Illinois dealers have historically charged “shop fees,” also often referred to as “environmental fees,” “rag fees,” “consumables fees,” or simply “oe” (other expense.) As a result of legal activity in 2004 in Oklahoma involving Jiffy Lube, and a corresponding investigation by the New York Attorney General’s Office during that time, which found certain charges to be misleading, NADA undertook to collect state laws and guidance governing these fees and related service/repair advertising. It concluded that given the wide variety of approaches used in various states, NADA Regulatory Affairs would not develop a set of model rules or guidelines.

The CATA now has word of possible litigation in Texas, so we again alert our dealers as to the potential risk of liability. We are aware of no challenges to these fees in Illinois. However, as with any fee charged, any revenue received from the fee should approximate the expense it covers. Said another way, these fees should not be a source of additional income for dealers.

The CATA suggests that dealers periodically monitor the amount of revenue these fees produce and compare/contrast it to the expense for consumables shown on the dealer statement. If these two items reasonably offset, the dealer should be able to defend against any allegation, class action or otherwise, that the “expense” is a ruse and is merely “additional income.”

Many dealers charge such a fee as a percentage of an RO. Assuming that the percentage is “reasonable” under the above analysis, we suggest further that the charge be capped at a reasonable amount, so as to not make for unreasonable charges on expensive repair orders.

Abuse of these fees could also subject a dealer to investigation by the Illinois Attorney General, so again we advise continued caution.