Just when you think you’ve seen every car rental fee under the sun, you hear from someone like Jason Hunter. After renting a car in El Salvador a few months ago, Budget shocked him with a $1,166 fee for a “loss of license plate.”
It shocked him — and it shocked me.
“I made one attempt to recover my money with Budget,” he says. “They denied me. They said it took them 13 days to obtain a new license plate and I was to be charged for the rental’s loss of use.”
Oh boy.
Hunter’s case raises several questions:
- Can a car rental company charge you for lost license plates?
- Is it legal for a car rental company to charge a “loss of use” fee?
- What are your rights when a rental company hits you with a fee?
OK, are you ready to go hunting for answers?
“Charging $1,166 for a lost license plate is ridiculous”
Hunter rented a car from Budget’s El Salvador International Airport location for a week. When he returned the car, Budget claimed the front license plate was missing and charged his credit card $1,166.
Budget’s breakdown of the fee included a “loss of use” charge of $976.16, calculated based on 13 days of lost rental income because the car couldn’t be rented without a license plate. Budget claimed it took 13 days to obtain a new tag.
Hunter disputed the charge, arguing that the car didn’t have a front license plate when he picked it up. He even pointed out that the two screws holding the license plate were still attached to the car when he returned it, suggesting the plate wasn’t stolen. (Related: Do I really have to pay this $450 cleaning fee from Budget?)
Budget insisted that both license plates were present when Hunter rented the car, providing a signed vehicle inspection sheet as evidence. However, Hunter suspects the front plate was never on the car and that he failed to notice its absence during the initial inspection.
“The car did not have a front license plate when we received it,” he says. “And charging $1,166.70 for a lost license plate is ridiculous.”
Can a car rental company charge you for lost license plates?
Car rental companies can charge you for anything they want, including lost license plates. But should they?
License plates are part of the cost of doing business. From time to time, they may fall off a car or someone might steal them. There’s no way for a renter to avoid any of these scenarios. So I’m inclined to agree with Hunter — holding him responsible seems absurd.
I’ve been mediating car rental cases for more than 25 years, and I’ve never come across a case like this in the United States. But the rules might be different in El Salvador. It’s worth investigating.
Is it legal for a car rental company to charge a “loss of use” fee?
Charging for “loss of use” is common, but controversial. Car rental companies hold customers responsible for more than just vehicle repairs. They often charge their customers for what they would have earned while the vehicle was in the shop.
Here’s the breakdown from Hunter’s rental:
So Budget is charging him not only for a new plate ($82) but also the cost of sending someone over to the motor vehicle department ($50), emissions testing ($15) and 13 days that it apparently took to get all this done. It also appears to be the maximum daily rate, which is fairly standard for car rental damage claims and which is usually higher than the daily rate you paid.
Charging for loss of use is legal in all but one state. Delaware recently enacted a law that does not allow car rental companies to charge for loss of use. Charging for loss of profits is a bit more complicated.
Most states don’t allow a car rental company to charge a customer for lost profits, but some certainly push the limits with their loss-of-use fees.
In other words, loss-of-use fees are usually legal. But they probably shouldn’t be. Loss-of-profit fees are illegal, as they should be.
What are your rights when a rental company hits you with a fee?
Car rental companies love fees and don’t always feel they need to explain them. I have more details in my ultimate guide to car rentals.
You have rights when you rent a car, but most travelers are only vaguely aware of them.
For example, a car rental company can’t just charge you a fee without explaining it. You have a right to know what you’re paying for. (Related: Do I really owe Budget $450 for cleaning my rental car? It’s just a little sand!)
Budget charged Hunter’s credit card without adequately explaining what it was doing or offering him a way to dispute the charge. Fortunately, the Fair Credit Billing Act gives you the right to file a chargeback and recover all the money, even if you rented a car abroad. Here’s my guide on credit card chargebacks.
You have the right to ask for a clarification. If the company won’t explain the fee, you have the right to appeal to an executive. Here are the Budget contacts.
You also have the right to take this to an outside mediator — state or federal authorities, or a consumer advocate. Ultimately, that’s what Hunter did.
What happened to the license plate?
When Hunter’s case landed on my desk, I thought Budget had made a mistake. How could they charge $1,166 for a lost license plate? Is that even legal?
Let’s find out. I contacted Budget and heard back from a manager in El Salvador. He sent me Hunter’s signed contract, which included clause XXIV:
In case of loss, confiscation for any infraction, theft and/or larceny of the Vehicle Registration Card or license plates of the leased vehicle, “The Lessee” accepts the responsibility of paying the cost to replace them. Also, the Lessee accepts responsibility for the lost profit for the days that the procedure entails up to a maximum of 21 days plus any administrative charges for the replacement procedure.
This also applies when “The Lessee” forgets to give back the vehicle registration card at the time of returning the vehicle. The lost profits are calculated according to the daily rental rate of the vehicle.
“The Lessee” expressly authorizes “The Lessor” to charge payments to the credit card on file according to the security deposit.
So there it is. Hunter signed the agreement.
Case closed? Not quite.
Hunter had pictures of the car before he rented it, showing that the car didn’t have a license plate.
I also had a few questions for Budget: What were the actual costs to replace the license plate? What do the costs cover (are they administrative, or does someone have to go look for the lost tag)? Also, what is the daily rate it was charging the customer?
In response, Budget sent me the breakdown I showed you earlier in the story. But it also did something else.
“Taking into account the client’s request and as a consideration for their preference for our brand, we have decided to issue a refund of $586 from the original charge,” a representative told me.
What was the savings? Budget lowered its daily rate to $30 a day.
Did Budget do enough?
Hunter says he’ll take the refund and that he’s learned his lesson. Always read the contract. Never accept a car with a missing license plate. Get a manager to sign off on the car when you return it. You know, the usual.
But I’m still a little disappointed. If Budget rented him a car that was missing the front license plate (as the photographic evidence shows), then it violated Salvadoran law by putting a vehicle on the road that could not be legally operated. And I don’t like clause XXIV and I find the partial refund frustrating. I have to respect his request to close this case and hope that anyone reading this will be extra careful when renting from Budget in El Salvador — or anywhere else.
