Chapter § 3.04 RENTAL CARS

• Jurisdiction: United States
• Publication year: 2021

§ 3.04 Rental Cars

Travelers, whether they are on vacation or on business, rent vehicles for short periods of time. Domestically, rental vehicles are used for business and vacations. The high cost of renting a car may be circumvented by using online rental agencies and information providers.⁶⁷³ Internationally, however, rental vehicles are, primarily, used by vacationers who wish to visit various locales at their own pace. With the exception of taxis, rental vehicles are not considered to be common carriers.⁶⁷⁴

The problems experienced by rental car users include death and physical injuries,⁶⁷⁵ property damage,⁶⁷⁶ misrepresentations⁶⁷⁷ and a variety of deceptive and unfair business practices⁶⁷⁸ including excessive charges for collision damage waivers and failure to disclose that collision damage waivers may duplicate lessee's own insurance, overcharging in providing replacement gasoline after a rental vehicle is returned, excessive charges for personal accident insurance, excessive charges for the late return of a vehicle, adhesion contracts, imposition of improper surcharges, overcharging for the actual costs of repairing damaged vehicles, illegal sale of insurance, unexpected surcharges and fees, failure to reveal additional costs for out of state drop offs, requiring renters to pay the cost of stolen rental vehicles and imposition of phony taxes.

[1] Marketing

Rental cars are marketed to the traveling public in two ways. First, a rental car company may rent its vehicles directly to the traveler through wholly-owned locations or through franchises, licenses or agents⁶⁷⁹ and competition is vigorous.⁶⁸⁰ In addition, new marketing programs have been developed, such as zipcars⁶⁸¹ and hybrids.⁶⁸² Second, a tour operator may organize a package tour vacation featuring air transportation, hotel accommodations and the use of a rental car. Some domestic rental car companies are planning to make electric cars available.⁶⁸³

[a] Rental Car Companies

Often, a domestic rental company will market vehicles to the traveling public that will actually be provided by foreign corporations.⁶⁸⁴ The domestic corporation may be a representative of the foreign entity⁶⁸⁵ or may, in fact own a portion of the foreign rental car company.⁶⁸⁶

Regardless of the nature of the relationship between domestic and foreign rental car companies the traveler is encouraged to rely upon the famous trade name of the domestic rental car company. In Maggio v. Maggiore, the foreign car companies agreed to identify themselves as part of the Maggiore International Rent-A-Car System in the telephone directories, forms, contracts, advertising matters, signs, logos and uniforms of personnel featuring the Maggiore insignia.⁶⁸⁷ In Bank v. Rebold, the court found that Avis Rent-Car Systems had induced the plaintiff to believe that Avis was the only entity responsible for the provision of the contracted for rental car.⁶⁸⁸

Travelers often decide to purchase travel services delivered by foreign companies by relying on the assumed reliability and integrity of a well known domestic trade name. Whether the name be "Hertz" or "Avis," it is a common psychological phenomena that consumers will attribute certain positive qualities to well known trade names. Domestic rental car companies use this phenomenon to induce travelers to rent vehicles actually delivered by a foreign company.

In Fogel v. Hertz International Ltd.,⁶⁸⁹ the travelers rented a car from Hertz Corp. after watching TV ads stating that "[b]y day, Hertz is offering low rental rates . . ." and "[r]enting from Hertz also gets you terrific rates at 3,300 fine European hotels." The Hertz ads also offered a Hertz "800" number for details and information. The car was delivered in Rome, Italy. The personnel stationed at the Hertz store were in Hertz uniforms with Hertz logo and the invoice had the Hertz logo with Hertz Italiana in much smaller print. The travelers had an accident in the rental car in Italy. After returning to the U.S., they sued Hertz. The court held that Hertz may be liable for the tortious misconduct of the foreign supplier, Hertz Italiana, under several theories, including apparent authority, estoppel and reliance.⁶⁹⁰

[b] Tour Operators

Tour operators are independent entities that enter into contracts with various suppliers of travel services.⁶⁹¹ A tour operator may contract with Hertz or Avis for the provision of a certain number of rental cars at certain locales for certain periods. The tour operator will combine various services into a unit and market the package to the traveling public. In this situation the tour operator is the principal vis-a-vis the purchase of the package tour featuring rental car transportation.

