Admin fees: Increasing transparency on vehicle pricing

By Ben Smith, Product lead, consumer products. Auto Trader

Last year we introduced the ‘three Ts’ of our customer promise;

• Trust: Giving car buyers confidence in the vehicle, the retailer they are buying from and the price of the vehicle.

• Transparency: Giving car buyers the information they need to feel confident in the buying decision.

• Time: Making car buying easier by showing relevant results and useful information upfront to car buyers. Helping connect them to the right vehicle, the right retailer, delivering more meaningful connections to retailers.

These ‘three Ts’ provided direction for new or improved products we launched last year, like the changes we made to our search algorithm, vehicle check, price indicator and the changes we made to our adverts.

Bringing trust and transparency to the marketplace and driving more meaningful connections to retailers are missions that continue to drive the focus of our teams this year and the next change we’re excited to talk to you about is our work around admin fees.

Why is Auto Trader looking at admin fees?

With the ever-increasing amount paperwork involved in purchasing a vehicle, organising finance, dealing with a part-exchange and possibly dealing with a finance settlement, some retailers choose to charge an admin fee on top of the purchase price of the vehicle. These additional fees vary between retailers; some may include additional products or services in addition to the admin costs, and with some retailers this fee is compulsory whereas at others it is optional and upsold as a consumer product in a similar way to GAP insurance or paint protection. The lack of consistency and transparency around how admin fees work make it difficult for consumers to compare ‘apples with apples’, especially in a price driven marketplace like Auto Trader.

There are many legitimate reasons why retailers charge additional fees and, especially when additional products are included, these can offer great value to car buyers. We don’t feel it’s for us to judge whether a retailer chooses to charge admin fees or not, but we do feel it’s our job to make the fees clear and transparent to buyers on our marketplace.

We also have a responsibility to make sure that there is no advantage to be gained on Auto Trader by charging an admin fee, and it’s unfair when the price advertised does not include any mandatory fees. This price doesn’t reflect what it will actually cost to purchase the vehicle and it makes the vehicle appear cheaper in search than a similar vehicle from a retailer that charges no additional fees.

What does the law say?

 In March 2020 the Chartered Trading Standards Institute published updated guidance for dealerships on how to comply with consumer laws and there a number of points to consider that specifically relate to the charging of additional fees.

• 17.2. The selling price is by definition the final price and must therefore include the unavoidable and foreseeable components of the price, components that are necessarily payable by the consumer.

• 17.5. Additional charges should be included in the up-front selling price if they are compulsory. A failure to include compulsory charges in the up-front price may breach the law.

This guidance is fairly explicit that where an admin fee is compulsory/unavoidable, it must be included in the advertised price.

Admin fees vs value-add consumer products

 Over the next few months we will be introducing some new features that make additional fees more transparent and ensure that there are no unfair advantages gained on Auto Trader by retailers who choose to charge them. As part of this it’s important to understand how we define two different types of fees.

Admin fees; are compulsory fees that are charged in addition to the sale price. As per the guidance from Trading Standards, where these fees are unavoidable, they must be included in the advertised price. Regardless of what products or services are included, if it’s compulsory it’s treated as an admin fee.

Value-add consumer products; are products/services that the retailer makes available to the consumer during the sale process in addition to the purchase price of the vehicle. Any value-add consumer products must be marked as optional and the retailer must comply with the guidance from regulatory bodies where applicable. Where a value-add consumer product is optional there is no requirement to include it in the advertised price.

In summary, if the fee is compulsory it’s an admin fee, and if it’s not compulsory and the buyer has the option not to pay it and not receive the associated products/services, it’s a value-add consumer product.

How we decided on our approach to admin fees

 Following the recent changes to Price Indicator, our research and product teams have been spending time meeting customers, listening to your feedback and making sure we take a considered approach in handling admin fees on Auto Trader. We’ve also been working with representatives from the Chartered Trading Standards Institute to ensure that our response to admin fees reflects the ‘Car traders and consumer law: Guidance for dealerships’, published in March 2020.

We know admin fees are a contentious topic within the industry and lots of people have passionate views, both for and against. At Auto Trader it’s not our job to say if admin fees are right or wrong and we met with many retailers who use admin fees to deliver a great experience for car buyers. Our priority is to ensure that retailers can comply with the law with respect to any additional fees that they charge, and that the practice of charging admin fees is fair and transparent for all the buyers and sellers that use our marketplace.

To those of you who have responded to our surveys, fed back on forums, attended dealer discovery days and welcomed us into your forecourts, thank you for taking the time to speak to us. We can’t always promise to action every suggestion you give us (especially with something like admin fees where the view of retailers differs), but we do promise that we’ll continue to listen and we encourage you to share your candid views so we can make our platform fairer for everyone that uses it.

If you would like to be involved in the research and testing for the next phase of our admin fees journey please get in touch with ben.smith@autotrader.co.uk.

For more details on the roadmap, key dates and visuals, please visit this page.