Hertz/Thrifty takes reservations for cars it doesn't have, stranding customers; worse, that's the business model

I've been locked in pre-litigation combat with Hertz Corp. for almost a year, and I'm tapping out.

The problem is simple: The Thrifty Car Rental (Thrifty is a Hertz company) at Memphis Airport (MEM) has been renting cars that it doesn't have. Customers get stranded for hours, until a car comes in, rolling the problem forward. And Hertz is OK with it.

Frustrated Thrifty customers wait hours for cars in Memphis (Mar. 2023).
There's not even seating. RJ Peltz-Steele CC BY-NC-SA 4.0

Here's a rough timeline.

● March 2023: I show up for a car rental in Memphis with a time-sensitive work schedule. They're "out of cars." Lots of people are milling about in the same predicament.  Hours later, I get a car, not before my work plans are screwed up. A check of online reviews reveals that this is business as usual for Thrifty MEM.

● Later March 2023: I complain to Thrifty and the Tennessee AG and ask for just one day's refund and that the deceptive practice be abated.

● May-June 2023: Hertz Executive Customer Service reaches out to offer $50 off a future rental and pledges that what I experienced is not Hertz/Thrifty's normal mode of business. In exchange for the coupon and assurance, I drop the matter with the Tennessee AG.

● October 2023: I discover that the $50-off coupon is a sham.  The coupon can only be redeemed at the rental counter.  Premium for paying at the rental counter: $50.  I ask the Tennessee AG to reopen the matter. 

● Also October 2023: I investigate online reviews of Thrifty MEM and discover that they still are renting cars they don't have, leaving customers stranded for hours or longer. I report my finding to the Tennessee AG. The Tennessee AG suggests I also report the matter to Hertz's home jurisdiction, Florida. So I forward the report to the Florida AG.

● November 2023: In response to my reopening of the settlement with the Tennessee AG, Hertz says take a hike. The Tennessee AG closes the matter, because, you know, what can you do.

● December 2023: I send Hertz a demand letter, alerting the company that sending a sham coupon to a Rhode Island resident and knowingly doubling down on the sham renders the company liable for treble statutory damages of $1,500 under R.I. consumer protection law.

● January 2024: Hertz gives me 1,900 "Gold Plus Rewards" points for one day's car rental, in place of the $50 coupon.  I find out the points are just as useless when I need a rental from IAD to BWI; points can't be used on one-way rentals.  Meanwhile, Hertz replies angrily to my report to the Florida AG, accusing me of seeking unjust enrichment by complaining in multiple states. Oh, and Hertz tells me again to go take a hike.

That brings us to today.

---

Feb. 12, 2024

Hertz Corp. d/b/a Thrifty Rental Car
Attn.: General Counsel
8501 Williams Rd.
Estero, Fla. 33928

Open Letter

Dear sir or madam:

I write in regard to the matter originating in a car rental reservation with Thrifty at the Memphis International Airport on March 28, 2023; your subsequent proffer of a sham coupon for a subsequent Thrifty rental; my demand of Dec. 17, 2023, for compensation accordingly under Rhode Island consumer protection law; and your subsequent award of 1,900 “Gold Plus Rewards” points.

I accept your award of the points in abeyance of my demand.  I have grave doubts that the points are of any use to me.  I already have discovered that I could not use them for a one-way rental from IAD to BWI; they cannot be redeemed on one-way rentals.  And I don’t foresee a need in the future for a one-day car rental anywhere, certainly not before the points expire.  Nevertheless, I choose to see the award as a gesture of good faith.

In return, I ask just one more thing of you:  Hear me out on the following points.

(1) I never wanted from you money, coupons, or points.  I demanded the sum of only one day’s rental cost as nominal and symbolic. What I really wanted was simply that you stop your Memphis MEM Thrifty provider from accepting car reservations for cars they do not have, leaving customers stranded.  Ms. Walsh of Hertz Executive Customer Service wrote that that was not the business practice of Hertz and Thrifty (nor, one presumes, Dollar). That assurance was false. My investigation of online reviews revealed that the deceptive practice continued unabated at MEM. I subsequently rented from another company at MEM and saw the usual crowd of distressed travelers camped out at the Thrifty counter. Shame on you.

