Consumer Federation of California

SACRAMENTO – 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."