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“There are no polite words to describe what I feel has just been done to me”

May 14, 2009

No industry piles on the fees and surcharges like the car rental industry. Yes, they have their reasons. And yes, they have competition from airlines, which haven’t met an ancillary fee they don’t like.

But sometimes it’s useful to watch the rubber hits the road, so to speak. I’m talking about a postmortem on a real car rental bill.

Like Paul Irvine’s. He recently rented a car from National at Bush Intercontinental Airport in Houston, which is one of the most notorious places for car rental fees.

Here’s the damage:

5 days @ 38.50 per day = 192.50
FSO = 32.32
Customer facility charge = 15.00
National busing recovery fee = 4.49
Concession recoup fee = 26.78
Sports venue tax 5% = 12.43
Veh lic recov 2.34 per day = 11.70
Veh rental tax 10% = 25.05

Total = 320.27

That’s some bill!

Irvine can hardly believe it.

I can’t fathom which of the above constitutes sales tax, analogous to what one would expect to pay when buying a meal or a shirt but the difference between the rental charge itself and the grand total, composed of additional taxes and charges ripped out of an unsuspecting consumer, is $127.77. This represents approximately 40 percent of the overall cost. There are no polite words to describe what I feel has just been done to me.

It is simply unbelievable that a company can get away with the kind of charges they willingly tack on to a customer’s bill to fatten their own bottom line and that, in addition, they can be coerced by a local, state or federal government entity to extract even more blood to pay for their own programs which have not survived a simple cost-benefit analysis to the extent that they could be funded out of general tax revenues.

There is something seriously wrong with the financial machinery of this country and the inter-relationships between private wealth and the public purse. I’m wondering what can be done to lift the veil on this kind of robbery so the public can be better protected.

I couldn’t have said it better myself.

This is one of those rare cases when I feel that the victims aren’t just renters like Irvine, but the car rental companies, too. When 40 percent of the money you take from your customers goes to taxes and other fees, you aren’t a car rental company anymore. You’re a quasi-government agency that collects taxes from unsuspecting travelers.

This madness has to end.

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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27 comments

  • mindy

    OMgosh do i agree! I have vowed to only rent ‘off airport’ whenever possible. See, citizens of each state feel no shame in fleecing “visitors” but often will not levy the same taxes on their own citizens…. therefore.. many of these taxes/fees can be avoided by heading a few miles in and renting at a city location.

    Each trip, it saves me hundreds.

  • Ira Rosen

    What’s worse is that the taxes have been calculated on the rental cost plus some of the fees. 10% rental tax should be $19.25 and the 5% sports venue tax, half that.

  • Mike

    In looking really quick over the charges, I see at least one or two that the car rental company has decided to line it’s pockets with. First is the national bussing recovery fee, second is the facility charge, which I could argue is the same as the concession fee since both pay for exactly the same thing. Then you have the license recovery fee. Perhaps the cost is higher in other states but in my state a tag for an entire year is like $60. So to get $11 for a week is charging more to the customer than reasonable. i’m not even sure what the FSO is, but i suspect it’s another overpriced add on.

  • Heather Collins

    The “madness” will end when we start holding our elected officials responsible for their actions. They will do anything they want when they don’t hear from the
    voting public.

    First, complain to your US Congressional leaders.

    But most importantly, complain to the STATE legistlative members. Most of the taxes
    are of a state and local level. Tell them that you will no longer 1. rent a car in their state
    and better yet (drive yourself and see the country – two vacations into one or
    better yet, 2 you will no longer VACATION there either, thus depriving them of ANY
    taxes (such as those paid for food, etc)

    States have already been hit by the loss of tourists due to the recession. BUT if they are told that those tourist dollars are gone permanently, maybe they will think twice
    about ‘biting the hand that feeds them”!

  • Stewart Sheinfeld

    There are 2 issues here. 1 is the various taxes that have been assesed by the government, which are somewhat legitimate. the other are the various fees that have been added by the rental companies which really should be included in the daily fee. Can you imagine buying a shirt in a department store and when you get to the register they added a fee for rent to the shopping center, a fee for having the lights on, and a fee for putting the price tag on the shirt? This is the real problem, the rental companies want to keep the daily rental fee low so they look good to shoppers and then kill you with add on fees after you agree to make your purchase

  • Dang

    Sports venue tax ? What the f*** is this taxes for. ? Just take a small cut in the millionaire salaries of the players and the overpriced tickets of the event. Why the car-renter or the travelers have to pay for this.

  • Jane

    Oh, just wait for the next layer of taxes and fees that will be levied on vacationing car renters…..recession recovery fees, TARP recovery taxes, Big 3 auto failure bailout fees, high unemployment fees, bad federal/state/municipal government management taxes, etc…..the total taxes and fees will soon outpace the total for the base rental itself!!

