Former Franchisees Accuse Avis of RICO Fraud


     HOUSTON (CN) — Avis ruined a franchisee by rigging its online reservation system to show falsely that its lot was “sold out,” two Texans claim in a federal RICO complaint.
     Francis Ward and Charles Igwe also claim Avis retaliated against them for telling regulators it was fleecing rental car customers.
     The men say they quit well-paying jobs and formed Red Carpet Rent A Car to operate an Avis franchise in Houston after Avis promised them the venture would provide “unlimited income.” They sued Avis Rent A Car System and its parent company Avis Budget Group on June 22, alleging fraud and other charges.
     Ward is owner and president of Red Carpet. He signed a temporary franchisee agreement with Avis that ran from March 17, 2014 to Dec. 30, 2015 and made a plan to turn a profit within five years, they say. But he says Avis’ willingness to defraud franchisees and customers derailed his business.
     Warren Avis founded the car rental company in 1948 with three cars at an airport in Ypsilanti, Mich. Today Avis Budget Group is a publicly traded company with 30,000 employees. It netted $327 million from $8.5 billion in revenue in 2014.
     “The Wizard System is the electronic reservation system for booking all vehicles from Avis System locations throughout the country,” the complaint states. Avis implemented the system in 1972.
     Ward says Avis rigs the system to falsely show its franchisees are “sold out” of rental cars and inflate the price of franchisee cars so customers will take their business to Avis-owned locations.
     “Often the misrepresentation in the Wizard System that plaintiff Red Carpet as an independent operator is ‘sold out’ of vehicles is accompanied by an Avis suggestion that the customer rent vehicles from a company operated airport location,” the complaint states.
     The fraud didn’t stop there, Ward and Igwe say.
     Avis also overcharged for rental cars, rented vehicles that needed repairs and charged several clients for the same car, according to the complaint.
     Ward says he complained about this to government agencies and Avis terminated the franchise agreement.
     Ward also claims that Avis misclassified him and his staff as independent contractors to avoid paying them overtime and providing medical insurance and retirement benefits.
     Ward and Igwe seek punitive damages for RICO and labor violations, fraud, breach of fiduciary duty, bad faith, unjust enrichment and retaliation.
     They are represented by Jonathan Cox with Cox Pradia in Houston.
     Avis did not respond to a request for comment.

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