Wow, those car rental tolls can really add up!

Highway overpass / Photo by James Yu – Flickr Creative Commons
It cost me $27.10 in tolls and fees to make the round trip between the Orlando airport and my home in Winter Springs, Fla., in a rental car last month.

If that sounds like a lot of money for a half-hour drive, it should.

There are no expensive bridges or tunnels between the airport and my house, just suburban sprawl connected by a flat toll road. And technically, I paid only $3.50 to Florida’s turnpike authorities; the rest went to a company called PlatePass.

PlatePass is one of several businesses that offer electronic toll payments through an onboard transponder or a system that photographs license plates. These little-known businesses are at the center of a growing number of complaints from car rental customers, and a look at my bill offers a few clues as to why.

PlatePass, which works with car rental companies such as Advantage and Hertz, charges customers an “administrative fee” of $2.95 per day, with a maximum of $14.75 per month, starting as soon as you incur your first toll and continuing whether or not you pass through another tollbooth during the course of your rental. Because I rented a car for more than 30 days and I went through a tollbooth on the first day, driving to the airport, I was charged for a full month plus several days of PlatePass as well as tolls.

Something similar happened to Dave Medin, an electrical engineer from Cedar Rapids, Iowa, when he rented a car for a 12-day vacation in Houston. He paid cash for tolls, not realizing that the license plates were also registering a charge. “We were billed the minuscule toll, plus a $10 administrative fee,” he says. “I was asked to produce toll road receipts to show that I’d paid by cash, but to be honest, who asks for toll receipts on a family vacation, expecting to defend oneself against a bogus electronic charge?”

Medin protested the charge, copying me on his e-mail. I objected to my bill as well, because I already own a Florida SunPass transponder and thought that I had arranged to pay my tolls with it. PlatePass appeared to be double-billing me.

PlatePass says that it offers a valuable service to car rental companies and their customers. Before the system came online six years ago, it points out, car rental companies had to reconcile toll violations themselves, a tedious and expensive process. Car rental customers who blew through a tollbooth could face fines plus punitive surcharges from their rental company.

“PlatePass is a win-win-win,” says PlatePass spokesman Charles Territo. “It’s a win for a consumer who now has the option of using toll lanes without having to enroll in a program prior to renting a vehicle. It’s a win for rental car companies, because it alleviates the effort involved in processing toll violations and invoices. And it’s a win for the toll authorities, because they receive timely payment of all tolls from Hertz and Advantage vehicles.”

But some are winning more than others. I spoke with current and former car rental employees about electronic toll payments, and I learned a few things. First, billing fees are set by the agencies — not the toll-payment companies, which collect the money, pay the toll authorities and give the rental agencies a cut. If it wanted to, a car rental agency could charge only for the tolls, with a modest surcharge for handling the transaction; instead, the industry standard is to start the meter at the first use of a tollbooth, setting off a daily charge for the administrative fee.

It wasn’t always this way. Hertz, for example, originally authorized PlatePass to bill its rental car customers for only the days they used the service to pay tolls. In February 2009, Hertz changed that policy, levying the administrative fee for every day of the remainder of the rental period. Customers complained that they weren’t clearly informed that they would be charged the fee even for days when the PlatePass was not being used; after an investigation by the Florida Attorney General’s Office, the car rental company agreed to improve its disclosure and offer refunds to some drivers.

Some say that the agreement gave other car rental companies a green light to start the meters on their toll-payment services and to keep them running; a Hertz representative disputes that, pointing out that other rental agencies had similar price structures in place before Hertz did. “We believe Hertz’s pricing to be the most consumer-friendly in the industry,” she said.

Another important, but unsurprising, fact: Electronic tolling services are “immensely” profitable, according to several people with knowledge of these systems. I asked the largest provider of car rental tolling services, Highway Toll Administration, about the success of its transponder-based product, which is used by several large car rental companies, including Alamo, Avis and Enterprise.

David Centner, the company’s president and chief executive, said that his company doesn’t publicly release its earnings because it’s privately held, and although he didn’t deny that business is brisk, he was quick to add that consumers are benefiting from the technology, too. “Everyone’s winning,” he said. “We’ve had tens of millions of satisfied customers. Our service is extremely desirable, and the price is right.”

But he acknowledges that electronic toll payment systems such as his aren’t without their critics. “With any service that’s offered, there are going to be people who think they didn’t get the value for it,” he said.

Centner and other car rental insiders say that the anger is misdirected. Neither the car rental companies nor the electronic toll services control the burgeoning number of toll roads in the United States. Also, they have no influence over the new tollbooth-less “open road” tolling that authorities are adopting, which tends to run up charges for drivers who don’t realize that they’re on a toll road. And they say that things could be worse: Instead of paying $10 or $20 in extra fees, motorists without a transponder or pre-registered plates who incur unpaid tolls could face fines of hundreds of dollars if those systems weren’t in place.

Customers like Medin are in fact upset by the prevalence of toll roads. At the top of his list is E-470, a 47-mile toll road east of Denver that tourists often use by accident, either because their onboard navigation system guides them there or because they aren’t aware that it’s a toll road. Drivers are also bothered by older highways that have been turned into toll roads, ensnaring travelers who assume that they’re still free.

“Rental car companies and their affiliates shouldn’t be treating toll roads as another revenue source, period,” says Medin. “They should charge only for tolls plus the actual administrative costs.”

I agree. At the very least, they should bill only for tolls that we incur. Medin’s charges were reversed almost immediately. Mine? A review of my SunPass records shows that it didn’t charge me for the four tolls, even though I had registered my rental’s plates. So I’m probably stuck with my PlatePass bill.

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