  • Van

    Kansas City International, MCI is worse….I almost never pay as much for the car as I do for the taxes and fees…CRIMINAL.

    And the rental car agents normally apologize to me, profusely.

    Travelers are raped in the name of “because we can.”

    Criminal

  • David H

    Sounds like the old stories of people paying for a hooker, then getting their wallets stolen afterwards.

  • Roberto

    Who is going to hold the elected officials responsible? The same ones who tell their constituents, “Sure you can have that shiny, new ballpark without paying for it. We’ll just tax visitors who don’t get a say in the matter.”

  • Phil

    I am renting a car at O”Hare next week, have just checked the charges for the rental company “Dollar” Rental for two days $35.26, Motor Vehicle tax $2.75 and State Tax $7.05, thats it, pretty reasonable at O’Hare

  • ChelseaGirl

    While I agree that the fees are ludicrous, I don’t know if you can use the phrase “unsuspecting travelers” unless the fees are not disclosed before you rent. I don’t think that boycotts will work, because even if leisure travelers stay away, business travelers have to travel to certain places and they often have to rent cars. Large companies get negotiated rates so they aren’t as affected anyway.

  • http://www.icoulduseadeal.blogspot.com Jeanine

    OMG – I JUST did my expense report for the HOUSTON area yesterday and noticed the same exact rip off ! I couldn’t figure out why my rental car expense was double nearly every OTHER city I had visited recently. I’m glad it wasn’t just me BUT someone should investigate what are legit taxes vs. pocket lining and get HOUSTON some reality. I doubt we’ll be back.

  • Richard Clarke

    it’ll never end while a parasitical government continues to grow and fester like a gigantic tumor on the productive and hardworking section of society. Reagan said it best: a government programme is the nearest thing to eternal life you’ll see on this earth!

  • Les Wilder

    ‘Taxation without representation’ applies to the sports stadium, hotel and other visitor taxes. Hotel operators occasionally object (feebly) to these ripoffs but I doubt car rental operators bother.

    Didn’t we fight a war about this kind of thing?

    If offended travelers begin voicing their anger en masse to Convention and Visitors organizations, state attorneys general and home offices of the rental companies the notion might begin to seep in that these practices are actually hurting business.

    The idea that anyone would visit Houston for pleasure seems a little far-fetched. I’ve been there many times for family business and always with clenched teeth. I’ve learned how to do without a rental car which, in addition to dodging the greedy hands of the vendors, has the added benefit of avoiding some of the worst traffic in the country.

    The cost of airport and hotel limos as well as taxis has never added up to the cost of an airport rental.

  • http://www.travelersjournal.com Dave Bear

    And this list of extra charges doesn’t even address the question of insurance costs for those renters who feel they have to buy the full coverage package. That’s another abomination.

  • Noah

    Elliott is quick to blame the government, but it looks to me like a lot of those fees are fees the rental company decides to charge:

    FSO = 32.32 – no idea
    Customer facility charge = 15.00 – that’s a company fee
    National busing recovery fee = 4.49 – probably a company fee
    Concession recoup fee = 26.78 – no idea
    Sports venue tax 5% = 12.43 – gov’t
    Veh lic recov 2.34 per day = 11.70 – that’s a tax or gov’t fee, the one we all pay for vehicle licensing. It’s inexcusable that the rental co. doesn’t include that in the base price.
    Veh rental tax 10% = 25.05 – that’s a tax.

    The point is that at least $31 of those fees are things that should be included in the base price of the rental.

    Obviously, it makes sense to separate the “rental tax” and I’ll give the agency some leeway on the “sports venue tax.” So, whether “most” of the blame falls on the gov’t or the rental agency probably comes down to what an FSO and a “Concession recoup fee” are. Yet, for some reason, Elliot seems to give the rental agency a free pass and picks on the gov’t. Huh???

  • William Rowell

    FSO is “Fuel Service Option”

    This is BY FAR the greatest scam that they’ve invented yet….

    So the rental agent asks you “Would you like the Fuel Service Option? It’s only $2.17 per gallon.” These are real numbers, I called National at IAH today. Or if you don’t refill they will charge you $3.26 per gallon.

    The trick is, you have to pay for a FULL TANK, or what THEY say is a full tank. At $2.17 per gallon, Paul’s FSO would be payment for 14.89 gallons (probably different rate on the day he rented, so let’s call it 15 gallons). I hope he had an SUV, cause the G5 only has a 13 gallon tank. But I digress, the point is, to get this fabulous rate you have to USE all the fuel in the tank, and bring it back empty….try that some time! If you drove 200 miles, at 25 mpg, you actually paid $4.04 for your gas, nice huh?

    OR, you could fill it yourself, the Shell stations at both entrances to IAH, Today, are charging $2.15 for Unleaded (yep, called them too).

