Hertz pushes the envelope. We shred the envelope.

By | January 28th, 2016

Last Christmas Eve, on a highway outside of Boston, Julie Thomason was involved in a car accident. Thankfully, no one was hurt.

Thomason’s Hertz rental car had seen better days. In fact, the car was totaled.

Thomason reported the accident to the authorities, to her insurance carrier, GEICO, and, of course, to Hertz. The car was towed from the highway and taken to a salvage yard in New Hampshire.

What began as a bad situation quickly got worse. For nearly a month, Hertz could not locate the damaged car in its computer system, and soon Hertz’s “vehicle control” department started calling Thomason, threatening that they’d contact the authorities if she didn’t return the car.

After a month, the car was again “found,” and the insurance adjusters started their work. Eager to settle the claims, Thomason called GEICO every two weeks, seeking an update, but getting no news.

Seven months later, Hertz finally issued a subrogation package to GEICO, and declared the car a total loss. GEICO was billed $8,400 — the full value of the car, $7,400, plus $1,000 in fees.

GEICO sent payment for $6,900, leaving a balance of $1,500 for Thomason to pay. Part of that balance was her $500 deductible, which she owed for making a collision claim on her policy.

But what about the additional $1,000? Hertz charged Thomason $836 for “loss of use” fees and another $117 for “administrative fees.”

“Loss of use” fees are charges that rental companies can make their customers pay while a car is being repaired and is out of service. The “administrative” fees are simply charges to offset the overhead costs of the actual handling of the claim.

According to Thomason, a GEICO representative told her that if she could get Hertz to substantiate the fees — in other words, explain how they arrived at the figures — GEICO would pay them.

Thomason spent five months writing letters and making phone calls to Hertz, trying to get someone to explain the charges in writing, so that she would be off the hook.

Her requests fell on deaf ears, as Hertz continued to send identical letters demanding payment for “damage to a vehicle for which you are contractually obligated.”

After months of volleying with Hertz, Thomason finally broke down and contacted us for help when the $1,000 bill was sent to a collections agency.

“I don’t want to pay $1,000,” she explained. “My husband and I are just starting our lives together; we have great credit, so it seems unfair that seeking answers to questions should ruin our credit.”

And just when Thomason thought her case had hit bottom, it finally did. She received a letter from Hertz “permanently suspending” her rental privileges with Hertz and all its affiliate companies, including Dollar, Thrifty and Firefly.

Despite everything — the missing vehicle, the collections agency, the permanent ban from future rentals — the detail that didn’t sit right with us was the “loss of use” fee. When a car is so far beyond repair that insurance companies call it a total loss, the owner is compensated for the full value of the car. Therefore, loss of use, which is premised upon a temporary loss, cannot apply.

We contacted Hertz on Thomason’s behalf, and within 12 hours, Hertz dropped its entire case against Thomason and instructed collections agencies to stop contacting her.

Will Thomason rent from Hertz again in the future? We don’t know. But as they say, experience is the best teacher.

Posted January 28, 2016
  • sirwired

    The administrative fee, I can understand. A LOU fee if the location was sold-out even makes sense, but it should not be the Labors of Hercules to generate a report showing the in-stock status at that location over, say, a couple weeks following the accident.

    (As a side-note, doesn’t CC insurance usually cover LOU fees (and the deductible))?

  • Nathan Witt

    I’d like to know whether Hertz was charging loss-of-use fees for that month they couldn’t “find” the car in question.

  • I wonder if SHE can go after Hertz under the Fair Debt Collection Practices Act for their action for pursuing the LOU? I wonder if she should also contact the Consumer Financial Protection Bureau to file a complaint as well (or the FTC).

    Sounds like this is red meat to those organizations.

  • NotThatBrooklynGuy

    Winston Churchill + Red Green yields:
    “You can sometimes count on Hertz to the right thing, if they have to, after being exposed to bad publicity, maybe”.

  • fairmont1955

    Props for being able to cut to the chase.

  • Zarkov505

    This is one of those situations where Registered Mail has its uses.

  • Harvey-6-3.5

    This sounds like a great idea. I think she should file a claim with the CFPB and FTC. I’d be interested in hearing from a lawyer who practices in this area as to whether a fair debt act claim would have any basis because if it were filed in small claims, if that’s possible, she’d probably have a good shot of winning. Then after Hertz didn’t pay, she could get a sheriff to seize cars at her local Hertz office as collateral, which would be fun.