Ford dealership’s undisclosed finance charge not an ‘additional charge,’ COA holds

The Indiana Court of Appeals has affirmed a finding that a Ford dealership failed to disclose a $25 convenience fee for its credit customers as a finance charge. It also reversed an Indiana Department of Financial Institutions’ finding that because the fee was not disclosed in the finance charge box, it must be an additional charge.

When the Indiana Bureau of Motor Vehicles began allowing dealerships to charge customers a convenience fee for offering registration and titling services at the time of a sale in 2007, Webb Ford Inc. began charging a $25 fee for its credit customers for electronic titling. Although the Highland dealership required its credit customers to use electronic filing, cash customers were given the option of using the service.

Then in late 2015 and early 2016, a routine examination of Webb Ford’s records for compliance with the Indiana Uniform Consumer Credit Code revealed that the dealership had failed to properly disclose the convenience fee on a retail installment contract. The DFI alleged Webb Ford should have listed the fee in the “Finance Charge” box on the contract, not the “Itemization of Amount Financed” and “Amount Financed” boxes as a “Filing Fee.”

Webb Ford was not charged with violating Indiana Code § 24-4.5-2-301 for not disclosing the $25 convenience fee in the “Finance Charge” box, but rather with violating the IUCCC additional-charges statute, I.C. 24-4.5-2-202, for assessing “impermissible additional charges” in the form of the convenience fee.

DFI alleged Webb Ford tried to treat the convenience fee as an additional charge, and ordered it to “Cease and Desist charging a mandatory $25 electronic vehicle registration fee[] to credit customers only when such fees are not also charged to cash customers.” It also ordered the dealership to “search its files from December 30, 2013 to the present to identify and to refund all impermissible additional charges that were assessed to consumer credit buyers but not to cash buyers.”

An administrative law judge concluded the $25 fee was an additional charge because it was not disclosed as a finance charge, and the trial court subsequently affirmed DFI’s final order and concluded Webb Ford had failed to meet its burden of showing it was prejudiced by an agency decision that was arbitrary, capricious or otherwise contrary to law.

Webb Ford argued on appeal that even if a finance charge is disclosed improperly, it’s still a finance charge governed by the disclosure statute. The Indiana Court of Appeals agreed, holding that “a finance charge does not cease being a finance charge just because it is not disclosed as such.”

The appellate court declined to decide whether it mattered if DFI charged Webb Ford with violating the disclosure statute or the additional charges statute because the remedies under both were the same. Instead, it held that a finance charge doesn’t become an “impermissible additional charge” when it’s not disclosed in the “Finance Charge” box.

The appellate panel therefore affirmed the DFI’s finding that the $25 convenience fee was a finance charge that Webb Ford failed to disclose as such, and reversed DFI’s finding that because the fee was not disclosed in the finance charge box, it must be an additional charge.

The case of Webb Ford, Inc. v. Indiana Department of Financial Institutions, 18A-PL-2675, was, thus, remanded to DFI for further proceedings under the disclosure statute, allowing Webb Ford to raise any applicable defenses in.

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