    And don’t even get me started on Avis’s AUTOMATIC fuel charge for driving less than 75 miles……(yeah, they’ll take it off….IF you notice it…..and IF you have the receipt showing you put gas in……Just ’cause the gauge says “F” doesn’t do it!)

  • http://www.best-car-rental-tips.com Paula

    “This is one of those rare cases when I feel that the victims aren’t just renters like Irvine, but the car rental companies, too. When 40 percent of the money you take from your customers goes to taxes and other fees, you aren’t a car rental company anymore. You’re a quasi-government agency that collects taxes from unsuspecting travelers.

    This madness has to end.”

    So totally true! It’s so frustrating for customers who start checking rates…. they think they see a good deal $19 a day or a weekly rate for $149… but once all the taxes, surcharges and fees are added on, it’s hardly a deal anymore!

  • Jim_J

    I recently got a “fantastic” deal at Boston/Logan from one of the major car rental companies. The car cost $30 for a three day weekend. The taxes and fees were $32 for the rental period for a total of $62. That 100%+ beats Paul Irvine’s 40% by quite a bit. I don’t have the rental agreement in front of me but remember that there was a $10 tax for the Hynes Convention Center. This is a flat $10 tax regardless of the number of days that are on the rental contract. Therefore a person renting for one day gets hit at a much higher percentage than a fourteen day renter. The Hynes Convention Center is not on the airport property or near the airport. It is located in the Back Bay district which, depending traffic, can be a 20 minute or a one hour drive from Logan. Because of Boston’s heavy traffic and winding streets, I’m sure that many people arriving at Logan who use the Hynes take a cab or the subway to reach their hotel. The $10 tax appears to be of little benefit to car renters. yet it is there and nothing can be done about it.

  • Bela Fleck

    Somebody has to pay for that nice new stadium the Houston Texans play in. It darn sure wasn’t going to be people who actually LIVE in Houston. Unless you’ve done yourself the disservice of wrecking your car, of course…

    Seriously – ridiculous! And thanks to William for decoding the FSO for us. I’m surprised Chris didn’t do so in his article. That’s exactly the reason why I’ve always filled my own tank (which is why I didn’t recognize it). What a ripoff. And yet, with virtually all the companies doing this and no one to *seriously* call them out on it, they will continue to line their pockets with these cryptic fees, and there isn’t much we can do about it except demand more media attention and/or government intervention.

  • Carver

    The full service option doesn’t bother me. Its a completely voluntary choice and 100 percent avoidable charge. Its well documented how much gas will be if you accept it. Granted, its rarely a good deal, but I can’t quarrel with having more options rather than less.

  • William Rowell

    Ah, but Carver, You know what an FSO IS or ISN’T and can avoid it. How many of the well traveled folks just above us here didn’t know what it was? Ok, so maybe they KNEW what it was, just not what it shows up as on their receipt?

    I have run into dozens, if not a hundred “amateur” travelers who have NO idea what they’re agreeing to after the rental car desk agent offers this “Really Convenient Fuel Service Option” that’ll “Save you15-20 cents per gallon on your gas”. Yes, I’ve actually overheard that offer at the rental car desk in St. Louis.

    An then every so often it magically shows up on MY receipt. I NEVER use the FSO and I KNOW I didn’t ask for it, but there it is. Let’s face it, by the time we finally check our cars in, we’re looking forward to the next steps, find the bus to terminal, move our luggage through the check-in process, visit with the ever-so-friendly TSA folks, up-pack all the pocket stuff from my laptop bag and put it back in my pockets……. Hey, did you really, really READ that rental car receipt???

    Let’s agree to call it 50% avoidable?

  • Pingback: elliott.org | “There are no polite words to describe what I feel … «

  • Jeanne

    Omaha built a Convention Center/arena and is now building a new stadium just for the 2 weeks a years that the College World Series is in town. Part of the funding comes from hotel and rental car taxes. The thinking was that only out of towners rent cars or stay in hotel rooms. The hotel and rental car companies complained very loudly about having visitors fund these projects, when so many people in the Omaha area benefit. The taxes went through anyway. (Now the locals are whining because they have to rent cars when their car breaks down or is in the shop because of an accident and are stuck with these fees themselves!)

    Plate fees in Nebraska depend on the age and value of the car, and our license plate fees are some of the worst in the nation. My husband’s car cost ~$200 and mine ~$350 to put plates on the car this year. I don’t know what Texas charges for plates, or even if the rental car was licensed and plated in Texas. Having a separate charge for this cost seems to be an effort at transparency, in Mr. Irvine’s example from National.

