Avis And Budget’s Hidden Fees Exposed In New Lawsuit: The Dirty Secret Of Rental Car Pricing

Consumer group Travelers United has sued Avis Budget Group under the Washington, D.C. Consumer Protection Procedures Act for egregious junk fees charged on top of advertised rental car prices, characterizing the practice as “bait and switch” and “drip pricing.” The lawsuit seeks both statutory and punitive damages.

The Budget website shows prices without the full cost of the rental. This isn’t just the before tax price. They display only part of the price that Budget itself demands.

It’s only several pages into the check-out process before the full cost of a prepaid rental is disclosed. The extra cost is misleadingly disclosed as taxes and fees, though you can get a breakdown of those (Budget doesn’t make clear that not all of this additional cost is mandated).

Here’s the lawsuit against Budget and against Avis.

Rental car extra fees are some of the most egregious rip offs, in travel and even beyond. In some ways they’re worse than hotel resort fees. Here are some of the fees I’ve seen rental car companies charge:

  • Tourism Commission Recovery Fee: Why does a tourist need to pay a tax, perhaps 3.5%, to… encourage tourism? They are already tourists, and taxing tourism literally does the opposite!

  • Concession Recovery Fee: Your rental car company has to pay the airport to operate there, and you pay an extra charge for their right to sell to you (isn’t that what the price of the car is for?).

  • Customer Transportation Fee: the free rental car shuttle bus isn’t actually free, and you pay for it whether you use the shuttle or not.

  • Parking Recovery Fee: when you’re not renting the car and they’re not renting it to someone else, it has to be parked and parking is expensive. This is literally a fee that covers time when you aren’t renting from them.

  • Premium Location Charge: This covers the rental car company’s rent. Usually that comes out of a company’s general revenue. But since the airport rental facility is convenient (although if it’s an off-airport rental center it isn’t that convenient) they call it a ‘premium location’ and add a charge for that. But it’s really a fee for rent.

  • Energy Surcharge: this may cover utilities (on top of rent at the facility, there might be a power bill, though that’s probably included in their rent), fueling rental cars (but you either have to return it full or pay for gas!), or fuel for the shuttle bus (but you already pay a fee for that). Some hotels have tried to add energy surcharges but the chains have found those too scammy and crack down on the practice when it creeps up. There’s nothing too scammy for a rental car company, though.

  • Vehicle License Recovery Fee: If you’re renting the car, doesn’t it need to be licensed? Why are you paying this as a separate service? “Yes, I’d like to rent the car but it doesn’t need to be licensed. Ok, thanks.” If it is mandated by law, then it goes in the price. It’s not an upcharge.

  • Air Conditioning Recovery Fee: A car manufacturer pays an excise tax on air conditioners. In theory the car company charges the rental company more for the vehicle as a result. And the rental company charges you an add on fee because the price of the car is higher. Of course more expensive cars tend to mean higher rental rates, also. Double dip!

  • Seasonal Tires Fee: this one seems unique to Quebec, where snow tires are required in winter and rental companies charge for it year round (because tires have to be both installed and removed as well as stored).

Junk fees often add 50% – 100% to the cost of a car rental. The good news is that many of them are specific to airport car rentals, and in particular to rentals you pick up at the airport. (Note that there are no airports in the District of Columbia.)

You can avoid most of them by taking an Uber or cab (or have someone pick you up and drive you) to a car rental location away from the airport, and you can still return the car to the airport if you wish. For a one day rental this often doesn’t make sense, but for a longer rental it certainly can.

With an airline the rule is simple: an add-on fee must be optional. There has to be a way for a customer to buy the product without paying the fee. That’s how airlines like Spirit and Frontier can charge ‘online booking fees’, there’s no booking fee if you ticket at the airport. Meanwhile, hotels at least pretend that resort fees benefit the customer. With rental car companies there is literally zero consumer benefit to mandatory add-on fees.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. I’m going to play devil’s advocate here, and speculate that at least some of these fees are not subject to sales tax. If they baked it all into the base price, they’d have to charge tax on them. That would actually make the total cost more than what you’re already paying, and be in violation if the law. I could be wrong.

  2. Well, if Avis/Budget will agree to start having some customers arrested maybe they can merge under the Hertz umbrella? LOL.

  3. Yes this is a total rip off! The real gangster shake down is ticket fees! They add 25-35% of price of tickets!
    Law makers DoNOTHING BECAUSE THEY GET FREE TICKETS TO BOT DO ANYTHING

  4. Rentals for everything should be one bottom line price. I mean let’s say I have a restaurant and I list the prices for each item. But then when the bill comes there is the waiter’s salary recovery fee and the kitchen equipment recovery fee and the insurance recovery fee and the food recovery fee. I mean isn’t the price supposed to pay for all of these “recovery fees”?

  5. Agreed. I admire your writing on this subject. Any chance on these consumer advocacy posts you could direct the righteous anger of us readers to an agency that could fix these problems? Maybe an email for the BBB or a governmental regulating agency?

  6. @LAX Tom — Some are always taxable, like the VLF, ERF, etc. Sometimes the airport concession recovery fee is taxable, sometimes it isn’t; same goes for extra coverage like LDW/SLI/etc. — depends on the jurisdiction.

