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“Look at this list. Are you insane?”

January 30, 2008

Did your last car rental bill include a surcharge for vehicle registration, contracts or a security fee? Bob Baker’s did when he rented from Avis recently. So he asked.

Here’s what happened next.

I haven’t rented from Avis in a while, but I wanted to this time. I can’t believe the balls of Avis to expect me to pay their vehicle registration, a “security” fee and what the hell is a “contract fee”? and others. Look at this list. Are you insane?

Your Base Rate is for : 3 day(s) / unlimited mileage 617.97 USD
Car Information: Intermediate SUV Class
Pontiac Vibe or similar
Seats 5
Holds 2 large, 3 small Suitcases

Pricing
Base Rate: 617.97
Taxes & Surcharges:
Total Surcharges: 92.71
* 1.10% (Vehicle License Fee)
* $5.00 per day (Domestic Security Fee)
* $0.75 per day (Customer Contract Fee)
* 11.11% (Concession Recovery Fee)

Total Tax ( 7.000% ): 48.54
Mileage: Unlimited
Approximate Subtotal: 759.22 USD

Here’s Avis’ reply:

Hello Mr. Baker,

Thank you for contacting Avis Car Rental.

I apologize for any concerns, or confusion due to the different taxes, and surcharges that are imposed on the rental charges.

The taxes are required by the government bodies where the Avis is located. It may include state sales tax, county sales tax, or city sales tax. Locations within the same state may have different tax amounts because each county, or city may impose different tax rates.

Airport authorities charge concession fees to car rental companies who operate on airport property for use of its roadways, and facilities.

Thank you for choosing Avis

Josephus Daniels
Avis Customer Service E-Mail Dept.

Let me take a moment to point out that both parties could have done better with their initial letters. Baker’s note could have been more precise and polite — here are a few guidelines — but Avis shouldn’t have sent a form letter that didn’t address the question.

Here’s Baker’s response:

Hello Josephus Daniels,

You did not answer my question. I demand that you escalate this email to a higher source.

I did not ask about taxes or the 11.11% airport concession fee. I know all about them.

I asked about the other fees that Avis charges and keeps for themselves.

I want to know what these fees are:

Total Surcharges:
* 1.10% (Vehicle License Fee)
* $5.00 per day (Domestic Security Fee)
* $0.75 per day (Customer Contract Fee)

If you prefer I ask the State Attorney General instead, I will be happy to do so.

Thanks,

Bob Baker

Very good. Except for the threat to ask the attorney general. Copying the AG on the note would have probably been far more effective.

To which Avis said:

Dear Mr. Baker III,

Thank you for contacting Avis through www.avis.com.

We certainly do apologize that the initial response did not answer your questions for you. In regards to the surcharges that you have listed below the 1.10% vehicle license fee is assessed to license, $5.00 per day surcharge is in regards to the increase in security that is needed at the locations, and $0.75 customer contract fee is in regards to the fee for the processing of the contract. We are sorry if you feel that these are unneccessary charges however every customer is charged these and every rental car agency does assess surcharges.

If we can be of further assistance, please let us know.

Sincerely,

Sancha Adams
Avis E-Mail Customer Service
custserv@avis.com

What kind of a nonsense answer is that?

Fact is, there’s no good explanation for why car rental companies bill you for security, contracts and registration fees, other than that they can. If this is their best defense of the fees, maybe it’s time for the state attorney general to take a hard look at these questionable surcharges.

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.

25 comments

  • Drew

    I routinely rent from Avis (I think I’m at something like 20 rentals since September), and the VLF (Vehicle Licensing Fee) is something that’s relatively common across the board. Essentially, you pay for the portion of the vehicle license that you use (if it costs them $365 a year to license a car, and you use it for 5 days, then you pay $5)… I have NEVER seen it as a percentage of the contract–that seems like a license to take you to the cleaners!

    Looking back over my contracts, I often see Transportation Fees (for the shuttle buses, if they have them), Tourism Fees (from the City/County), CFC Recycling Fees, Concession Recovery Fees, and the like, most of which I can agree with. I have never seen a security or a contract fee on any of my Avis contracts…

    But, then again, if you’re paying over $200 a day for a car (617.97 for 3 days!), then maybe there’s something else going on there…

  • pat a thomas

    This seems to be another sneaky marketing ploy like the one that airlines use – giving a cost for a fare, or in this case a certain number of days renting a particular class of vehicle, making the customer comfortable with their choice, then socking on the extra fees and taxes so that the real price significantly exceeds initial expectations. But, the rental car companies are taking this to the extreme. Why don’t they all just give us the bottom line cost so we know what we’re dealing with without having to research the local costs, then doing the math or just plain getting “sticker shock”?

  • Joe F.