(2) A “$50 off”-at-the-counter coupon when you charge $50 more for transactions at the counter is a sham, plain and simple.  I reiterate, I didn’t want your coupon.  I would’ve dropped the matter if you simply abated the deceptive practice.  I decided to redeem the coupon only when it became clear that you were determined to continue to allow deception in your business at MEM.  Even to buy me off, you could not even make an honest offer. Shame on you.

(3) I informed the Tennessee and Florida AGs of the ongoing deceptive business practice at MEM.  Authorities should be informed, even if, as usual, they do nothing.  I forwarded the notice to the Florida AG only because the Tennessee AG bid me do so.  I did not ask for anything in Florida; I did not want dispute resolution in Florida.  The Florida AG, whether for incompetence or willful indifference, entered the notice into a private-dispute resolution system. Ms. Walsh responded in Florida with something like outrage that I had dared to complain about you in another jurisdiction. Let’s be clear: Your MEM provider was engaged in a deceptive business practice.  I notified civil enforcement authorities in that jurisdiction.  They urged me to notify civil enforcement authorities in Hertz’s home jurisdiction. So I did. I asked for nothing from or in Florida. Don’t accuse me of some kind of profiteering off of your poor choices.

You know as well as I do that you can get away with deception at MEM, and anywhere else you want to, and with your profound commitment to stick your head in the sand about it only because antitrust and consumer protection enforcement in your industry is a joke.  I wish I could say I’ll never rent again from Hertz companies. But of course I will. I won’t have a choice.

I understand how you get away with deception and subterfuge, but what I cannot understand is why.  It would be so easy simply to run an honest business.  Don’t accept reservations for cars you don’t have.  Don’t tell customers you’re doing one thing and do another.  If you give someone $50 off, give someone $50 off.  I’m sure Hertz is big and successful enough to stay in business without relying on deception.

Is it really so hard just to be honest?

Sincerely,

/s/ Rick J. Peltz-Steele

Cc: [Ms. Walsh]; [Tenn. AG]; [R.I. AG]; [Fla. AG]

Federal law shields car dealer in courtesy-car accident

CC0 by Open Grid Scheduler via Flickr

A car dealership could not be held vicariously liable to a pedestrian struck by a courtesy vehicle, the Massachusetts Supreme Judicial Court ruled in June.

A New Jersey Mercedes Benz dealer lent a customer, defendant Oke, a courtesy car while Oke's car was being repaired. After traveling to Boston (an apparent excess of the radius permitted by the courtesy-car contract), Oke left the key in the ignition, engine running, and his wife, Steele (no relation), in the passenger seat, while he attended to business. When a parking official demanded that the car be moved, Steele's attempt to do so resulted in collision with, and serious injury to, the pedestrian-plaintiff.

The laws of many states permit an injured person to pursue the owner of a vehicle in vicarious liability, regardless of the owner's fault. In a 2005 federal highway bill, Congress preempted and disallowed no-fault vicarious liability when the vehicle owner is a rental company. According to FindLaw, Congress was troubled by the likes of a $21m vicarious liability award against Budget in New York. The statutory language, "the Graves Amendment," was named for Rep. Sam Graves (R-Mo.), who estimated that vicarious liability awards cost car rental companies some $100m annually, a cost passed on to consumers.

The Supreme Judicial Court ruled that the Graves Amendment protected the New Jersey car dealer. The courtesy-car arrangement was part of the transaction for car service, the court reasoned, so akin to a rental agreement.

The court thus dismissed claims against the car dealer. However, reversing, the court remanded the plaintiff's claim against Oke for negligent entrustment. The trial court must resolve a question of fact, the court opined, before the negligent entrustment claim can be adjudicated. The plaintiff plausibly alleged that Oke had, under the circumstances, implicitly authorized Steele to move the car if necessary.

The surviving claim based on negligent entrustment provides a worthwhile reminder that, upon other facts, the Graves Amendment does not let car rental companies off the hook for liability theories in negligence, such as negligent entrustment and negligent maintenance.

