It began two years ago when an irate client confronted Cecilia
Pedroza with a car rental bill for $100 more than she said the car
Unaware of the fees the rental car agency had tacked on to the
bill after she booked the reservation, at first Pedroza, owner of
Pedroza Travel in Los Angeles, said she “felt like a total idiot.”
Then she got mad.
Pedroza’s anger and similar scenes with other agents led to the
filing this June of a groundbreaking class-action suit against the
major car rental companies, which could have broad implications for
The suit, which includes the Outside Sales Support Network
(OSSN) as a lead plaintiff, challenges the increasingly popular
practice of “unbundling” fees when calculating commissions.
By excluding concession fees, drop fees, insurance and other
charges from the commissionable total, rental car companies
routinely underpay commissions by 20 percent to 40 percent, the
Six companies are named as defendants in the suit: Avis, Budget,
Dollar, Enterprise, Hertz and Thrifty. Alamo and National, which
were operating under bankruptcy protection when the suit was
prepared, will likely be added at a later date, according to
Alexander Anolik, one of the lead attorneys on the case.
In essence, the suit asks the court to define what constitutes
revenue. The rental car companies, much like the cruise and hotel
industries, argue they are simply passing along their fees directly
to the consumer.
“We immediately have to remit the fee to some government body,”
said Richard Broome, vice president of corporate affairs, Hertz
Corp. “Why should agents get a piece of something we’re not making
But the suit alleges the practice is moving beyond taxes and
specific government fees, and is now used to cover costs that are
simply part of the rental companies’ cost of doing business.
For example, the rental companies’ concession recovery fees the
fee rental car companies pay in addition to rent for the rights to
operate at an airport, often 10 percent of revenue are simply “part
of their rental cost for operating at lucrative airport locations,”
the suit says.
By excluding the concession recovery fee from revenue, the
companies are simply billing a portion of their overhead directly
to consumers as a way to “keep their quoted rates artificially
low,” the suit says.
“We want to have a precedent for what ‘revenue’ is in the
future,” Anolik said. In addition to questioning the fee
compensation, the lawsuit charges the rental companies with
routinely failing to pay higher commissions when customers upgrade
at the counter.
But the rental car industry historically has taken the position
that sales made at the counter do not involve the travel agent.
If a customer buys additional items at the counter, “the travel
agent is not doing anything that warrants commission,” said Jim
Shapiro, president of the Association for Car and Truck Rental
Independents and Franchisees (ACTIF). “They weren’t engaged in the
The argument strikes to the core of the agent relationship with
hotels, airlines and cruises, as well as the car companies.
Should travel agents get a cut for drinks and movies on
airlines? asked Neil Abrams of Abrams Consulting Group, which often
works with rental car companies. “Where does it end?”
Anolik says the suit is seeking restitution for past bookings,
but he is primarily interested in developing a more equitable
commission system for the future.
Lawyers are scheduling depositions and beginning the suit’s