The experience of renting a car can give you some trust issues. You’re booking on some travel website, where you start at Price A. Then, by the time you get to the checkout, you’re at a higher Price B that wasn’t the one you saw prominently advertised — maybe it was in small letters, but you didn’t notice. When you go to pick up the car, you’ve got to make a deliberate effort to avoid the even higher Price C, which the guy at the counter is pretty intent on selling you on. Even if Price B sticks, you find yourself staring at your receipt, wondering what in the world all those extra charges are. That’s assuming that the vehicle you intended to rent is even available. That’s assuming any vehicle is available.
We all know flying sucks. Airlines squeeze every penny they can out of us with add-ons and fees, and airports are wildly overpriced. The experience of renting a car often flies under the radar, but it can be similarly terrible.
The pandemic was an absolute nightmare for renting a car, and horror stories were not hard to come by. (To be fair to the companies here, a business where your inventory may be taken very very far away and not returned to its initial location is inherently complicated, and the pandemic was a doozy for the industry in a lot of ways.) Even though some of the dust has settled, it’s hardly smooth sailing now. The customer service experience remains exhausting. The concept of a reservation still comes with a bit of a wink — there’s a whole Seinfeld scene about it. The fees and tax scheme is incomprehensible.
“The fees in the car rental sector, in many ways, are worse than fees in the airline sector because there’s a factor of sticker shock,” said William J. McGee, senior fellow for aviation and travel at the American Economic Liberties Project, an anti-monopoly think tank.
There’s a specific and daunting element of surprise that comes with the price and logistics of renting a car. And yet, the rental car rodeo is often an inevitable part of travel: It’s expensive, it’s annoying, and it’s not clear it’s getting better anytime soon.
Don’t just be mad about rental car companies for the fees
A family friend recently reached out about the cost of their rental car from Budget at the Denver airport. They sent over the receipt, and it’s really something to behold. The base rate for an eight-day rental is $555.19; the total they owe is more than $400 higher.
Deciphering what each line item corresponds to requires navigating a ton of jargon. A “concession recovery fee” costs $77.74; the “Colorado road safety fee” is $19.17; an “energy recovery fee” is $7.11. A look at Budget’s glossary and some googling provide an explanation of the fees, especially where they come from. The concession fee is a kickback to the airport. The state fee helps pay for Colorado’s roads. The energy fee is because customers are supposed to chip in to keep the company’s lights on, which seems like it could be rolled up into the base rate but okay.
It’s ridiculous that consumers would need to look in a glossary to decipher the list of charges they’re faced with. More importantly, it’s representative of the issue with rental car fees and taxes: They’re coming at you from every which way, and many of them you can’t avoid. The guy at the counter trying to sell you on insurance is someone you can hopefully say no to (more on that later), but the locality that’s figured out that a rental car tax is a nice way to pay for a new sports stadium, not so much.
“People are not wrong to hate all the fees that they’re hit with, but we distinguish between fees that are unavoidable and those you can potentially do something about,” said Chuck Bell, director of financial services policy at Consumer Reports.
It’s sort of like consumers are walking down the street, and state and local governments, airports, and car rental companies are all picking cash out of their pockets at every step.
Airports can charge different fees that add up quickly, such as concession fees, which amounts to the rent companies are supposed to pay for being allowed to do business on their premises. That’s generally passed on to the consumer. The same goes for facility fees, which are supposed to go toward new car rental facilities. If you pick your car up at the airport, those fees are unavoidable.
Many state and local governments across the country levy a number of fees and taxes on rental cars, too, whether it’s for police training or miscellaneous projects or (I was being serious earlier) sports arenas. The reasoning on the part of lawmakers is that it’s easier to raise taxes on out-of-towners than it is on locals, and state and local governments want and need the money. “In some cities and states, there are politicians that say, ‘Well, if we try and put in a tax for this big project ... the people that vote for us are all going to be upset, and they’re not going to want to pay this tax,’” McGee said. “But if you have tourists coming through, they don’t vote for you.”
One question you might be asking yourself here is why any of these fees and taxes are even broken out. If it’s an unavoidable part of the total cost, who cares who the money’s going to? One simple answer is it is a way for rental car companies to offer full disclosure to consumers — and to show them their bill is more expensive in part because of mandated extra charges outside of their control. From the consumer’s perspective, it’s a bit of a wash.
But also do be mad at the companies for the fees
There’s probably a discussion to be had about whether governments and airports should account for so much of the rental car receipt pie. But what can be a bigger pain point for consumers — and one that’s within the industry’s control — is the extra charges the companies themselves add on.