The case is Garcia v. Steele, No. SJC-13378 (Mass. June 27, 2023) (FindLaw). Justice Dalila Argaez Wendlandt wrote the court's unanimous opinion.

FTC finally notices abuse of customers, shady business practices by car rental industry

In an omnibus resolution late last week, the Federal Trade Commission (FTC) green-lighted investigation of the car rental industry.

Earlier this year, I wrote about the "new lows" of our car rental oligopoly in the United States, including my own experiences with the misleading Hertz "loyalty" program and the manipulation of pickup and drop-off times to draw overage fees.

The resolution broadly compels investigation "[t]o determine whether any persons, partnerships, corporations, or others have engaged or are engaging in deceptive or unfair acts or practices in or affecting commerce in the advertising, marketing, promotion, sale, tracking, or distribution of rental cars."

For context, Frankfurt Kurnit's Jeff Greenbaum wrote in Advertising Law Updates that commissioners ordered similar investigations in July 2021 into "areas such as COVID-19, healthcare, and technology platforms," and in September 2021 into services targeting veterans and children, "algorithmic and biometric bias, deceptive and manipulative conduct online, repair restrictions, and abuse of intellectual property."

The FTC didn't detail the buzz in its bonnet, but they likely heard lawmakers in the spring frowning on Hertz's misreporting of stolen cars. Senator Richard Blumenthal (D-Conn.) wrote Hertz a nasty-gram in March. Forty-seven customers filed suit for false arrest in July, CNN reported (via ABC 7 L.A.), and they're not the only ones.

I documented my rental return this summer in Thunder Bay, Ontario.
(RJ Peltz-Steele CC BY-NC-SA 4.0)

I've started taking the advice of The Points Guy's Summer Hull to take pictures and videos of my rental cars when I pick them up and when I return them. One Mile at a Time advises the same. 

But I'm doubting the utility of it. I'm not sure you can see scratches or dents in the images, especially in dark garages. And, as Hull herself reported, she was called out for alleged damage to the roof, which she had not climbed up to photograph. I wonder whether I should crawl under the car to photograph the undercarriage.

Lately rental companies have presented me with an up-sell option for tire and window insurance, threatening that they're not covered even if a buy the CDW. And don't get me started on involuntary "upgrades" to fuel-inefficient trucks. Even the sedan pictured here, which I rented this summer in Thunder Bay, Ontario, was what I got when I reserved an SUV to tackle unpaved roads.

Meanwhile, my budding occupation as car portraitist is eating into my travel time and my hard drive space.

It seems to me that when customers start having systematically to video-record their interactions with industry to protect themselves against fraud, the problem might be with the industry and not with the customer.

Oh, FTC ... 🤙

U.S. rental car oligopoly hits new lows, as customers alleging false arrests intervene in Hertz bankruptcy

Photo by Diego Angel CC BY 3.0

A curious story of alleged false arrests and a corporate lawyer's blunder surfaced in business media earlier this month, and the story speaks to the sad state of consumer protection in America.

In December 2021, dozens of claimants filed (no. 193) in the covid-precipitated bankruptcy of Hertz, the rental car company, alleging the reporting of rental cars as stolen, resulting in false arrests of Hertz customers by police, along with the disgrace of arrest, jailing, and other life disruptions that attend felony charges.

The claims, many recounted by CBS News, allege varied circumstances precipitating the reports of stolen cars, including poor record-keeping and misunderstandings over return times, hardly the stuff of high crime.  The claimants' theory is that Hertz essentially outsourced its (mis)management of late returns to police, disregarding the dramatic mismatch between contract enforcement and criminal justice and the ruinous consequences visited on customers.

Early in January, journalist-blogger Minda Zetlin of The Geek Gap reported a verbal gaffe in court on the part of a Hertz lawyer.  Zetlin's report was picked up by a number of outlets, including Inc.  The only recent transcript on file in the case (no. 251) is "not available" on PACER, maybe because the claimants, Hertz, and CBS News are now in a tussle over sealing, the docket suggests.  Anyway, I can't verify Zetlin's report, so I'm not going to name the lawyer here.

