Avis Budget Group to Pay $19M Over Hidden Fees Scandal

BREAKING: Avis Budget Group Inc. faces a major financial setback, agreeing to pay $19 million to settle a class-action lawsuit involving hidden fees charged by its subsidiary, Payless Car Rental Inc. This urgent development reveals systemic issues affecting renters from January 1, 2016, to November 25, 2023, drawing attention to practices that have frustrated countless customers.

The lawsuit, filed in September 2016, alleged that Payless routinely charged renters for ancillary services, specifically the Gas Service Option (GSO) and Roadside Protection (RSP), even when customers declined these add-ons or were not clearly informed about them. This conduct is viewed as a violation of the New Jersey Consumer Fraud Act and has raised pressing concerns about transparency in the car rental industry.

According to Michael Taylor, Lead of Travel Intelligence at J.D. Power, “Rental car companies have been facing significant challenges,” with rising costs and poor customer service contributing to dissatisfaction. The settlement highlights the urgent need for reform in car rental practices as customer frustration continues to grow.

Under the settlement terms, eligible consumers who rented from Payless in the U.S. during the specified timeframe may receive up to $20 per rental for GSO fees and $12 for RSP fees. This payout is subject to pro-rata adjustments based on the total claims received. Notably, no claim form is required for most class members; payments will be issued automatically unless individuals opt out.

The case, titled Bacon et al. v. Avis Budget Group, Inc. et al. (Case No. 2:16-CV-05939-MCA-KM), underscores the operational shifts that Payless must now implement. The company has committed to updating its sales processes, requiring affirmative consent from customers before charging for add-ons. This change is expected to have significant compliance implications and may impact the overall profitability of ancillary services that are crucial for rental companies.

As car rental firms increasingly rely on additional fees for revenue, the implications of this settlement extend beyond Avis. Consumer advocate Christopher Elliott warns that “recent litigation shows just how costly it can be to consumers.” The risk of similar lawsuits looms large for other rental brands, potentially increasing legal and compliance risks across the sector.

The settlement also raises questions about investor confidence in Avis Budget Group. While the $19 million payout may seem minor relative to the company’s overall revenue, the operational changes and potential reputational damage warrant close monitoring. Stricter consumer consent rules could slow growth in rental margins from ancillary products, impacting overall financial performance.

Moving forward, the industry is at a critical juncture. The fairness hearing for this settlement is scheduled for December 2, 2025, while the deadline for class members to opt out or choose digital payment methods is November 10, 2025.

As this story develops, it is clear that the car rental market must adapt to changing consumer expectations and increased scrutiny. The focus on transparency and fair practices is more pressing than ever, as customers demand clarity and fairness in their rental experiences.

Stay tuned for more updates on this evolving story as the implications continue to unfold.