The industry will say a lot of the extra fees are your choice, which is true. You decide whether you want to pay that extra driver fee, and you pick if you want that insurance. Still, some of it isn’t up to you, like having to pay the company for parking and licensing the vehicle, or being hit with some random penalty for smoking in the car even though you swear you did not. Regardless, a lot of it is confusing.
In the summer of 2022, Brittany Miller, who works for a nonprofit in Seattle, got duped by a Hertz location in Las Vegas on what was and was not her choice. The agent there told her she had to purchase additional insurance (in rental car parlance, a collision damage waiver) even though she and her boyfriend had insurance of their own — your regular car insurance usually covers rentals. She says the agent made it seem as though they wouldn’t be able to walk out of the lot if they didn’t agree, telling them it was Nevada state law. So, they relented.
Once they later realized they’d been tricked, they decided to try to get their $300 back — an endeavor that took over a year. Hertz at one point told her it would be $25 to even investigate the case because six months had passed since the original rental date. Eventually, she found an email address on Reddit that got her results. Hertz returned the money and apologized for the “misinformation” the couple was given at the lot. “It was kind of gratifying but also frustrating to hear,” Miller said. “It shouldn’t be pulling teeth to get them to admit wrongdoing.”
Hertz did not respond to a request for comment for this story.
While Miller’s experience is perhaps an extreme one, it’s not entirely novel. Once you’re at the counter trying to pick up your car, you’re faced with a barrage of questions that can be tough to decipher, especially as the agent tries to upsell you. A few years ago, I found myself in a back-and-forth with a rental car agent over whether I should get the extra extra insurance. He warned me the coverage I had wouldn’t pay for damages ... if a tree fell on my car.
“There’s a lot of fine print, so if you’re not prepared for it when you walk up to the counter, you can be persuaded to take it because you’re afraid,” Bell said. “The devil’s really in the details with a lot of these things, and I think people get bamboozled into accepting add-on charges that they don’t need.”
Car rentals, relative to other services, have more discretionary and add-on services that they try to induce people to accept. There are all sorts of levels of protections for the car, for liability, for possessions, and accompanying fees consumers have to sort through. Do you need a car seat? What about GPS? Will someone under 25 be driving? Really, have you thought about the insurance? What about transponders for tolls? There can also be penalties for canceling, for dropping off a car too late, or for dropping it off too early.
Your mileage may vary on which of these is fair and which isn’t, but some of it does feel, at the very least, mildly unfair. Rental companies sometimes push consumers to pay extra for toll transponders, even though there aren’t tolls in the area. If people forgo a transponder and do hit some tolls, the add-on charges can be much higher than the tolls themselves. There have been lawsuits around the issue, and some rental car companies have reached settlements to repay consumers over hidden fees around tolls. This is all likely disclosed somewhere in rental agreements, but who has time to pore through contracts to see where they may or may not get gouged?
“There’s a lot of confusion at the front desk, and there’s that huge rental document that they’re scrolling through on an iPad and getting you to sign,” said Melanie McGovern, a spokesperson for the Better Business Bureau.
Why are we — or rather, rental cars — like this?
Reporting for this story, I heard all sorts of terrible tales from consumers.
Shoshana Weissman, a Washington, DC, strategist, was charged some $2,000 by Budget after her rental because the company claimed she hadn’t returned the car to the Salt Lake City airport. She sent the company all sorts of proof she had, going as far as to request security footage from the airport. Eventually, Budget sent her an email saying the car had been re-rented in Minneapolis and returned the money, no further explanation offered. “They accused me of stealing a car,” she said. (This is a problem Hertz has made headlines for, too.)
Budget didn’t respond to a request for comment for this story.
One man couldn’t get ahold of the company’s tow service when his rental car broke down, so he had to hire an outside service and then fight to be reimbursed even though it was the company’s car that was defective. Another man spent days going from location to location trying to find something comparable to the van he’d reserved, eventually realizing that the agent at the first office had lied about the vehicle’s availability elsewhere. Another customer was in an accident that wasn’t his fault while driving a rental car. He has insurance through his credit card; the rental car company tried to charge him for forgoing its insurance anyway.
I don’t want to malign the car rental industry here, which did go through quite a roller coaster ride in terms of inventories and demand as a result of the pandemic. But it feels fairly clear there is much to be desired in the consumer experience. As to why it’s like this, there’s no one specific answer, though there are some issues in play.
