House Amendment 1
H 3952 - Session 125 (2023-2024)
Consumer affairs

The Committee on Labor, Commerce and Industry proposes the following amendment (LC-3952.DG0006H):

Amend the bill, as and if amended, by striking SECTIONS 1, 2, 3, and 4 and inserting:

SECTION X. Section 37-2-307 of the S.C. Code is amended to read:

Section 37-2-307. (A)(1) Every motor vehicle dealer charging closing fees on a motor vehicle sales contract shall pay a one-time registration fee of ten dollars during each state fiscal year before January thirty-first to the Department of Consumer Affairs. The department shall set the fee annually in an amount not to exceed twenty-five dollars.

(2) The closing fee must be included in the advertised price of the motor vehicle, disclosed on the sales contract, and displayed in a conspicuous location in the motor vehicle dealership.

(B) A As used in this section:

(1) "Closing fee" is defined as means a fee charged for recovery of a motor vehicle dealer's actual costs for all administrative and financial work needed to transfer and deliver the motor vehicle to the consumer, person, or entity including, but not limited to, compliance with all state, federal, and lender requirements, preparation and retrieval of documents, protection of the private personal information of the consumer, records retention, and storage costs;

(2) "Dealer" means a "motor vehicle dealer" as defined in Section 56-15-10; and

(3) "Department" means the South Carolina Department of Consumer Affairs.

(B)(1) Every dealer charging closing fees in a motor vehicle sale or lease transaction shall pay a filing fee of ten dollars to the department each time the dealer provides notice of a new closing fee amount to the department. The department shall set the filing fee annually in an amount not to exceed twenty-five dollars.

(2) The closing fee must be disclosed on the motor vehicle sale or lease contract, displayed in a conspicuous location in the motor vehicle dealership, and clearly and conspicuously disclosed in any advertisement of a specific motor vehicle for sale or lease .

(C)(1) Prior to charging a closing fee, a motor vehicle dealer shall provide written notice to the department of Consumer Affairs of the maximum amount of a the closing fee the dealer intends to charge on an annual basis.

(2) If the maximum amount of the proposed closing fee the dealer intends to charge is not more than two hundred twenty-five dollars per vehicle, the closing fee is deemed approved by the department and the dealer does meet and fulfill all reasonable requirements and criteria in compliance with this section. If the proposed closing fee exceeds two hundred twenty-five dollars, the department may review the amount of the closing fee for reasonableness using the criteria in item (3)(5) if the maximum amount of the closing fee intended to be charged by a dealer in a vehicle transaction exceeds two hundred twenty-five dollars per vehicle. The department shall not conduct a review of the amount of the closing fee for reasonableness when the maximum amount the dealer intends to charge in a vehicle transaction is not more than two hundred twenty-five dollars per vehicle.

(3) If the department intends to conduct a formal review of a proposed closing fee, the department shall provide written notice to the motor vehicle dealer of the department's intention to review the proposed closing fee within thirty fifteen days of receiving the complete proposed closing fee notice. If the department determines that a proposed closing fee is not reasonable, the department must issue a written order detailing the department's findings within thirty days of receiving the complete proposed closing fee notice. If the department does not provide a motor vehicle the dealer with written notice of the department's intention to review approval of the proposed closing fee within thirty days of receiving the proposed closing fee notice, the motor vehicle dealer is authorized to charge the proposed closing fee. If the department determines that a proposed closing fee is not reasonable, the department shall issue a written order detailing the department's findings. The department may require the fee to be reduced or require the motor vehicle dealer to submit a new fee for review.

(4) The dealer is at all times authorized to submit a new closing fee that is equal to or less than two hundred twenty-five dollars per vehicle which is not subject to review. If the department finds that a proposed closing fee is not reasonable, the dealer may request a hearing in accordance with the Administrative Procedures Act. During the pendency of the department's review period, a motor vehicle dealer or the pendency of any action before the Administrative Law Court, the dealer is authorized to charge a closing fee at an amount not to exceed the amount most recently on file and permitted to be charged by the department. If the department finds that a closing fee is not reasonable, the motor vehicle dealer may request a hearing in accordance with the Administrative Procedures Act.

(2) If the maximum amount of the closing fee that the dealer intends to charge is not more than two hundred twenty-five dollars per vehicle, the closing fee is deemed approved by the department and the dealer does meet and fulfill all reasonableness requirements and criteria in compliance with the law and this section.

