When you think you’ve seen every car rental fee under the sun, you hear from someone like Jason Hunter.
After renting a car in El Salvador a few months ago, Budget shocked him with a $1,166 fee for a “loss of license plate.”
It shocked him- and it surprised me.
“I made one attempt to recover my money with Budget,” he says. “They denied me. They said it took them 13 days to obtain a new license plate and I was to be charged for the rental’s loss of use.”
Oh boy.
Hunter’s case raises several questions:
- Can a car rental company charge you for lost license plates?
- Is it legal for a car rental company to charge a “loss of use” fee?
- What are your rights when a rental company hits you with a fee?
OK, are you ready to go hunting for answers?
“Charging $1,166 for a lost license plate is ridiculous”
Hunter rented a car from Budget’s El Salvador International Airport for a week. When he returned the vehicle, Budget claimed the front license plate was missing and charged his credit card $1,166.
Budget’s breakdown of the fee included a “loss of use” charge of $976.16, calculated based on 13 days of lost rental income because the car couldn’t be rented without a license plate. Budget claimed it took 13 days to obtain a new tag.
Hunter disputed the charge, arguing that the car didn’t have a front license plate when he picked it up. He even pointed out that the two screws holding the license plate were still attached to the car when he returned it, suggesting the plate wasn’t stolen.
Budget insisted that both license plates were present when Hunter rented the car, providing a signed vehicle inspection sheet as evidence. However, Hunter suspects the front plate was never on the car and that he failed to notice its absence during the initial inspection.
“The car did not have a front license plate when we received it,” he says. “And charging $1,166.70 for a lost license plate is ridiculous.”
Can a car rental company charge you for lost license plates?
Car rental companies can charge you for anything they want, including lost license plates. But should they?
License plates are part of the cost of doing business. Occasionally, they may fall off a car, or someone might steal them. There’s no way for a renter to avoid any of these scenarios, so I’m inclined to agree with Hunter—holding him responsible seems absurd.
I’ve been mediating car rental cases for more than 25 years, and I’ve never encountered a case like this in the United States. But the rules might be different in El Salvador, so it’s worth investigating.
Is a car rental company charging a “loss of use” fee legal?
Charging for “loss of use” is common but controversial. Car rental companies hold customers responsible for more than just vehicle repairs. They often charge their customers for what they would have earned while the vehicle was in the shop.
Here’s the breakdown from Hunter’s rental:
So Budget is charging him not only for a new plate ($82) but also the cost of sending someone to the motor vehicle department ($50), emissions testing ($15), and the 13 days it apparently took to get all this done. It also appears to be the maximum daily rate, which is fairly standard for car rental damage claims and usually higher than the daily rate you paid.
Charging for loss of use is legal in all but one state. Delaware recently enacted a law that does not allow car rental companies to charge for loss of use. Charging for loss of profits is a bit more complicated.
Most states don’t allow a car rental company to charge a customer for lost profits, but some certainly exceed this limit with their loss-of-use fees.
In other words, loss-of-use fees are usually legal. But they probably shouldn’t be. Loss-of-profit fees are illegal, as they should be.
What are your rights when a rental company hits you with a fee?
Car rental companies love fees and don’t always feel they need to explain them. My ultimate guide to car rentals has more details.
You have rights when renting a car, but most travelers are only vaguely aware of them.
For example, a car rental company can’t just charge you a fee without explaining it. You have a right to know what you’re paying for.
Budget charged Hunter’s credit card without adequately explaining what it was doing or offering him a way to dispute the charge. Fortunately, the Fair Credit Billing Act allows you to file a chargeback and recover all the money, even if you rented a car abroad. Here’s my guide on credit card chargebacks.
You have the right to ask for clarification. You can appeal to an executive if the company won’t explain the fee. Here are the Budget contacts.
You also have the right to take this to an outside mediator—state or federal authorities or a consumer advocate. Ultimately, that’s what Hunter did.
What happened to the license plate?
When Hunter’s case landed on my desk, I thought Budget had made a mistake. How could they charge $1,166 for a lost license plate? Is that even legal?
Let’s find out.
I contacted Budget and heard back from a manager in El Salvador. He sent me Hunter’s signed contract, which included clause XXIV:
In case of loss, confiscation for any infraction, theft, and/or larceny of the Vehicle Registration Card or license plates of the leased vehicle, “The Lessee” accepts responsibility for paying the cost to replace them. Also, the Lessee accepts responsibility for the lost profit for the days that the procedure entails up to a maximum of 21 days plus any administrative charges for the replacement procedure.
This also applies when “The Lessee” forgets to give back the vehicle registration card when returning the vehicle. The lost profits are calculated according to the vehicle’s daily rental rate.
“The Lessee” authorizes “The Lessor” to charge payments to the credit card on file according to the security deposit.
So, there it is. Hunter signed the agreement.
Case closed? Not quite.
Hunter had pictures of the car before renting it, showing that it didn’t have a license plate.
I also had a few questions for Budget: What were the actual costs of replacing the license plate? What do the costs cover (are they administrative, or does someone have to look for the lost tag)? Also, what is the daily rate it was charging the customer?
In response, Budget sent me the breakdown I showed you earlier in the story. But it also did something else.
“Taking into account the client’s request and as a consideration for their preference for our brand, we have decided to issue a refund of $586 from the original charge,” a representative told me.
What were the savings? Budget lowered its daily rate to $30 a day.
Did Budget do enough?
Hunter says he’ll take the refund and learned his lesson. Always read the contract. Never accept a car with a missing license plate. Get a manager to sign off on the car when you return it. You know, the usual.
But I’m still a little disappointed. If Budget rented him a car without the front license plate (as the photographic evidence shows), it violated Salvadoran law by putting a vehicle on the road that could not be legally operated. I don’t like clause XXIV, and I find the partial refund frustrating. I have to respect his request to close this case and hope that anyone reading this will be extra careful when renting from Budget in El Salvador—or anywhere else.
By Christopher Elliott
BIO:
Christopher Elliott is an author, consumer advocate, and journalist. He founded Elliott Advocacy, a nonprofit organization that helps solve consumer problems. He publishes Elliott Confidential, a travel newsletter, and the Elliott Report, a news site about customer service. If you need help with a consumer problem, you can reach him here or email him at [email protected]g.
