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Post date: July 21 2003

Enterprise Rent-a-car To Refund Millions In Deceptive Insurance Charges To Consumers

Attorney General Spitzer today announced that the nation's largest rental car company will pay $2 million in restitution to tens of thousands of consumers who purchased unnecessary liability insurance.

Enterprise Rent-A-Car Company, and its subsidiaries, ELRAC, Inc. and SNORAC, Inc., consented to a court order resolving three years of litigation. During the litigation, the courts confirmed, as the Attorney General argued, that Enterprise has an obligation to provide minimum liability coverage to its renters and to defend them when they are sued by third parties.

"This litigation resulted in a significant change in the practices of this rental car company that benefits consumers," Spitzer said. "The court order compensates consumers who were deceived into purchasing liability insurance through Enterprise even after the state's highest court held that rental car companies are required by law to provide coverage for their renters."

In May 2000, the Attorney General sued Enterprise, alleging that it was failing to provide its renters with the minimum liability coverage required by state law. The minimum amount of personal liability coverage is $25,000 - $50,000 for bodily injury, $50,000 - $100,000 for death, plus $10,000 for property damage. Instead of providing the insurance mandated by law, Enterprise would sue its renters to recover any liability incurred by Enterprise as the owner of the vehicle while the renter was driving it.

In addition to not providing insurance, Enterprise profited from the sale of supplemental insurance. By telling its customers that it provided no insurance, according to the lawsuit, Enterprise induced consumers into purchasing liability insurance, known as Supplemental Liability Protection, or SLP, at an extra cost of $6.95 to $7.95 per day of rental. The supplemental liability insurance provides consumers with $1 million in coverage.

In April 2001, in private litigation in which Spitzer's office filed a "friend of the court" brief, the State Court of Appeals ruled that Enterprise must provide the statutorily mandated minimum levels of liability coverage to its renters as a part of the basic rental agreement.

Following that decision, an injunction was issued in the Attorney General's lawsuit requiring Enterprise to provide the required insurance. Enterprise nonetheless continued to tell its customers that it provided no insurance until September 2001, five months after the injunction was issued.

Under the terms of the consent order, each of the more than 105,000 consumers who purchased SLP from Enterprise in New York between April and August 2001 will receive a check from Enterprise within approximately 60 days. The checks will range from a minimum of $5 for someone who purchased SLP for only one day, to a hundred dollars or more for consumers who purchased more than 40 days worth of SLP during the five month period.

In addition, Enterprise will pay $200,000 in costs to the state.

Attorney General Spitzer also announced today the availability of a Car Rental Tip Sheet. "Renting a car has become more and more complicated. When consumers are trying to get onto the road quickly, they are often pressured at the rental counter into purchasing insurance coverage that may duplicate coverage they already have through their own automobile and homeowner policies or through their credit card companies," Spitzer said.

The Car Rental Tip Sheet is available on the Attorney General's website, www.ag.ny.gov.

Individuals with complaints about car rental companies are encouraged to contact the Attorney General's consumer help line at (800) 771-7755.

The case was handled by Assistant Attorneys General Melvin L. Goldberg and Joy Feigenbaum of the Consumer Frauds and Protection Bureau.

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