JACKSONVILLE, Fla. — Hidden processing fees are hitting Floridians signing onto payment plans when purchasing high-priced items like cars, electronics, and cars, but Florida lawmakers are looking to ensure there’s more transparency in the process.
David Boyd is the finance manager at Castle Used Cars on Beach Boulevard.
The company offers what are called Retail Installment Sales Agreements to its customers.
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It’s basically an option where, instead of taking out a loan and making payments to a bank, the customer agrees to pay back the price of their vehicle directly to the dealership over a period of time.
Boyd estimates that less than ten percent of customers choose the option.
“Pretty much the individuals who choose that type of financing, generally are people who are challenged credit-wise, you know? People who don’t want to use outside financing or want their credit used,” said Boyd.
But it’s not just cars.
These types of agreements are common options for other big-ticket items like furniture and electronics as well.
There is a cost, though.
If customers choose to make payments using credit cards or debit cards, businesses might charge a fee to offset the price they have to pay to third-party processing companies.
“It’s a big expense because they’re charging us as well as the consumer. You see, credit cards, they’ve got their profit margin also,” said Boyd.
And while some companies like Castle Used Cars are up front about those extra fees, that’s not always the case.
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Customers may be surprised to see the additional cost added to their payments, which generally averages around 3.5 percent of the total price of the transaction.
New legislation moving in the Florida Senate seeks to add more transparency by requiring businesses to disclose electronic payment fees on the initial contract.
It also requires them to offer a fee-less payment option like cash or check.
Boyd sees it as a win-win by allowing businesses the option to pass along the cost, while ensuring the customer fully understands the potential for additional costs on the front end.
“If a business is operating with integrity, they’ll have no problem, you know, telling the customer and disclosing anything that they’re doing,” said Boyd.
The bill also requires the service charge to be “reasonably” related to the actual expense incurred by the business for processing a payment.
Some lawmakers expressed concerns about the language in the bill’s first committee stop, arguing it should be tightened down as the bill moves forward to ensure customers aren’t overcharged.
The bill has two more stops in the Senate.
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