    I see the airlines adopting something like this –

    Fare: $100
    Airplane use fee: $25
    Seat Maintenance fee: $7.50
    Lav cleaning fee: $2.00
    Fuel Surcharge $22
    Airport Gate Rental Fee $12
    Boarding Pass printing fee $8
    Airport Water Charge [for the toilets] $12.50
    Pilot Training cost deferral: $4.50
    Aircraft Inspection Fee: $22
    Personal Property Tax: $3
    Electronic Ticketing Fee $5
    Convenience Fee $4
    Surly Flight Attendant Raise so they Smile Fund $5

    The list can go on and on and on – even before you get to the Security Fees, Sept 11th surcharge, I mean, who wouldn’t want the Lav cleaning fee – its not like they let you do it by yourself.

  • Michele N

    I always thought that the cost of the ticket was calculated to account for all of those jobs that need to be done. If they have to charge additional fees for all of these duties previously thought of as routine parts of operating the business, then what is my initial ticket cost for? Am I just paying the salaries of the crew with that? Although, on that last charge, if it takes an additional $5 to get surly flight attendant to at least pretend to be happy to see me, I wouldn’t mind that! I’ve had some real grumps over the last couple of years.

  • Bob

    I’m the person this happened to and wrote this.

    A security fee? I still can’t get over it! Are the counters steel plated? Are there bomb proof doors? Where are the metal dedectors? Armed security agents?

    I think I finally realized why they charge a “Security Fee’. They need the protection from their customers after then hit them with those ripoff fees!

  • http://www.strategicdevelopment.com George Smart

    That’s 365,000 cars a year, if 25% of which need gas. You’re actually gonna need
    a gas station to service that many cars, which is in fact what the car rental companies do. I hate the fees like everyone else, but it takes some cash to pay staff, build and maintain a facility, plus the gas of course.

    The solution is to stop providing cars with a full tank, which would mean you could stop requiring they be returned full. The customer would only pay for fuel used.

  • Joe F.

    Local Taxes are a source of revenue for local government- they add these fees on to collect money from people who do not vote locally and thus can not complain about the fees. Not much you can do there.

    But the vehicle license fee? That is part of the business of the company. If there is cost that they cannot avoid simply by being in the business they are in, then that should be covered by the cost of the item. Its not like you go to JCPenney and buy a pair of pants and you get charged for store rent, electricity, business licenses and corporate fees in addition to tax and the cost of the item.

    The Vehicle License fee should be the daily cost of the license fee. In most states, it is less than $100 a year. So the fee ought to be 50 cents a day, which would easily pay the cost of the person keeping track of the cars and writing the checks. Having it as a percentage of rental is patently unfair. I’m a business traveler and rent the car for a day for $50, I pay 55 cents but over the weekend, the car gets rents for $20 a day, and the cost of the fee is 22cents a day. Does the vehicle cost less to register on weekend?

    Domestic Security Fee? Mr. Vice president of Operations, please describe the security enhancements at this location since September 11th? Duuuuuhhhh. What, you mean there are no local enhancement? No GPS tracking? No ID check against the TSA no rent list? You mean there isn’t a no rent list? Oh, you say you are now kicking more money back to the franchisor for THEIR security fee? I see. What are they doing with the money? We all know this is just $5 a day extra for the car. You can probably negotiate it away with a little nice cross examination about it of the manager of the establishment.

    Customer Contract fee? You charge me a fee to print a contract? Explain the fee structure and what this fee is for. If you tell me it is for ‘the costs of maintaining the reservation and contract printing infrastructure,” guess what, you just opened up your books to me on the subject if I decide to litigate the fees as being unfair, a violation of consumer protecton rights since they are mostly not disclosed in advance, and probably illegal or unconscionable.

    Sometimes, a good lawsuit over these items ends up costing the person or company charging them more in legal fees to defend and settle it than it ever would have generated in fees.

    Next, ask about the ‘Airport Concession Fee.” If the airport operator or authority charges a fee, guess what, it is public information. You can get a copy of their contract and verify what the fee structure really is. They may only be paying 4% of their rentals. et, the contract may ‘authorize’ the car rental company to charge a fee to recoup their losses. Which would then be misleading if the concession fee is 4% but the fee they charge is more than double that.

    Call me cynical, but I think I’m right about the concession fees and because they involve out of towners, none of the local investigative tv stations and reporters could care less – siince – like the government knows – they do not vote or consume media locally for advertisers.

    It should NOT cost you $20 a day rent a car and then have you pay and other $10 in fees and surcharges. There needs to be a rule that ALL fees and charges and their amounts are disclosed in advance and that the rental cannot be completed until the customer acknowledges [which can be done as part of the res process] all of the fees and charges and then the actual amounts the company is paying for those fees and charges, instead of what they are charging for them.

    George Smart – the whole idea of returning a vehicle on fumes is great until YOU are the person who picks up the rental car on fumes. And it runs out of gas between the airport lot and the gas station.

