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“Is this a new trend by rental companies to make a few extra bucks?”

November 24, 2008

Are the car rental companies taking a page from the airlines’ playbook, when it comes to fees and surcharges? Charles Locher thinks so. First, Hertz billed him an extra $26 for gas and fuel service, even though he had prepaid for both. Then another car rental company socked his friend with a $120 “interior cleaning” charge, even though the vehicle was returned in good shape.

“Is this a new trend by rental companies to make a few extra bucks?” he asked.

In a word, yes. And … no.

Car rental companies are in deep trouble, as I pointed out over the weekend.

A close look at the latest round of quarterly earnings reports (here’s Hertz’ and Avis’ — warning, SEC server is slow this morning) suggests that one important strategy the car rental companies are leaning on, in order to generate more revenues, is applying surcharges more aggressively.

For example, here a snippet of Avis’ earnings:

During the nine months ended September 30, 2008, our net revenues increased $123 million principally due to a $112 million (11%) increase in ancillary revenues such as counter sales of insurance products, GPS navigation unit rentals, and fees charged to customers.

Car rental companies have always relied on fees for generating earnings. If you don’t believe me, just have a look at the legal proceedings in their earnings reports, which describe the car rental company’s efforts to extract more money from their customers.

So what’s different this time?

I believe car rental companies are getting more aggressive — much more aggressive — in finding every last cent of “ancillary” revenue.

Locher’s story had a happy ending. Hertz eventually refunded the fuel surcharge. But his friend didn’t get the $120 back, even though the car was spotless when he returned it. “Only his 78-year-old mother and he were inside the car,” he says.

Bottom line: be on the lookout for fees — now more than ever.

Christopher Elliott is the author of Scammed: How to Save Your Money and Find Better Service in a World of Schemes, Swindles, and Shady Deals. Critics have called it “eye-opening” and “inspiring” — it’ll “grab your attention and won’t let go.” Order your copy now on Amazon, Barnes & Noble or iTunes.

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10 comments

  • http://www.alaksatravelgram.com Scott mcmurren

    Advantage Rent a Car has a “roadside assistance” insurance policy of $3/day in Seattle that you have to opt out of if you do not wish to have. They don’t ask you–they just charge you. I’ve seen it at other Advantage locations as well. It’s extremely low-rent to apply these hidden charges, IMHO.

  • http://Huh? Jerry Mandel

    People write that they will never use Hertz, National, Avis, etc. again because of bad experiences. What will it take to educate people that the national car rental companies have little control over their franchisees?

  • Sven

    Most rental companies have room to negotiate prices. If something (car or accessory) is just sitting in the back room or parking lot collecting dust, and the rental company can rent it out for less than the listed price, why wouldn’t they?

    The best way to protect yourself against fees is to take photos with a camera that has an accurate time stamp.

  • Regina

    His friend should have immediately put the cleaning charge into dispute with the credit card company, which would backed him up. This sounds like outright fraud to me and he absolutely should not have paid it.

  • Bill Sheppard

    I just got post-charged by Budget at John Wayne (Orange County) $44.20 for 4.6 gallons of gas, supposedly for not having refilled (I did). I drove a total of 68 miles in a car rated for 28mpg on the highway (which is almost exclusively what I drove). 4.6 gallons? And almost $10/gallon?!?

    When I called to complain they asked where I filled up – I told them somewhere between Anaheim and the airport (a total of 12 miles). He suggested if I had filled up in Anaheim then I’d still owe for a top-off. I did fax them the receipt. If they don’t refund the charge I’ll dispute with AmEx…

  • Bela Fleck

    I agree with Regina. And Sven. It doesn’t hurt to let the employees see you taking the photos either. It can be a bit inflammatory, but it lets them know you’re on your guard against these fraudulent charges. Any employee who would give you a hard time about it only would do so because s/he is planning to do something they shouldn’t.

  • Chris

    @Jerry Mandel:

    As someone who works for a franchise organization, I can assure you that it is in the franchisor’s best interest to make sure that they are policing their franchisees. There are quality and brand standards that franchisees are contractually obligated to meet in order to keep their franchise. To say Hertz or Avis does not have any control over how their franchised locations are run is false.

    Allowing your franchisees to run their business the way they see fit without regard to these standards is a stupid business move – all it does is lessen the quality perception amongst consumers.

    McDonalds makes its franchisees tow the line, and for good reason…they have an image and a value proposition to the consumer to deliver on…every visit every time. They have shown that they have no problem yanking a franchise from an owner if they do not run things the right way.

    Consumers do not care if they are visiting a corporate location or a franchised one. In their mind, Hertz is Hertz or McDonalds is McDonalds, regardless of who operates the location.

    Perhaps the franchisors need to step up and put the smack down on these rogue franchisees who seem to care little about their customers or the brand they represent.. These folks are only serving to hurt the reputation of the parent company – something they do not need.

  • Joe Farrell

    @ Bill – hey, if you every get charged the top off = then you can ask to see THEIR proof that THEY topped it off. haha

    I got that scam pulled on my so I send THEM a demand for THEIR receipt. Never got it – and got the charge removed in response as an ‘accommodation.’

    Everybody plays the car rental game and how many times have we said, ‘its only a rental.’ The companies have their side too.

  • http://www.ffocus.org Bruce InCharlotte

    Agreed with the above post – take digital pictures, including one of the gas gauge and the mileage. They cost nothing and after a month or so, you can delete them. I wouldn’t worry so much about the time stamp – the background will clearly show that the car is in the return lanes, though if you can include one of their smiling and happy employees checking the car, that always helps.

    Dollar at LAX has twice tried to overcharge me, once because I returned it the same as I got it (at 3/4 of a tank) and once they tried to hit me for $14/day LDW when the contract said $9/day. When I complained by email, they quickly reversed the charges, but how many people look that closely at their receipts? In the second email, I told them that if they mess it up one more time, they lose a very frequent customer.

  • jaxon

    I have a positive story to tell, not a Hertz rental, though. Last month when we returned the car, the fellow inspecting asked how we had gotten a scrape on the front bumper. We were both non-plussed and I still have no idea how that could have happened given our parking/driving that week — it surely was nothing we had done. I always do an inspection before I drive off the rental lot, so I know it wasn’t there when I rented it.
    The fellow was very nice and said — we will mark it as already present — don’t want to lose good customers, he said to his co-worker. I was flabbergasted, and my husband turned to me as we walked off, saying, “Guess sometimes it’s good to be old — had we been kids, we probably would have been charged.” The funny thing was I had been ticked at that rental company because I had reserved a Prius, didn’t get it, and loudly complained.

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