Highway robbery: Should Avis be allowed to charge $336 an hour for a rental car?

By | January 5th, 2009

The words “highway robbery” come to mind when hearing the story of John Floss, who was charged about $336 an hour to rent a car from Avis during the holidays. Is that legal?

I’m not making this up. Here’s Floss’ receipt.


Gary Floss, his father, filled in the details:

John was scheduled to fly from Chicago Midway to Minneapolis for Christmas with his family on Tuesday evening, Dec. 23rd. When he arrived at the airport, he learned that his flight was canceled and that the airline could not get him on another flight until Christmas Day.

As we wanted him home for Christmas Eve, he attempted to rent a car from Avis for a one-way drive to Minneapolis. At the time, the Avis service person said that they only had three cars left. Neither agency on each side of Avis had any cars left.

Well, I understand the principle of supply and demand. But I was stunned by the rate that was quoted, which was an estimate of $855 for the rental. The actual hourly rate quoted was $336 an hour or $4,204 for the week.

When John inquired why Avis was “gouging” him on this rate, the service person said “my boss would probably be upset at me for quoting this rate!”

In any event, we had no choice but to take the car in order for John to get home.

Floss wrote a brief, polite letter to Avis requesting a refund between the higher rate and the normal rate charged by Avis. So far, no response.

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That doesn’t surprise me. Car rental companies typically charge higher rates for one-way rentals, and Floss is correct about supply and demand. Avis had his son over a barrel.

But where does a travel company cross the line between charging a market rate and price gouging?

Many states have price-gouging laws, but you only hear about them during natural disasters like hurricanes, when grocery stores double the price of staples or hotels raise room rates to take advantage of displaced guests.

So where’s that line? Floss thinks it was crossed. And interestingly, he may be in a position to make that determination.

I am an adjunct professor on the faculty of the University of St. Thomas in St. Paul, Minn. For nine years, I have taught a graduate level course called Strategic Quality Management, which is centered on the principles of performance excellence, leadership integrity, and continuous improvement of high-performing organizations.

I am always looking for case studies to use with our students, both “good” and “bad.”

This experience, suffice to say, constitutes a “bad” case and I plan to make the most of it in our class. It has several teaching points, not the least of which is the apparent disregard for the Avis Quality value statement on your Web site:

“Quality: We will place the interests of our customers first.

We will be dedicated to providing an individualized rental experience that assures customer satisfaction and earns the unwavering loyalty of our customers.

We will ensure that the ‘We Try Harder®’ philosophy underlies everything we do and shines through in our service to customers.”

I am certain you see that our experience does not correlate with this Quality value.”

I plan to use this experience in our class.

I believe that what Avis did was probably legal. It was not right.

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I’ll be interested in seeing how Avis responds to Floss’ request for a refund.

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