    I’m not defending this bill – goodness knows I’ve been hit by the various taxes imposed when I rent a car when I travel. It just seems to me that if National had raised the price and not broken out all of the components, Mr. Irvine would still have had to pay the same amount. I’m curious as to what the other car rental places in the area are charging for a comparable car. When I look to rent a car, most companies are charging similar amounts, when all taxes and fees are included. When I walk up to the counter, I already know in advance what those are – no surprises. I can’t protest the taxes – I don’t live there. I don’t sign up for gas refilling options. I try to get cars off-airport, with all the inconveniences that entails.

    So, why is this bill such a surprise to Mr. Irvine?

  • Paulette

    DavidH: Your analogy is ridiculous as well as in bad taste.

  • car rental company owner

    Just thought I would weigh in here even though this thread is dead.

    These are what the fees are from the perspective of a car rental company owner:

    FSO = Fuel Service Option. This has already been explained previously. You have to initial to accept it. If you didn’t initial and you are charged for it you should complain. Car rental companies make honest mistakes just like any other company (and yes they sometimes make mistakes that result in your bill being cheaper too – we have belatedly discovered these mistakes many times – but surprisingly no one ever complains about being undercharged).

    Customer facility charge = This actually is not a fee generated by the car rental company. It’s generated by the Airport. It’s supposedly a fee to cover the cost of building the “car rental” building or area that most airports have. If the car rental company wants to be in the airport they have to charge this fee. For the record car rental companies hate this fee, but it’s not up to them.

    National busing recovery fee = This fee is usually only charged when the location cannot be reached except by shuttle bus. Most companies are making a good faith effort to just recover the costs of providing the shuttle bus (which require drivers, special insurance, and buses that are a pain to maintain). If you rolled this fee into the overall rate then people who rented vehicles for longer periods would be paying more than people renting for shorter periods, which wouldn’t be fair since they both used the bus once. So it’s usually charged on a “per rental” basis.
    $5 seems a little high relative to the cost, and there’s probably a little profit margin built into that, but it’s probably not any more than a cab would charge, and no one ever accused cabbies of getting rich. You might be surprised to discover it costs money to provide a service, but it does.

    Concession recoup fee = 26.78
    This is a fee charged by the airport for the privilege of doing business in the airport. But, you might ask, they are already charging a facility fee! And you would be right. They charge car rental companies a fee to build the building, and they charge them another fee to be allowed to operate on the premises. Sometimes the Airport charge a flat fee per year, other times it’s based on a percentage of business the car rental company does on the airport. Again, the car rental company can either raise their overall rates and appear to be more expensive than their competitors, or they can charge it as a separate line item expense (which is specifically permitted by law in California, can’t speak for Texas but doubt they are different). I personally think both the car rental companies and the consumer would prefer a flat rate that was inclusive of all fees, but the business is so cuthroat, and the margins are so tiny (around 2-3% if they are doing everything right) that competitors are forced to seek every advantage they can just in order to not be wiped out. The only way to get an inclusive rate would be to ask your state politicians to make it state law.

    Sports venue tax 5% = The sports team owner wanted a new stadium, but didn’t want to pay for it, and neither did the city or the voters. They decided to rape another completely unrelated industry for the funds. This has become common across the land and car rental companies HATE it. It’s grossly unfair to both the consumer and the car rental company. We have tried to band together to stop it, and have had some successes lately (see Wisconsin – http://aboutus.enterprise.com/file/311/Wisconsin_Car_rental_excise_tax_press_release_June09.pdf) but it’s very difficult to stop.

    Veh lic recov 2.34 per day = most states have laws that you are allowed to recover the cost of vehicle licensing fees they charge to the car rental companies. You are NOT allowed to collect more than you actually pay, and there are penalties if you do, so most car rental companies actually collect less than what they pay in expenses. I personally don’t like to break this out as a separate fee (what’s next? employee labor recovery fee? vehicle depreciation fee?), but again the intense competition forces companies to do everything in their power to appear to have the lowest rates. And because state vehicle licensing fees are often in flux the states permit the car rental companies to charge an extra fee for it.

    Veh rental tax 10% = Many states charge a special tax for rental cars. The rationale behind this is murky at best. It basically boils down to “because they can”. For instance Oregon has no sales tax at all, yet charges a 12.5% tax on rental cars. Do rental car companies hate it? YES. Is there anything they can do about it? Outside of complaining about it, and pointing it out on forums like these, not much.

    Bottom line: I can’t speak for major rental car companies, but your average independent or franchisee is making about 3-4% on your rental if they are doing everything right. It’s not really a shakedown industry. Yes there are some shady operators out there like any other industry. There are also some wonderful people who would give their right arm to make sure you are ok.
    If you want to save the most money and get the best service, go with an independent off-airport operator. These people will do just about anything to help you, will have the least amount of extra fees and charges, and will be very fair and reasonable if anything goes wrong.

    If you made it this far, thanks for reading.

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