Rental Car Company to Pay $80K in Penalties, Implement Reforms Over Fraud Allegations

September 17, 2020

A discount car rental company operating out of Newark and JFK Airports has agreed to pay $80,000 in penalties, enter binding arbitration to resolve consumer complaints and change its policies and practices following New Jersey Attorney General Gurbir S. Grewal and the Division of Consumer Affairs’ investigation into alleged fraudulent activity.

A consent order with Drivo LLC d/b/a Drivo Rent-A-Car resolves the division’s allegations that Drivo violated New Jersey’s Consumer Fraud Act (CFA).

The alleged violations include:

  • not accurately disclosing in its rental agreement all charges a consumer would have to pay if a rental vehicle was damaged;
  • altering vehicle inspection records to falsely suggest consumers acknowledged damage to rental vehicles;
  • falsifying accident or incident reports;
  • billing different consumers for the same damage to the same rental vehicle;
  • failing to disclose existing damage on a rental vehicle to the consumer;
  • posting deceptive and misleading online advertisements and statements; and
  • failing to honor rental rates agreed upon through online reservations.

“Companies that employ shady tactics to unfairly profit from their customers will be held accountable,” Grewal said in a press release issued by his office. “We want drivers of rental cars in New Jersey to be confident that they aren’t being taken for a ride.”

Under the consent order, Drivo agreed to reform the way it does business by, among other things:

  • Not posting deceptive or misleading advertisements;
  • Not making statements that suggest partnerships with corporate entities when no such partnership exists;
  • Maintaining uniform policies for the sale of rental vehicle insurance and additional merchandise;
  • Accurately disclosing all of the charges a consumer will be required to pay if a rental vehicle is damaged;
  • Reporting all pre-existing damage to consumers for acknowledgement and signature at check-out and ensuring they have an opportunity to fully inspect their rental vehicle prior to their departure;
  • Notifying consumers in writing of any identified damage to the rental vehicle that occurred during the rental period; and
  • Providing additional training to managers and employees on the check-out and check-in procedures of rental vehicles, as well as the sale of related services or products.

In addition, the consent order requires Drivo to enter into arbitration and abide by the decision of a neutral arbitrator to resolve certain consumer complaints not resolved by the consent order itself.

“For many consumers, renting a car can be a stressful and confusing process that they need to navigate quickly in order to get to their next destination” said Paul Rodríguez, acting director of the Division of Consumer Affairs. “I am pleased this settlement goes beyond civil penalties and restitution by requiring company reform, it should serve as an example of how we will continue to enforce the laws in place to protect consumers from fraud.”

The total settlement includes $44,524.87 in civil penalties, $2,677.88 in restitution to consumers, $9,535.25 in investigative costs and $23,262.00 in attorneys’ fees.

Investigator Luis Zuniga of the Division of Consumer Affairs’ Office of Consumer Protection conducted this investigation. Assistant Section Chief and Deputy Attorney General Jesse J. Sierant from the Consumer Fraud Prosecution Section within the Division of Law represented the state of New Jersey in this matter.

Source: New Jersey Office of the Attorney General

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