  • MrBadExample

    State Attorney General is the way to go. It forces a rental company to respond and respond promptly.

  • MarkA

    Joe F – I agree wholeheartedy with most of your points (I actually DO believe that you pay for electricity, rent, etc. when you buy a pair of pants – it’s called “overhead” and it’s a prominent feature in the bottom line of most companies’ spreadsheet) and that is the problem – they make sense. I doubt that you can argue away a fee THEY know is inherently unfair. “Whaddya gonna do, Mister? You don’t wanna pay the extra fees and charges? There’s the door. Make way for the next suck… er, customer. Next door at Alamo, they’re doing the same thing. Or Hertz, or Budget.” Legislation is the only real way of fighting this stuff. If they all do it, we’re stuck. We can’t “fight with our wallets” if every one of them rips us off the same way.

  • Jasper

    @ some of the above:

    I do not think that the problem is that companies don’t have legitimate expenses they need to recover from the customer. I do think that the problem is that they do not give you a decent prize anymore when you ask for a quote.

    The problem is that the customer expected to pay $617, and that he ended up paying $759. Transparency in business is a good thing. If someone wants to give me a break out of their pricing, I consider that good service. But I’d like to be told BEFORE I decide to purchase the product.

    Disclosure is way more than important. When a consumer is shopping around, he mainly cares about quality and price. That is was should be disclosed to the customer.

    A simple total price.

    Perhaps Bob can answer whether he would have minded paying $759, if he’d known in advance.

  • Chicky

    That’s the advantage of renting through places like Priceline. You know what you’re paying, and you pay it up front, period. Granted, if you cancel, you can’t get your money back, and you can’t upgrade your car, but by George, you can’t be charged for any other little doodads they feel like sticking on the total, and calling it a “fee.” For sure, Priceline has its drawbacks, but it does have that one redeeming feature.

  • Pancake

    Who in their right mind pays $205.99 per day for a car rental? If I could afford rentals rentals at that rate, then I wouldn’t be complaining about another $140 in fees.

    Maybe the way to save money is to find a place that will rent you a car for something like $40/day. There are plenty of them out there… I do it all the time! Even with the fees, a three-day rental shouldn’t cost more than $150…

  • Nate

    I used to work in management in the car rental industry for one of the big players. Most airports have always charged an airport concession fee for the “privilege” of of doing business at the airport. It has almost always been a percentage of the rental. However, up until the late 1990′s, the concession was factored into the price of the rental and the rental car companies paid it to the city every month. Starting in the late 1990′s, and after some favorable legislation in a few states, the rental car companies began charging this fee as a seperate line item on the rental bill. Funny thing is that they did not change their rates to reflect the fact that consumers were now paying for the fee seperately. Most airport concession fees in the US are between 10% and 13% depending on the airport. So, in effect, the rental car companies were able to raise their rates by 10 % in one fell swoop.

    Once this practice began, the pandoras box on fees opened up. For those of you who remember renting cars in the 80′s and 90′s, fees were non-existant, and in some states, illegal.

    With a few exceptions, there are almost no mandatory fees in the industry. Instead of factoring the costs of doing business into their rates, rental car companies keep coming up with unique ways of hitting their consumers with new fees. The only major exceptions are some true taxes that some municipalities charge for their pet projects, like new stadiums or tourism taxes.

    The vehicle licensing fee does not cover just your share of the rental. In most states a rental car company is now allowed to recover a certain percentage of their total cost of licensing and registration of their entire fleet for the year. The percentage you are assesed may be far more than your “share” of the rental. But this fee in not a legal requirement. It was created by the rental industry as another way to make money. Again, when this was instituted and copied by everyone else, no one lowered their rates.

    While concession and VLF fees are here to stay, I recommend that you shop around. It is going to be hard to get away with a lot of these fees, however some of the smaller competitors are taking advatage of the frustartion of consumers and not charging them.

    Also, if you have never noticed before, the airport concession fee is also assessed on all of the other so called fees on your rental bill. If these other “fees” were in deed some kind of tax or legally required, they would not be taxable. Airports and municipalities don’t complain because it’s just more money in their pockets. Check your next bill and you will see that any true taxes will have the word “tax” somewhere on the line item while everything will have “fee”.

    Until we as consumers rise up and start hurting these guys by flooding them with complaints and complaining to our AG’s, this practice will only get worse. At a minimum, they should advertise their rates withh all fees included so that you can accurately compare rates. Just like the banking industry, a good chunk of the rental car companies profits nowadays are coming from fees and not their actual rental rates.

  • Linaka

    With every car I have ever rented, I do get a quote with the rate(s); and then there is a breakdown of the taxes, etc, etc, etc. I always know up front before I “sign” the rental contract!! I agree with the previous poster…..paying over $200/day for a rental car is pretty high and if you can afford that…then why waste time grumbling about the extra fees!!

