Added Car Rental Fees Spell Trouble for Dollar

     SAN FRANCISCO (CN) – Dollar Rent a Car must face class-action claims that its practice of tacking extra charges onto contracts violates consumer law, a federal judge found.
     Sandra McKinnon and Kristen Tool sued Dollar Thrifty Automotive Group, an Oklahoma-based rental car company with more than 835 locations in the United States, after renting vehicles in Oklahoma and California, respectively.
     The women claimed that they orally declined additional services like liability insurance, but that Dollar employees misled them into checking boxes on the electronic pad that added the services onto their contracts. They claim in their class action that Dollar relies “on the hustle and rush of airports to send their customers away without having reviewed their rental charges, thereby giving Dollar a basis for claiming that their customers routinely agree to the add-on charges.”
     Additionally, McKinnon and Tool allege that Dollar built its business model on incentivizing the practice, by paying its agents minimum wage but offering a 12 percent commission on add-ons and threatening to fire employees who fail to average 30 up-sales per day. The women brought actions for violations of California’s unfair competition law and the Consumer Legal Remedies Act, a violation of a similar Oklahoma consumer law, and breach of contract and implied covenant.
     Dollar moved to dismiss the class action, largely on grounds that California law does not apply to out-of-state companies and transactions. The company also argued that the contract on which McKinnon and Tool relied – the online reservation – does not constitute a true and final contract, which the women received when they picked up their vehicles.
     U.S. District Judge Samuel Conti agreed that the unlawfulness prong of California unfair competition claim cannot apply to out-of-state transactions. Since Dollar’s business practices could amount to a nationwide scheme to trick customers, however, that defeats the presumption against extraterritoriality as to the unfair and fraudulent prongs of the state law.
     “Plaintiffs’ pleadings have raised new facts suggesting that the court’s analysis should change – specifically, plaintiffs explain how Ms. McKinnon was harmed by reserving a car in California, being promised a certain price, and then being defrauded by a widespread scheme that defendants have engineered to produce exactly the outcome she suffered,” Conti wrote.
     Dollar’s alleged conduct in California “does not only amount to the provision of a price quote and the completion of an automated reservation process,” the judge continued. “Based on plaintiffs’ reasonably specific pleadings, defendants have a national scheme involving providing low reservation rates and then tricking customers into paying more once they pick up their cars. Plaintiffs’ second amended complaint sufficiently makes clear that the presumption against extraterritoriality does not apply to limit plaintiffs’ action in this case, and that defendants’ conduct is more than mere endemic dishonesty – it is actionable under the unfair competition law as an unfair and fraudulent business practice.”
     Conti also found that Dollar’s confirmation of an online reservation is a contract since it contains prices that must be honored.
     “Plaintiffs agreed, through a contract of adhesion, to pay what they thought was a fair price – after all, if they knew that defendants would defraud them and make them pay more money, they would have rented cars from a more honest dealer,” Conti wrote. “Defendants’ refusal to honor the confirmation price in any way, and in fact to convince plaintiffs of the price’s validity and then to alter it secretly, was a breach.”
     Dollar Thrifty Automotive Group is a Fortune 1000 company, formed by Chrysler in 1990. Hertz acquired the company in late 2012 for $2.3 billion.

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