Dollar changed to Hertz in San Diego (Miramar location)
  • Dollar changed to Hertz in San Diego (Miramar location)
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On July 18 of last year, Melinda Basker of San Francisco rented an auto from Dollar Rent A Car at 2499 Pacific Highway. While talking to the Dollar agent, “I was extremely clear that I wanted no insurance coverage at all,” she recalls. She put her initials on the screen of a rental car agreement, “thinking I was acknowledging the fact that I was declining all insurance coverage.”

But she was charged $9 a day for “Loss Damage Waiver.” Loss damage waivers and collision damage waivers are optional damage coverage in renting a vehicle. Generally, people are covered for such contingencies by their own insurance policies. Basker complained to the company, which said that since she had signed on the line purportedly stating she wanted the coverage, she would not get her money back.

There are thousands of cases like Basker’s across the United States. In 1989, the California attorney general’s office slapped Dollar with a permanent injunction for overcharging consumers and misrepresenting insurance provisions. Employees got high commissions if they aggressively sold the add-on insurance, using contracts in such tiny print that they could not be read, according to the California charges.

The attorney general of Florida has an ongoing investigation of Dollar Rent A Car’s alleged trickery, including getting people to sign up for insurance they specifically state they do not want. The attorney general’s office confirmed that the investigation is ongoing but wouldn’t say more.

John Mattes

Alan Mansfield

San Diego attorneys John Mattes and Alan Mansfield, along with Mansfield’s colleagues from the law firm Whatley Kallas, are working on two fraud suits against Dollar — one in California and one in Colorado. “Dollar has received over 17,000 direct, documented complaints from customers who rented vehicles in Colorado and Florida,” and Dollar admits that only a fraction of customers would normally lodge such complaints, says the Colorado suit.

“The scam is simple,” says the suit. “The company tricks consumers into buying insurance and other services they did not want by…signing up customers for collision damage waiver, car insurance and other added services they declined or were charged for without proper consent.” The company, Dollar Thrifty Automotive Group, now owned by Hertz Global Holdings, denies that charge.

The California and Colorado suits charge that Dollar creates incentives for employees to induce customers to sign for products they declined by paying generous bonuses for the add-ons the clerks generate. Dollar admits that its sales agents are eligible for commissions for sales of optional products but denies it encourages deception.

Mattes, a former on-air investigator for XETV Channel 6, has located more than 350 online complaints about such Dollar practices and has gathered more than 140 declarations detailing similar alleged mistreatments. The defendants provided him with about 1000 complaints about Dollar, half of which concerned insurance overcharges.

“Dollar appears to not be in the business of renting cars — it is in the business of selling add-on products. That is where it makes its profits,” says the Colorado suit. In Colorado and Florida alone, between July 2009 and October 2014, Dollar rang up more than $332 million in revenues from add-ons purchased by 2.6 million customers, says the suit. Hertz bought Dollar Thrifty Automotive Group in November 2012. In its last annual report to the Securities and Exchange Commission, in 2011, Dollar Thrifty complained that 25 states had adopted laws typically requiring that customers be warned that loss damage waivers may duplicate their own insurance coverage or be unnecessary. The company cautioned in that report, “Adoption of national or additional state legislation affecting or limiting the sale, or capping the rates, of loss damage waivers could result in the loss of this revenue for Dollar Thrifty, and their franchisees.”

The California and Colorado lawsuits contain some grim consumer stories. Dr. Allen Friedman, a plaintiff in the Colorado suit, says that when he demanded to see a copy of the document he was alleged to have signed, he “realized that his signature had been forged,” according to the suit.

Kristen Tool, a plaintiff in the California suit, picked up the rental car she had ordered at the San Francisco airport. The Dollar clerk “asked her to sign the signature pad to obtain the car and told her to check the boxes in order to decline all options,” according to the suit. When she discovered that her credit card had been charged an extra $231.80, she complained and was told that by checking the boxes, she was accepting the coverage, not declining it.

When she asked for a refund, she got the same canned letter that other victims get, indicating she had signed for the coverage, received it, and there was nothing Dollar could do.

Another person cited in the suits rented a car at Dulles airport in Virginia. “I was told that by signing the screen I was declining insurance. The screen I signed made no mention of insurance. A review of the contract revealed that my signature, which only appeared on the signature pad, was then transposed to an electronic contract that requested insurance.”

Another one who declined the add-ons watched as the service representative put a big D beside the spot for additional coverage. The customer then initialed the D. But she was charged anyway because she did not initial a box saying “Decline” in extremely small print.

I contacted Richard Broome, executive vice president, corporate affairs/communications of Hertz Global Holdings. He said, “This litigation pertains to events which are alleged to have happened well before Hertz acquired Dollar Thrifty and do not reflect in any way the rental experiences of current consumers.”

But Mattes has collected hundreds of statements from people saying they were victimized long after Hertz acquired the company in late 2012.

In late January, the Colorado judge denied the certification of a class-action case but allowed the plaintiffs to refile with victims who were allegedly defrauded and did not get a refund. Mattes says that won’t be a problem. There is a class certification hearing in California in April. “California has much stronger consumer laws,” says Mattes.

The United States Supreme Court has made it harder to certify class-action suits. It would be sad if this one doesn’t get to a full court hearing.

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Comments

Visduh Feb. 11, 2015 @ 8:37 a.m.

