractors rather than by the manufacturer. The dealer in this case seeks to draw a comparison between the "consumer service charge" and these other fees, in order to suggest that a literal reading of the prohibitions in CL §§12-609(d) and 12-614(a) should not be given. We will address each of these charges in Part IV below.

                                       IV
                 Other Authorizations For Charges

A. Excise Tax
The sale of a new or used motor vehicle is exempt from Maryland's general sales tax. Article 81, §326(g) of the Maryland Code. However, §13-809(c)(1) of the Transportation Article ("TR" Article) imposes a five percent excise tax on sales of automobiles (subject to certain exemptions set out in TR §13-810). TR §13-812 expressly permits a licensed dealer to collect the excise tax on behalf of the Motor Vehicle Administration.9
In our view, this specific authorization must be given effect over the more general prohibitions in CL §§12-609 and 12-614. Originally enacted in 1941, RISA was intended as a remedial measure to protect installment plan buyers from misleading or ambiguous lending practices. We read in that purpose no intent to inhibit the statutorily authorized collection of State taxes.10

9 The dealer keeps 1.2 percent of the gross tax collected.
10
The excise tax on the titling of vehicles was part of the original Motor Vehicle Code, former Article 66 1/2, §25A. See Chapter 1007, Laws of Maryland 1943. The General Assembly last increased the tax, to its current five percent of fair market value, in 1977. Chapter 672, Laws of Maryland 1977.

B. Fees for title and vehicle registration
CL §12-616(a) provides, in part:

   If the holder [of the retail installment obligation] does not pay out to a public official the full amount charged to the borrower for filing and recording instruments, the buyer shall receive credit for the amount so charged to him and not paid out.

This section, a part of RISA, impliedly authorizes the collection of fees like those charged by the Motor Vehicle Administration for filing title and vehicle registration information. Otherwise, the section would have no purpose. However, CL §12-616(a) authorizes neither the "seller documentation fee" initially charged by the dealer nor the recharacterized "consumer service charge."

C. Dealer improvements to a vehicle
CL §12-606 provides a listing of fees and charges that must be disclosed to a purchaser in any installment sale contract. CL §12-606(b) provides in part:

   An installment sale agreement also shall state in simple tabular form the following separate items in the following order:
    (1) The cash price of the goods sold;
   (2) All charges for delivery, installation, or repair of or other services to the goods, which, separate from the cash price, are included in the installment sale agreement.

One way of reading CL §12-606(b)(2) is that it merely requires disclosure of fees and charges permitted by other law but does not itself authorize charges not provided for elsewhere. However, it is both a permissible reading of the language and a reflection of long-accepted practice to read CL §12-606(b)(2) as impliedly authorizing legitimate charges for actual services of the types listed.11

11 See also note 4 above. Although we believe that the construction of CL §12-606(b)(2) given in the text is defensible, we recommend that the General Assembly consider remedial legislation to expressly permit those charges regarded as legitimate.

But even this liberal construction does not vindicate the dealer's "consumer service charge" in this case because, with one possible exception, none of the asserted services giving rise to the fee is "delivery, installation, or repair of or other services to the goods." The dealer's purchase order explains, essentially, that the charge is for the collection of insurance data; computer entry of information relating to the vehicle and the transaction; postdelivery follow-up with the buyer; and "final delivery preparation including washing, pointing up, vacuuming and final pre-delivery check" of the car. With the possible exception of the last category, none of these constitutes "delivery, installation, or repair of or other services to the goods."
We understand "delivery charge" to mean a fee for moving the goods to an agreed location, where the buyer takes possession. For an automobile, the only bona fide delivery charges are "destination" charges that defray the cost of transporting the vehicle from the manufacturer to the dealer or to some other location specified by the purchaser other than the dealership. See Rocky Mountain Fire & Cas. Co. v. Goetz, 633 P.2d 109, 112 (Wash. App. 1981). The dealer's "consumer service charge" in this case does not purport to be a "delivery charge."
Whether the charge can be regarded as "installation," "repair," or "other services to the goods" is a harder question. The charge includes "washing, pointing up, vacuuming and final pre-delivery check." In some contexts, at least, these acts might be considered "installation" or "repair."12 They are also, in a literal sense, "services to the goods": a dirty car becomes clean, for instance, or a car with dislodged trim has it reaffixed (if a remedial step of this sort is what "pointing up" means).13
The difficulty with this application of the statutory language, however, is that it is inconsistent with the very nature of the goods for which a cash price was paid, a new car. Under TR §11-138, a "new vehicle" is one "[t]hat has never been used to destroy its newness ...." When a buyer pays the sale price of a new car, the buyer is paying for a vehicle that is clean and in good working order. A dealer who