    Ironically, the airport concession recovery fee is usually subject to itself. That’s why it’s almost always listed as 11.11%. The airport authority’s concession fee they charge the rental agency is typically 10%, but if the rental company just charged an extra 10% fee, that extra revenue would then be subject to the 10% collected by the airport, so the company would only keep 90% of the extra revenue. So they add a tenth of that amount (resulting in 11%), then a tenth of that (11.1%), and then a further tenth of that (resulting in 11.11%) so that it ends up being break-even for the rental company. The fact they have to do that, though, is how you know it’s really just a money-grab. 🙂

  7. These are obnoxious. And you’re right, you have no idea what you’ll be be charged until you return the car. I consider it stealing. And in this one case, I’m supportive of the class action suit that’s been filed. In Kelowna, BC Canada last month, I had a “Vehicle Damage Inspection Fee” ($2) added…it was explained as “a fee to visually inspect the car for any damage caused during your rental”. I’ve found that the best way to not be surprised is to rent from Costco. They use the big 4, and you can add your Frequent Renter number in during the reservation process to take advantage of Preferred or Gold service. Their quoted fees are all-inclusive of everything you’ll be paying. You may wind up paying many of them anyway, but at least you’ll know what you’re being charged up-front.

  8. I thought Sleepy Joe was going to end all junk fees? Is the out-the-door price displayed in California?

  9. Try renting a car in Germany with an additional Premium Location Fee of 20%+ on any rental starting at an Airport or Train Station. That is a daily fee on top of the base rental, insurance, tax, etc. I generally take a train to a city rental location and avoid it on any multi-day rental..

  10. @CHRIS, yes, it is. The price I’m quoted is the price I pay unless I opt for the under-75-mile refill fee for convenience. I don’t like these fees, but they’re all disclosed up front.

    Cheers.

  11. What I find especially annoying about Avis is their EZFuel charge for rentals under 75 miles. I often get hit with the $18 fee even when I show the fuel receipt when returning. And then I get to call to have it removed.

  12. @canuck_in_ca, this used to happen to us, but hasn’t in several years. I just tell them I filled the car, don’t even show a receipt, and no issue. Since they send the emailed receipt immediately, I just check to make sure and can handle it on the spot if it’s there.

    Cheers.

  13. Great article. State legislatures throughout the U.S. need to pass legislation to require a full price quote on each rental car transaction. There should be no surprises. The federal government is not involved, despite the comments by Sleepy Joe.

    As to the lawsuit, it would great if the executives at the rental car companies were sued individually for the fraud. Such actions would cease if corporate officers were held personally legally liable.

  14. Avis is my go-to car rental agency as fortunately I have an absolute killer corporate discount code, typically ~ $35/day all-in for a midsize in most locations. I’ve never been charged a penny more than my quoted reservation price.

  15. This is one of the reasons I rent almost exclusively through National Car Rental. National shows the full-in price on the top page of the reservation process.

  16. It’s interesting to hear about certain shady practises that are going in with certain care rental companies and it’s good to know that this is being brought out into the open because such shady stuff should be

  17. Some companies have contracted rates which stipulate the rate to be charged at all locations. By having a concession fee separate from the base rate, it allows them to charge more at the airport locations – which are legitimately higher-cost locations – without violating the corporate contract. I see this as a legitimate reason for the fee. The problem is when it’s not prominently shown until late in the booking process.

  18. I find a seasonal tire fee interesting and maybe a good thing. It should be charged only when icy conditions are possible because all weather tires should take care of the other times. It should come with studded tires, which cost more and I suspect don’t wear as long, but provide much better grip in icy conditions. I have driven with chains on my tires but I have never have driven with studded tires, although they were fairly common for winter driving where I grew up.

  19. When a hotel or car rental company, at checkout, asks you to post a review on Trip Advisor, etc., reply that they will need to pay you a “review access convenience, location, energy, and scrivener equipment recovery fee” to compensate you for your time, energy recovery, memory, and depreciation of your mobile phone, tablet, or computer required to generate, proof read, and post the review. If they ask for a quote, then your fee should be the equivalent of the sum total of their garbage fees. If your visit was part of your paid job, then you should also charge a personal income tax and employee medical insurance co-pay recovery fee. If, by chance, they ever agree, be sure to ask if they would like to upgrade to a 3, 4, or 5 star review for a nominal extra charge. Your photos also call for an additional charge—let’s call it a pixel processing and handling fee. Just sayin.

  20. Important to note that taking a ride share to a non-airport location doesn’t necessarily work… For example, Avis charges the airport concession fee at all locations within 10? miles of the Orlando airport unless your license has a zip code that matches or is adjacent to the zip code of the location. So you pay the airport fee even if you don’t rent from the airport location!

  21. When will Hertz add a 25% customer litigation fee to help cover the cost of renters’ false arrest lawsuits resulting from Hertz telling police their rental car was never returned when Hertz rerented the vehicle to another customer?

  22. @Gary. “With an airline the rule is simple: an add-on fee must be optional. ”

    Two words: British Airways

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