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The encyclopedia · Advertising & PR · Marketing decision · 2017

Hertz's fees ran to 57% — and its discounts never touched the total — $1.25M

Apr 2017: Hertz and Dollar Thrifty paid Canada $1.25M — prices that mandatory fees pushed 10-57% higher, and discounts that never reached the whole bill.

Hertz Canada Limited · 2017-04

What happened

Hertz Canada and Dollar Thrifty — both owned by Hertz Global Holdings — advertised enticing low rental prices, and then added mandatory fees that took the bill 10% to 57% higher. Some fees were described as government taxes or surcharges when they were the companies' own charges to recover business costs. The advertised discounts were misleading too: they implied a percentage off the whole bill, but were not applied to the total, and the mandatory fees still had to be paid in full.

The Bureau also rejected the companies' fallback: showing an estimate of the total price only before completing a reservation was not enough. On 24 April 2017 the two companies signed a consent agreement: $1.25 million in penalties between them, corrected fee descriptions, compliant advertising including online, new procedures and proof of a corporate compliance program.

Commissioner John Pecman noted the companies acted proactively once the investigation landed — but they were the second car-rental settlement in eleven months, after Avis and Budget's $3 million. The Bureau was working down the industry one consent agreement at a time, and the fee dressed as a tax kept reappearing.

Why it happened

  • Fees took the advertised price 10% to 57% higher — the number in the ad was an opening bid.
  • Company costs wore the label of government taxes, borrowing authority the fees never had.
  • A discount that skips the fees is not off the bill: the advertised saving never reached the total.
What it cost$1.25M penalty; pricing correctedcostly

The lesson

An estimate before checkout does not cure an advertised price, and a discount that does not reach the fees is a false saving: the whole ad, price and discount alike, must match the bill.

Aftermath

Both companies corrected their advertising and implemented compliance programs under consent agreements with the force of court orders. Enterprise followed with a $1 million settlement ten months later.

Sources

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