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Car rental firms face class action

By Jorge Sidron

Travel Weekly

June 23, 2003

San Francisco---Six major car rental companies have been slapped with a class-action lawsuit accusing them of “systematically and regularly” underreporting and underpaying travel agent commissions.

            The lawsuit, filed by four travel agencies and an individual agent in state superior court in San Diego, alleges that the car rental firms routinely exclude from their commission payments fees they collect for such things as fuel, collision damage waivers and vehicle drop-offs.

            The car rental firms have “failed to disclose” these practices and, in addition, have recently begun deducting “processing fees” from the payments they made to agents without the agent’s knowledge, according to the lawsuit.

The suit also alleges the car companies are guilty of persuading clients to upgrade their rental cars and encouraging employees to cancel the reservation and substituting a new one, for which the travel agent doesn’t receive a commission.

Alexander Anolik, one of the attorneys representing the plaintiffs, said his clients expected to receive commissions based on the total amount that the car rental companies made on their bookings, as specified on the car companies’ Web sites.

            “The car rental agencies are getting bolder and bolder with their fees,” said Anolik. “They’ve also managed to exclude travel agents from making a commission on these fees.”

            Named in the suit are Avis Rent A Car, Budget Rent A Car, Dollar Rent A Car, Enterprise Rent A Car, Hertz Corp. and Thrifty Rent A Car.

            A spokesman for the Cendant Car Rental Group, Which owns the Avis and Budget brands, said, “We don’t think the lawsuit has merit and we will fight it vigorously.”

            Anolik said the lawsuit seeks to recover underpaid commissions dating from July 1, 1999, the so-called class-action period. He said the car rental companies made “hundreds of millions of dollars” in revenue by underpaying commissions.

            Anolik said that more than 1,000 travel agents could join the class-action lawsuit. A Web site, www.tarentalcarclassaction.com,was created so agents could join the class action and read the complaint.

For more on the lawsuit, see

In the Hot Seat, Page 9

BUZZ

IN THE HOT SEAT: AL ANOLIK

JUNE 23, 2003 · TRAVEL WEEKLY

Page 9

Travel Weekly senior editor Jorge Sidron spoke with industry attorney Al Anolik about the lawsuit he filed against six car rental firms earlier this month.

Q: What’s at the heart of this lawsuit?

A: The key issue here is revenue and what the car firms mean by revenue. The car rental companies say “we will pay agent ‘x’ percent on revenue,” but they have come up with many different ways to collect revenue without including it in the commission they pay travel agents.

Q: The lawsuit alleges that the car rental companies make a “substantial” portion of their revenues and profits from “ancillary charges.” What are these charges?

A: Things like fuel, collision damage waivers (CDW), drop-off fees and liability insurance.

Q: Why were Alamo and National Excluded? Don’t they do the same?

A: We excluded Alamo and national because they’re operating under bankruptcy protection, and that would have slowed us down considerably.

Q: How much would the typical agency get if you win or the case gets settled?

A: The car companies have made hundreds of millions of dollars by not paying commission on these extra fees. The percentage would be the same as The commission on that amount. We’re asking the court to take away the profits that the car firms made on the backs of agents. We’ll get a better sense in about a week when we have our Web site up at www.tarentalcarclassaction.com. At the site, agents can join the class action and read the complaint. . At the site, agents can join the class action and read the complaint.

Q: The complaint alleges that the car rental companies “routinely” base their commission payments on the base rental amount and “routinely exclude” compensation for ancillary charges such as fuel or CDW. If these practices are routine- and agents have known about them for years- how can you accuse the car firms of failing to disclose them?

A: You’re right, we have known for years about the extra charges. But in the last two years, the car companies have started tacking on fees for such things as a second driver; concession fees, which is what the airport charges the car company for operating at an airport; and the newest fee: a commission processing fee. The car firms are charging agents a fee to recover their commissions through a third party. They give a list to a company that sends the agent the commission, less a percentage they charge to send the payment.

Q: Excluded from the suit are agencies that have formal contracts with car rental companies for the payment of commissions. Do you know if these contracts provide for the payment of commissions on fuel, CDW and other ancillary charges?

A: I don‘t know. I do know that the commissions are covered in other ways, like with an override