State Targets Illegal Rental Car Fees

In a move that could save consumers from paying unnecessary and illegal fees when they rent a car, Attorney General Spitzer today announced a lawsuit against the nation's largest rental car company.

The action against Enterprise Rent-A-Car seeks to end the widespread practice of tacking on extra fees for insurance coverage. It is estimated that New Yorkers have paid several million dollars in such fees over the last few years.

The lawsuit accuses Enterprise of unlawfully refusing to provide minimum personal injury and property damage liability coverage to consumers and failing to provide a legal defense or coverage if a renter is sued by a third party.

"The highest court in New York has already condemned this practice as being 'against public policy.' Yet Enterprise Rent-A-Car continues to charge consumers for insurance coverage that should already be provided," Spitzer said. "With this lawsuit, we are seeking an end to this deceptive and unlawful business practice."

In 1994, the State Court of Appeals, the highest court in New York, ruled that a rental car company cannot shift its personal injury liability burden to a renter or seek indemnification from a renter for amounts up to the legal minimum. This decision has been followed by the Fourth Department of the State Appellate Division, the United States District Court for the Southern District, as well as various trial level courts.

The Second Department, however, has not followed the decision and Enterprise has used this exception as a basis for continuing to pressure consumers to pay extra for insurance coverage.

By representing that it provides no insurance coverage for personal injuries, Enterprise convinces consumers that they should pay an additional $6.95 per day to insure against personal injury accidents. This charge is in addition to the basic car rental rate.

Alexander Grannis, Chair of the New York State Assembly Insurance Committee, said: "Allegations of consumer fraud in any form are disturbing, but the charges in this case are particularly egregious because even savvy consumers who know what kind of coverage, if any, to buy when they rent a car, are really at the mercy of the rental company."

"People who simply want to rent a car and be on their way are likely to play by the rules laid out by the person at the rental counter, regardless of whether those rules are fair or legal. I applaud the Attorney General for acting on behalf of the public on this issue," Grannis said.

Russ Haven, Legislative Counsel to the New York Public Interest Research Group, said: "The auto rental industry has a long track record of flouting consumer protections and gouging at the rental counter. This renegade industry thinks it's above the law. We are confident the Attorney General will prove otherwise in court."

The suit seeks to prohibit Enterprise from attempting to enforce the unlawful provisions of its contracts, pay refunds and damages to consumers injured by its acts and pay civil penalties and costs.

Enterprise, based in St. Louis, has more than 3,600 rental locations in the U.S. The company has more than 15,000 automobiles registered as rental vehicles in New York.

Any individual interested in filing a complaint against Enterprise regarding its liability contract provisions is encouraged to contact the Attorney General's consumer help line at (800) 771-7755. The case is being handled by Assistant Attorneys General Melvin L. Goldberg and Joy Feigenbaum of the Consumer Frauds and Protection Bureau.

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