12
"The ordinary meaning of the word 'install' is 'set up or fix in position for use or service.'" Town of Greenland v. Bunker, 394 A.2d 321, 322 (N.H. 1978). At least one case holds that the word "repair" includes cleaning operations. Tesche v. Best Concrete Products, Inc., 325 P.2d 150, 155 (Cal. App. 1958).
13
Not every car will need "pointing up," of course; yet, the "consumer service charge" is the same for every car.

sells "[d]eteriorated" goods as "new" violates the Consumer Protection Act. CL §13-301(2)(iii). As the Court of Special Appeals observed of a new vehicle:

   'New', like 'chaste', is not a matter of degree, and once lost may only be referred to thereafter in the comparative sense, never again as an absolute. The subject of that adjective may be just-like-new or even just-as-good-as-new, but it can never again be new.

Wheaton Dodge City v. Baltes, 55 Md. App. 129, 132 (1983).
In other words, we doubt that CL §12-606(b)(2) can properly be read to authorize separate charges for services that are necessarily included in the vehicle price. Rather, it refers to the dealer's adding optional items in or on the car that are not put on by the manufacturer. CL §12-606(b)(2) permits charges for a dealer's tangible improvements to the vehicle itself. Actions that are necessary in any event to sell a car as "new" do not fall within this category.
In sum, CL §12-606(b)(2) impliedly authorizes certain enumerated charges in addition to the cash sale price, so long as the charges are for the tangible, legitimate services listed in that paragraph. The "consumer service charge" addressed here does not fall within any of the fees or charges permitted under CL §12-606(b)(2). The charge is best viewed as a part of the "cash price," as defined in CL §12-601(d), and thus may not be listed or charged separately in a retail installment sale of a motor vehicle.

D. Summary
In our opinion, the "consumer service charge" or "seller documentation fee" in question here does not fall within any grant of permission in RISA, express or implied.14 It is, therefore prohibited.15

14 The strictures of RISA may be avoided if the seller elects to extend financing under the provisions of CL Title 12, Subtitle 10 (Credit Grantor Closed End Credit Provisions). Credit sales of automobiles are permitted under CL Subtitle 10 as an alternative to RISA. CL §10-1013. While the Credit Grantor statute affords the lender more flexibility, the statute restricts specifically enumerated fees and charges that can be imposed in connection with an extension of credit to a consumer to "actual and verifiable expense[s] of the credit grantor not retained by him." CL §12-1005(c)(2). In our view, the "consumer service charge" assessed by the dealer in this case would be prohibited under this statute as well because it is retained by the dealer.
15
Depending on the particular circumstances, a charge of this kind also raises serious

                                       V
                         Enforcement Provisions

CL §12-609(c) sets forth a specific penalty for the charging of any fee that violates the restrictions in CL §12-609:

     Except for an overcharge which results from a bona fide error in computation and which is corrected within 60 days from the date of the agreement, if a holder collects a charge greater in amount than the maximum permitted by this section, he shall forfeit to the buyer all finance charges paid or payable under the agreement.

This penalty provision applies, we believe, to any fee or charge that violates this section. A prohibited charge is by definition "greater in amount than the maximum permitted." A seller cannot justify an otherwise illegal charge on the grounds that the aggregate of all charges does not exceed the interest rate maximum. However, §12-630(c), which generally enumerates the penalties for violations of RISA, provides relief from this penalty if the overcharge is genuinely unintentional and is refunded promptly:

     If the seller or any subsequent holder unintentionally and in good faith fails to comply with any provision of §§12-609 through 12-612 of this subtitle, the holder may correct the error within 10 days after:
     (i) He notices it; or
     (ii) The buyer notifies him in writing of the error.

