• matthew

The DR 2434 and Bailment Fees

In early 2019, the US Public Interest Research Group (US PIRG) contacted Colorado's new Attorney General and Executive Director of the Motor Vehicle Dealer Board with a suggestion for rulemaking regarding how bailment fees are charged in Colorado.

If bailment fee is not a part of your vocabulary, or you use another term, this refers to the 'reasonable fee' that Colorado law allows you to charge for the use of a vehicle on spot delivery should financing fail and the car need to be returned or repossessed. These fees typically range about $50/day or $0.50/mile. They are outlined on the state form DR 2434 that is required on each motor vehicle sale. Within Colorado, even in the event of failed financing, these fees are typically not collected from a consumer unless a dealer finds they have been dishonest on the credit application or if they fail to return the vehicle after notification of failed financing.

US PIRG, if you are unfamiliar, is an umbrella group with nationwide affiliates that advocate on behalf of consumers. They encompass some of the groups raising concerns at the national level on the manner in which we sell voluntary protection products.

At the March 2019 Dealer Board meeting, this bailment item was placed on the agenda for discussion. Advocates recommended that bailment charges in the cases of failed spot deliveries not be charged from the date of delivery of the vehicle, but rather from the date of the rejection of the financing application. Typically, this is between day 3-7 of the 10 day window dealers are given to finalize financing. During this meeting, the issue was debated by stakeholders before the board. It was then tabled for 60 days to pursue more information.

Today's monthly meeting marked the 60 day mark, and the item was again placed on the agenda for discussion. Neither side turned up any new revelations, prompting further disucssion to be followed by a motion to table for another year. During this time, the Board will track the number of consumer complaints over bailment fees and determine the efficacy of modifying form DR 2434 to comply with US PIRG's wishes.

CADA strongly believes that we will see these advocates again in the near future, whether before the Dealer Board or the General Assembly. I am requesting those of you who have charged a bailment fee on occasion would be willing to speak to me about the circumstances under which you charge it. Through my many phone calls with dealers over the past 18 months, I have not successfully identified anyone using these fees with regularity, but I do not doubt that some may be doing it. Your contributions would be greatly appreciated.

I can be reached at matthew.groves@colorado.auto or at (303) 282-1449.

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