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Pa. Bill Striking F&I Markup Cap Awaits Gov.’s Signature

Legislation aimed at eliminating a 10-year-old cap on markups of certain F&I products was sent to Gov. Tom Corbett’s office yesterday after passing the Pennsylvania General Assembly. He is expected to sign the legislation into law in 10 days.

by Staff
January 24, 2012
2 min to read


Legislation aimed at eliminating a 10-year-old cap on markups of certain F&I products was sent to Gov. Tom Corbett’s office yesterday after passing the Pennsylvania General Assembly. He is expected to sign the legislation into law in 10 days.

Passed by the House of Representatives yesterday by a unanimous 193-0 vote, HB 1630 will become law 90 days after receiving Gov. Corbett’s signature. Aside from removing what was originally a temporary cap on markups, the bill also includes language ordering the Department of Banking to review and investigate consumer complaints related to the sale of F&I products.

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The cap, which allowed dealers to only markup service contracts, extended warranties, GAP and other debt-cancellation products by 100 percent, was established in 2002 to allow the state’s banking agency to create a standard on what charges would be deemed excessive. The agency, however, could not determine what was excessive since no other state imposed arbitrary caps on F&I products.

“We could not find another state that had it,” said Rep. Mike Tobash (R-Berks County). “So, this temporary cap was set and turned into a 10-year law that we just struck.”

Tobash only sought to remove the cap when he introduced his bill last June. As the legislation headed to the Senate after passing through the House on June 26, the banking agency told lawmakers that it could not determine what was excessive. The bill was then amended again, with lawmakers adding language that ordered banking regulators to continue monitoring the sale of F&I products. The amended bill was then passed by the senate on Jan. 17.

“The consumer protections that exists are No. 1,” Tobash said. “Finance companies will still be a gatekeeper for excessive charges, and the department of banking is going to take a look at how many complaints they receive and report back.

“All of the consumer safeguards that exist in our competitive auto buying market exist with these products as well, but we don’t have additional restrictive language,” Tobash added. “We’ve now leveled the playing field to be the same as other states.”

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Working with Tobash and state banking regulators was the Pennsylvania Automobile Association. Melanie Bible, spokesperson for the PAA, said the association will continue to work with the banking agency as it continues to monitor the sale of aftermarket products.

“The auto sales industry is extremely competitive, and consumers have more access to product information than ever before,” she said. “So we felt the market should be allowed to determine what costs for particular products the consumer considers acceptable.”

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