Regardless of the rental company, the charges for insurance coverage have always been very high, and had to be a wonderful source of revenue for them. I've never been charged for coverage once I declined it, but I have been on the receiving end of some hard selling to get me to buy.

While it is a little off-topic, all this merger mania in the car rental business doesn't bode well for the consumer. Just a few years ago, there were close to a dozen players in the industry. But now, as pointed out, Hertz owns Dollar and Thrifty. Budget and Avis have combined. Enterprise how has both Alamo and National. While some of them continue to operate under all those names in some areas and airports, combinations are underway. All of it points to reduced competition, and higher prices (and higher profits for the surviving corporations.)

While traveling over the years, the car rental part of trips often seemed like a bargain compared to hotel/motel room rates. Air fares vary widely, but seldom seemed cheap. Car rentals, when I traveled a great deal for business, were a mixed bag. Of the "top tier" of companies, I disliked Hertz intensely, but had good experiences with both Avis and National. Of the "bottom feeders" I had a wretched experience with Alamo and swore to stay away. Dollar wasn't much better. So, there is little surprise that Dollar is being sued. Hey, they do what they gotta do to survive in a dog-eat-dog world.

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Don Bauder Feb. 11, 2015 @ 8:50 a.m.

Visduh: Excellent observations. There is no question the insurance is a big part of these companies' revenue and profits. Also, clerks get bonuses for signing people up for insurance they don't need. This is a ticket to fraud by clerks, and probably by the companies that train the clerks. Best, Don Bauder

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Dennis Feb. 11, 2015 @ 11:53 a.m.

Defrauding customers can't be good for business. The private sector whines about regulations but this sort of practice is precisely why they have to be regulated.

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Don Bauder Feb. 11, 2015 @ 4:02 p.m.

Dennis: I agree. I used to think that, on balance, regulation was harmful to business. But I witnessed too much dirty activity that went unpunished -- thus rewarding the company fleecing its customers or the general public. While there is a lot of bad regulation (e.g. the California Public Utilities Commission) in which the regulators are captives of the industry, I believe that, unfortunately, regulation is necessary, as are criminal penalties for white collar fraud.

Greed has gripped the nation since the 1980s. Ergo, stiff regulation and tough criminal penalties for offenders are essential. Best, Don Bauder

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Don Bauder Feb. 11, 2015 @ 4:08 p.m.

Charles Steinmetz: Dollar admitted in this lawsuit that its sales personnel get bonuses for signing up people for insurance. In most cases, that insurance is not needed; the people are covered by their auto policies.

Before it was bought by Hertz, Dollar/Thrifty admitted in a filing with the Securities and Exchange Commission that if more states instituted penalties for high-pressure insurance sales (or committing such acts as falsifying a signature), the company's business would be hurt. And if there were national laws protecting consumers from rent-a-car fraud, the business would suffer. Best, Don Bauder

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ImJustABill Feb. 11, 2015 @ 6:03 p.m.

Just based on ballpark estimates I always assumed that the car rental itself is a loss leader for virtually any car rental company (at least assuming the customer does at least some shopping around for a decent rate).

Although I don't have any proof it would seem to me that most of the time the rental agencies lose money on the car rentals themselves but they obviously make a huge profit margin on insurance, gas refils, gps rentals, etc.

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Don Bauder Feb. 11, 2015 @ 8:10 p.m.

ImJustABill: That is an interesting thesis that others share. One reason for the low (or no) profits on car rentals, if that's the case, was that there once were a number of companies, and the industry was highly competitive and price-sensitive. Now, the various companies are merging and reducing the number of competitors. The government is doing little or nothing about this, to my knowledge. Best, Don Bauder

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AlexClarke Feb. 12, 2015 @ 7:08 a.m.

If your car repair facility has an arrangement with a rental car company to provide "loaner vehicles" the rate they pay is lower than the what is charged to the general public. They still try the hard sell for additional products.

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Don Bauder Feb. 12, 2015 @ 10:08 a.m.

AlexClarke: I assume the car repair facility makes up for the lower price on volume. Can the facility get in trouble for charging two different prices? I doubt it. Best, Don Bauder

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ImJustABill Feb. 11, 2015 @ 6:10 p.m.

Consumer electronics vendors play this game too. I don't ever get protection plans on Tv's, cell phones, etc.

The purpose of insurance is to protect me from catastrophic expenses.

I can afford to pay a $500 deductible if I crash a rental car. I can afford a new iPhone if I break mine. It would bum me out if I had an unexpected expense for something like this but it wouldn't break me. So I don't get insurance on these things.

I can't afford to buy a new house if mine burns down. I can't afford a complicated surgery if I need it. I can't afford to pay for someone's medical bills if I seriously hurt them in a crash. That's what insurance is for.

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Don Bauder Feb. 11, 2015 @ 8:13 p.m.

ImJustABill: Your ordinary auto insurance probably covers you on rental cars anyway, but you should check your policy. Your basic thesis is sound: the best use of insurance is for catastrophes that would break you financially. Best, Don Bauder

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ImJustABill Feb. 11, 2015 @ 8:45 p.m.

Good advice. I've checked my auto insurance several times because the car rental sales clerk always do their best to scare the bejeesus out of me every time I decline coverage.

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Don Bauder Feb. 12, 2015 @ 6:59 a.m.

ImJustABill: The car rental sales clerks get bonuses for signing up people for insurance they don't need. Best, Don Bauder

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