According to Zetlin, a Big Law lawyer representing Hertz responded in court to the allegations: "It is a fraction of 1 percent of annual police reports that are filed that turn into actual litigation claims.... We actually think the number of legitimate claims that arise out of annual rentals is a tiny, tiny, tiny, tiny, tiny, tiny fraction."

Zetlin fairly observed that even a "tiny" "number ... does not count customers who were falsely arrested but accepted an early settlement from Hertz, resolved the matter in arbitration, or simply decided they didn't have the funds or the stamina for a lawsuit."  Zetlin further opined that "[m]ost [Hertz customers] would likely prefer a car rental company where their chances of going to jail are zero, rather than just tiny."  Count me in that majority.

I can't speak to the merits of the claims.  But for my part, I have been frustrated by car rental companies' shocking embrace of the contemporary trend to forego all pretense of customer service.  This skimpflation has been exacerbated by the pandemic, but we were well on our way before 2020.

Hertz, in particular, raised my ire more than once last year.  Having been lured into Hertz's "Gold" program, I once made a reservation directly on the Hertz website, rather than running my usual price comparisons with intermediaries.  Afterward, I discovered a lower rate on USAA.  But every time I was forwarded to Hertz.com to confirm the reservation at the USAA rate, I was automatically logged in to Hertz, and the rate jumped substantially.  When I tried linking to Hertz in a private window, without logging in, I got the lower rate.  In other words, Hertz was charging me substantially more because I was a member of the "loyalty program."

When I waited on hold for hours to ask a Hertz agent to log my anonymous reservation in my Gold account, I was told it couldn't be done without elevating the rate.  An agent told me that the Gold program does not guarantee lowest rates.  Actually, it does.  So much for loyalty.

Another new practice of car rental companies is to manipulate the time of pickup and drop-off to increase the likelihood of a late fee.  A customer reserving a car for pickup has to make a ballpark estimate of the time, considering how long it might take to deboard a plane, claim bags, transfer to a ground transportation center, etc.  Reservation systems offer pickups usually in only half-hour increments, 12, 12:30, 1, 1:30 etc.  So it's an inexact science, and the rental company knows that.  Accordingly, it was once common for the companies to afford an hour's grace on the clock one way or the other.  No longer.

When I picked up a car early, Hertz, without the agent saying a word, pre-charged me a late fee on the return while giving me paperwork showing the car due back at the original return time.  When I complained, Hertz said the charge would be taken off if I returned the car earlier than the indicated time, days to the minute from my actual pickup.  Yet when I rented another car and picked it up late, my return time still did not change.  The car was due back at the same time, and I just lost the hours to my late arrival.  So whether a customer is early or late for pickup, an inevitability because of deliberate inexactness, the company wins, either time or money.  No doubt the company is betting that the small loss on one rental will go unnoticed to the customer but add up big for the cumulative bottom line.

I admit, my complaints are small potatoes, mere annoyances, compared with being jailed.  But the theme that unifies my experience and that of the claimants against Hertz is Hertz's profound indifference to the customer.

So, free market, right?  Treating a customer like an entitlement is a consumer protection problem that should solve itself when a competitor comes along and offers to do better.  (Southwest's free checked bags and transparent pricing come to mind in the airline industry.)  Part of the problem is our public officials' dereliction of duty in antitrust.  The experiences I just described also characterize the policies of Dollar and Thrifty, because, guess what, they're owned by Hertz.  Likewise, Enterprise owns National and Alamo, and Avis owns Budget and Payless.  Three "beasts" account for almost all of the U.S. rental market.

Free markets only work when the playing field is level, information flows freely, and barriers of entry to the market for new competitors are surmountable. None of those conditions holds true in our car rental oligopoly.  Rather, if the claims in the bankruptcy court are to be believed, we've come to the point that a company can jail customers in case of contract dispute and hardly fear market reprisal.

Debtors' prison must be around the next corner.

The bankruptcy case is In re Rental Car Intermediate Holdings, LLC, and CBS Broadcasting Inc., No. 20-11247 (Bankr. D. Del. filed May 22, 2020).