Whether the lesser consequence of "correction" under CL §12-630(c) is available in any particular case before you can only be determined after your full review of all relevant circumstances and an administrative finding that the overcharge was either "unintentional[] and in good faith" or not.16 You also may exercise some discretion in determining when a holder may be said to "notice" an overcharge, for purposes of the 10-day deadline for a refund.

Note 15 continued
questions of compliance with the Maryland Consumer Protection Act. A price advertisement that fails to disclose an extra service charge might well be deceptive and hence a violation of the Act. See CL §13-301(1),(3),(5),(6), and (9). Moreover, if a dealer imposes a charge for services that are not actually performed, or if the charge purports merely to compensate the dealer for services that are actually paid for by the manufacturer, the Act might also be violated. Deceptive practices like these might also violate the dealer licensing provisions of the Maryland Vehicle Law. See TR §§15-312(b) and 15-313(a) and (b).

Part of your second question asks us to detail the enforcement process that you should use in imposing the penalties set forth above. CL §12-631 establishes the jurisdiction of the Commissioner of Consumer Credit to investigate and act upon complaints alleging any violation of RISA:

      If a complaint for violation of any provision of Part II of this subtitle is filed with the Commissioner of Consumer Credit, he may investigate the complaint and hold a hearing on it in accordance with §11-413 of the Financial Institutions Article.

      If, after the hearing, the Commissioner finds that a person has engaged or is in engaging in any act or practice prohibited by Part II of this subtitle, he shall order the person to cease and desist from the act or practice.17

In a prior opinion, this office construed a similar statutory grant of power to issue cease and desist orders as including a power to prohibit a lender from collecting a loan for which usurious interest was charged. 54 Opinions of the Attorney General 281 (1969). That opinion construed the following provision:

       The Administrator of Loan Laws shall have, in addition to all other powers conferred upon him by this article, the power to issue orders directed to a licensee to cease and desist from a course of conduct if he shall find, after notice and hearing, that the [course] of conduct of the licensee results in an evasion or violation of any provision of this article, or of rules and regulations promulgated in pursuant thereof.

Former Article 58A, §11(c). The Attorney General concluded that the language of that statute "constitutes a mandate that the Administrator

16
The particular complaint that gave rise to your inquiry has been settled.
17
The investigatory powers of the Commissioner are set out in §11-413 of the Financial Institutions Article. CL §12-631(c)(2) provides that "[t]he order of the Commissioner shall comply with the Administrative Procedure Act." See Subtitle 2, Title 10 of the State Government Article.

require a licensee to cease and desist" collecting a usurious loan. 54 Opinions of the Attorney General at 287.
We likewise conclude that the similar language of CL §12-631 requires you, upon an administrative finding that the statute has been violated intentionally, to order the seller or subsequent holder to cease and desist from collecting any interest or finance charges "paid or payable" on the complainant's loan. CL §12-609(c). Additionally, the order should require the seller to cease and desist from charging the illegal fee in future transactions. See generally Beneficial Finance Co. v. Administrator of Loan Laws, 260 Md. 430, 272 A.2d 649 (1971).

                               VI
                          Conclusion

In summary, it is our opinion that:

1. RISA prohibits a separately stated "seller documentation fee." RISA also prohibits a separately stated "consumer service charge" unless the charge is levied for bona fide optional services performed on the vehicle, rather than for services that must be provided in any event when a dealer sells a new car.
2. If the seller imposed a prohibited charge in good faith and, after discovery of the overcharge, the seller (or subsequent holder of the installment sale agreement) acts promptly to refund it, the violation of RISA will have been corrected. If, however, the Commissioner of Consumer Credit finds either that the seller imposed the charge in knowing violation of RISA or that the seller (or subsequent holder) failed to make a refund promptly after discovery, the Commissioner may order the forfeiture of all finance charges on the loan.

      J. Joseph Curran, Jr., Attorney General
      J. Steven Lovejoy, Assistant Attorney General
   

Jack Schwartz
Chief Counsel
Opinions & Advice

Editor's Note: The applicability of the Retail Installment Sales Act to "seller documentation fees" and similar charges is at issue in Maryland New Car and Truck Dealers Ass'n, et al. v. State of Maryland, et al., Case No. 10-552/7272 (Cir. Ct. for Harford County filed August 22, 1988).