  • Ilene

    We rent cars many times a year, both at end destinations and locally.

    We always rent online, and always with a coupon.

    Our printed confirmation shows the exact costs and any fees charged. This is the time to check and question fees.

    If your online confirmation and your final contract show different amounts, then you at least have a hard copy to dispute.

    We have rented exclusively from Enterprise the past few years and have nothing but praise for the company. They seem to be consistently cheaper than the competitors.

  • Gary

    From the very first day that I started traveling, over 30 years ago I could not believe the games that travel supply retailers including car rental companies have played regarding the total cost of their products or services. As a consumer the only important amount that concerns me is the total amount I am being asked to pay for the product or service. Once I know the total price I in control and can choose whether or not to purchase the services.

    Everyone knows that advertisers and marketers are really responsible for the convoluted pricing game played by companies. First off the companies try to “hook” us by advertising a low base price, hoping that once we see all the additional taxes and fees we will be to lazy to go elsewhere for a better price and buy their product. As well when companies reveal their internal costs to us they are trying to deflect customer concern over high prices by making it seem like it is not their fault that such things as taxes and security fees have to be paid and we shouldn’t blame them for high prices.

    Does it really matter to us what the cost of doing business is for the car rental companies? This is a capitalistic society, meaning that the ultimate goal of any company is to make as much profit as possible. So let the companies raise the price of their products to what ever level they want and let the consumer decide if they think the price is reasonable buy purchasing the product.

    The bottom line for me is what’s important. I haven’t been taken in by their game for a long time because I look at the advertised price as a starting point not a finishing point and compare the total price, taxes and fees included, of different companies for the same product before making a purchase.

    Should marketers and advertising agents ever conclude that consumers are smart enough to compare the total price they may decide to advertise the total price. But as long as even one of them continues to advertise a base price they all have to advertise this way because everyone knows that a low advertised price gets our attention.

  • Bob

    If you think it can’t get any worse you may be wrong. I have just reserved a car with Alamo and I gave them my Delta FF # because of a special deal through the airlines. Guess who’s paying for that “special deal.”

    I noticed on my reservation confirmation that I am being charged, as follows:

    “Daily Freq Flyer Service Charge $1.50

  • Richard L

    Phoenix is the worst- Typically the fees are more than the daily rental rate.
    “Taxation without representation” comes to mind!

  • Kate

    You’re mad at Avis because of what the State of NJ & the airport authority require?

    Good “Domestic Security Fee” and you’ll find it’s required to be collected ONLY by rental car companies by the State of New Jersey.

    The Vehicle Licensing Fee is also also a state tax. It’s not something the rental company made up to scam you. Lots of states have started doing this. I don’t there’s any rationale behind it other than “Here’s another way to squeeze a couple bucks out of travelers.”

    It might interest you to know that some of the big car rental companies like Enterprise & Hertz have actually spent their own money in the past trying to fight new government rental fees because they don’t think you should bear the burden either.

    The contract fee is the only thing I’ve never heard of before. That sounds like it might be Avis imposed.

  • Aaron Gold

    I love how a compact car like the Pontiac Vibe (which is based on the mechanical bits from a Toyota Corolla) is listed as an “intermediate SUV”. Hah!

  • Janet

    I recently needed a rental car at LAX and it was last minute. I checked the rental companies websites directly. The two with the lowest prices were Avis and Fox. Guess which one charged around $50 in surcharges (not taxes…the taxes were the same at each company.) Needless to say, I went with Fox and had a satisfactory experience.

  • bette

    Everybody wants to get rich quick. This way of thinking which emerged in the 70′s (since the counter culture of the 60′s was “shot down”), is finally going to have to pay the band.. It really accelerated under Reagan (proud to be an American as long as you have a lot of money and things).
    Right now the most important thing is to find a secure place to spend the next few years in….kind of like “hitting the mattresses”. God bless.

  • http://www.deluxerentacar.info Kevin

    This is how bad Deluxe Rent A Car at LAX is…. http://www.deluxerentacar.info
    They aren’t eve authorized to charge the ACRF fee and they did it to the tune of 13-27% for up to two years.

  • genius

    You guys are geniuses. A quick check with Google reveals the $5 security fee is a NJ law. Complain to your legislators not the rental car company.

  • Mike

    Here is the NJ law regarding “Domestic Security Fee” http://www.state.nj.us/treasury/taxation/pdf/pubs/tb/tb47r2.pdf and NJ increased the fee from $2 to $5/day effective July 8, 2006. This is just one piece of the NJ 2006, billion dollar+ car tax increase http://www.njcar.org/njcar/dsp_news_details.cfm?news_id=740 – so don’t blame Enterprise/Hertz/Avis/whomever — blame Gov Corzine, but what do you expect from a Democrat.

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