For one thing, there isn’t much competition in the car rental industry. Enterprise, Avis, and Hertz run some 86 percent of the show, McGee said. “There are only three car rental companies in the United States, which is kind of shocking when you think about it. Because Enterprise owns National and Alamo, and Hertz owns Dollar and Thrifty, and Avis owns Budget,” he said. “It’s an oligopoly, really, between the big three. And so that’s problematic in terms of service, in terms of cost.”
McGee said he believes the industry needs more regulation and attention. “Problems with car rental companies just don’t seem to get the sort of media coverage that other problems do with airlines and hotels and whatnot,” he said.
Some efforts to address “junk fees” in rental cars, among other sectors, may be underway as part of the Biden administration’s efforts to broadly take on hidden charges and drip pricing, where companies draw consumers in with one price and then slowly add on extra charges. (I will note here that the rental car websites are generally pretty good about telling you at least the base unavoidable total cost upfront. The travel websites are not so great; the total cost might show up on the search page, but in much smaller print than the lower advertised price they’d like you to notice.) The FTC is currently exploring a rule on junk fees. It also has resources for consumers on navigating the rental car industry.
Part of the issue here is that there’s nobody advocating for the consumer in the web of rental car fees. “There’s nobody at the table telling the airport or state and local government, ‘Don’t tax people for this,’” Bell said. “That also just reflects interest-group-based politics where consumers are underrepresented.”
You could imagine a government that would say it wants to hold down costs for people when they go on vacation and would regulate the fees that are charged by providers, but our system doesn’t really do that. “You can charge extra fees to consumers because you can,” Bell said.
Greg Scott, a spokesman for the American Rental Car Association, said that every rental car company he is aware of “is aware of and in complete compliance” with the National Association of Attorneys General guidelines on disclosure to consumers. “There’s no question that at the counter, you’re asked a series of questions and you have to make a series of decisions,” he said. “We’re in the customer service business. We rent cars, we want you to be happy with it.”
Good luck and Godspeed next time you’re at the rental car counter
The fact of the matter is that when it comes to rental cars, a lot is out of consumers’ hands. There really is no getting around a lot of the fees, whether it be from states or airports or the companies themselves. The whole which-car-will-you-even-get situation is frustrating but inevitable. Prices, while they’re coming down, are still much higher than they were in 2019. But there are some limited measures consumers can take.
Do your homework before you get to the counter so that when you get there you know what you’re going to do. Check if you’ve already got some sort of insurance coverage on the rental so you’re ready to say no on the collision damage waiver. Figure out the closest gas station so you’ll be able to fill up before returning the car instead of paying the prepaid fuel fee, which is almost always more expensive. You can bring your own toll transponder if you have one. If you don’t, look up whether the route you’re going to take has tolls and how hard it is to avoid them. Avoid picking your car up at the airport and choose a non-airport location. Call ahead to make sure your reservation really is there. Note any potential damage to the car and how many miles it has on it before you leave the lot.
If you’re not sure about something at the counter, press the agent on it, even if you feel pressured to move fast. “BBB encourages consumers to read the fine print and take the time to ask questions to understand the full agreement before they sign anything,” McGovern said.
If something does go awry, complain, not only to the company but also to the FTC and CFPB and Better Business Bureau. “I would encourage people to fight back if they’re having problems,” Bell said. McGee noted that people can appeal to their credit card companies, specifically invoking the Fair Credit Billing Act that limits liability for unfair billing practices, and ask them to put a hold on the charge and investigate it. “It often works,” he said.
Comparison shopping can be tricky because the initial price you see often has little to do with the final cost. There are other options, like Turo, which is sort of like Airbnb for cars, said Charles Leocha, president and co-founder of Travelers United, a traveler advocacy group. “There’s different levels of car rentals, and they all have different pricing,” he said. He also recommends looking at budget brands, even if many of them are owned by the big three. “They take care of the car the same way, it’s just they’re maybe a year older.”
The catch in all of this is that it puts a lot of onus on consumers to do what they can to make sure they don’t get tripped up at every turn.
And yet, many of us have found ourselves there before and will likely be there once again: Standing at the rental car counter, ready to get moving, and wondering what on God’s green earth is going on.
We live in a world that’s constantly trying to sucker us and trick us, where we’re always surrounded by scams big and small. It can feel impossible to navigate. Each month, join Emily Stewart to look at all the little ways our economic systems control and manipulate the average person. Welcome to The Big Squeeze.
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