In Wiener v. British Overseas Airways Corporation,⁶⁹² the air carrier's brochure identified the rental car company as Hertz. However, in other cases involving tour operators and rental cars the actual owner and provided of the vehicle may not be identified. In Casey v. Sanborn's Inc. of Texas,⁶⁹³ a local travel agent organized a package tour of Mexico in cooperation with a Mexican supplier of rental car services. In advertising the package tour the travel agent failed to mention the identity of the Mexican entity delivering the services. And in fact the travel agent stated explicitly that the entire package tour had been organized and would be delivered by its employees or agents.

[c] Ride Sharing Companies Uber and Lyft

The disruptive travel revolution started by Airbnb,⁶⁹⁴ Uber, Lyft and other travel sharing companies is well under way. Some countries have welcomed these companies as new sources of economic growth and tax revenues,⁶⁹⁵ while others have not. Uber has grown rapidly⁶⁹⁶ (as have its domestic (Lyft, Inc.⁶⁹⁷ ) and international (Didi Chuxing⁶⁹⁸ and Grab) competitors) but has often engaged in problematic behavior in its business practices at home and abroad.

[i] Grayballing: Deceiving Regulators

Uber developed a program known as "grayballing" for the purpose of deceiving regulators. As noted in Isaac, "How Uber Deceives the Authorities Worldwide"⁶⁹⁹ ( http://www.nytimes.com), "Uber has for years engaged in a worldwide program to deceive the authorities in markets where its low-cost ride-hailing service was resisted by law enforcement or, in some instances, had been banned. The program, involving a tool called Grayball, uses data collected from the Uber app and other techniques to identify and circumvent officials who were trying to clamp down on the ride-hailing service. Uber used these methods to evade the authorities in cities like Boston, Paris and Las Vegas, and in countries like Australia, China and South Korea. Grayball was part of a program called VTOS, short for 'violation of terms of service' which Uber created to root out people it thought were using or targeting its service improperly. The program, including Grayball, began as early as 2014 and remains in use, predominantly outside the United States. Grayball was approved by Uber's legal team. Grayball and the VTOS program were described to The New York Times by four current and former Uber employees. . . . Uber's use of Grayball was recorded on video in late 2014. . . . At that time, Uber has just started its ride-hailing service in Portland without seeking permission from the city, which later declared the service illegal. To build a case against the company, officers like (Mr. X and others) posed as riders, opening the Uber app to hail a car and watching miniature vehicles on the screen make their way toward potential fares. But unknown to [Mr. X and others], . . . some of the digital cars they saw in the app did not represent actual vehicles. And the Uber drivers they were able to hail also quickly canceled. That was because Uber had tagged [Mr. X and others]—essentially Grayballing them as city officials—based on data collected from the app and in other ways. The company then served up a fake version of the app, populated with ghost cars, to evade capture. At a time when Uber is already under scrutiny for its boundary-pushing workplace culture, its use of the Grayball tool underscores the lengths to which the company will go to dominate its market. Uber has long flouted laws and regulations to gain an edge against entrenched transportation providers, a modus operandi that has helped propel it into more than 70 countries and to a valuation close to $70 billion."

[ii] Hell Spyware: Fake Riders

In Gonzales v. Uber Technologies, Inc.⁷⁰⁰ "[p]laintiff Michael Gonzales brings this action on his own behalf and as a putative class action for Lyft drivers whose electronic communications and whereabouts were allegedly intercepted, accessed, monitored, and/or transmitted by Defendants Uber Technologies, Inc., Uber USA LLC, and Rais- er-CA (together 'Uber'). . . . Uber offers technology that competes with the Lyft App and operates in the same geographic regions as Lyft. . . . Starting in 2014 or earlier and continuing into 2016, Uber secretly used 'Hell spyware' to access servers and smartphones owned and operated by Plaintiffs, Class Members and Lyft. The 'spyware extracted information from Lyft by posing as Lyft customers in search for rides.' These fake Lyft riders sent forged requests to Lyft's servers. When Lyft's servers received 'a request from a forged rider account they believed that the ride requests were coming from actual Lyft riders, not the Hell spyware.' As a result, Lyft's servers transmitted a response to Uber's fake Lyft requesters containing the IDs, on duty status, pricing and exact locations of nearby Lyft drivers." Plaintiff's Amended Complaint set forth six causes of action to include (1) Federal Wiretap Act as amended by the Electronic Communications Privacy Act (ECPA), (2) the California Invasion of Privacy Act (CIPA), (3) the California Unfair Competition Law (UCL), (4) common law invasion of privacy, (5) the Federal Stored Communications Act (SCA) and (6) the California Computer...