(3) In determining the reasonableness of a closing fee, the department shall allow the following items to be included in a reasonable closing fee:

(a) all administrative expenses,

(5)(a) In determining the reasonableness of a closing fee, the department must accept and allow all of the dealer's actual costs and expenses, including, but not limited to, employee compensation, information processing facilities cost, staff, supplies, and materials, and financial work needed to transfer the motor vehicle to the consumer and to procure the associated with the following closing and deliver activities:

(i) closing of the motor vehicle sale or lease transaction;

(b) all costs for administrative expenses, costs, staff, supplies, and materials necessary by including any associated loan or lease, and transferring title of the dealer motor vehicle to comply the consumer;

(ii) delivering the motor vehicle to the consumer;

(iii) complying with all state, federal, and lender requirements;

(c) all costs for administrative costs, staff, and materials needed for the preparation and retrieval of documents;

(d) all costs for administrative costs, staff, supplies, and materials necessary for the protection of

(iv) preparing, storing, and retrieving transaction documents; and

(v) protecting the private personal information of the consumer; and

(e) all costs for administrative costs, staff, supplies, and materials necessary for records retention and storage costs of such records .

(b) Dealer costs must be calculated using generally accepted cost accounting principles for the preceding twelve-month period.

(c) In determining the reasonableness of a closing fee, the department may compare a particular dealer's costs only with other similarly situated dealers.

(D) Whether the vehicle transaction is a credit sale, consumer lease, or cash transaction:

(1) notwithstanding another provision of law, a motor vehicle dealer who complies with this section and any regulation promulgated under it and who charges a closing fee is not engaging in any action which is arbitrary, in bad faith, unconscionable, an unfair or deceptive practice, or an unfair method of competition for purposes of Sections 56-15-30, 56-15-40, and 39-5-20 with regard to the charging of a closing fee and may lawfully charge a closing fee;

(2) a motor vehicle dealer may assert any defenses provided to a creditor pursuant to the provisions of this title; and

(3) a purchaser injured or damaged by an action of a motor vehicle dealer in violation of this section or any regulation promulgated thereunder, may assert the remedies available pursuant to the provisions of this title.

(E)(1) The department of Consumer Affairs shall administer and enforce the subject of motor vehicle dealer closing fees including, but notas limited to,by this section. The department shall may make and promulgate such rules and regulations relating to motor vehicle dealer closing fees to administer and enforce this section. The department shall have access to a motor vehicle dealer's books, accounts, and dealer's records, but only to the extent necessary to determine if the dealer is complying with the disclosure provisions of this section subsection (B)(2) and the accuracy of the dealer's cost and expense information in subsection (C)(5), and this financial information must be kept confidential and privileged from disclosure, except as otherwise provided by law.

(2) If the department determines that a closing fee is not reasonable, the department shall issue a written order detailing the department's findings. The department may require the fee to be reduced or require the motor vehicle dealer to submit a new fee for review. If the department finds that a closing fee is not reasonable, the motor vehicle dealer may request a hearing in accordance with the Administrative Procedures Act In administering and enforcing this section, or for any other review or investigation of dealers, the department must:

(a) promote education for consumers and best practices for dealers;

(b) mediate complaints between a consumer and a dealer, whenever possible .

(3) In administering and enforcing this section, and in any review or investigation of dealers, the department must:

(a) have probable cause to believe, based on a consumer complaint or other credible evidence, that the dealer has violated a provision of this title;

(b) prior to contacting the dealer's employees or visiting the dealer's business premises, present the dealer with written notice of any cause or complaint which necessitates any department review or investigation and any request for records necessary to conduct the review or investigation;

(c) allow the dealer to cure any unintentional violation of this title within sixty days of notice from the department;

(d) close its investigation into the complaint and pursue not further administrative action on it once the complaint has been cured.

(4) A dealer substantially complies with the requirement of this section if the consumer receives a clear and prominent disclosure of the closing fee in the sale or lease transaction and was not misled by any other failure to comply with other requirements of this section.

(5) A dealer may not be held liable in any action for a violation of this title if the dealer shows by a preponderance of evidence that the violation was not intentional and resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adapted to avoid the error.

(F) It is the intent of the General Assembly to authorize a motor vehicle dealer to charge a closing fee in compliance with this section and to protect a motor vehicle dealer from civil liability for charging a closing fee if the fee is charged in compliance with this title and any Department of Consumer Affairs regulation or administrative interpretation. It is further the intent to protect consumers by the disclosure and notice provisions established in this section and with the remedies provided by this title.