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New York reaches agreement with Zipcar for charging 5,000 consumers damage fees

Staff Writer |
Attorney General Eric T. Schneiderman's office has reached a settlement with the car company Zipcar for routinely charging New York consumers damage fees for rental vehicles in violation of New York law.

The law requires that consumers have an opportunity to dispute damage fees before they are assessed, but an investigation by the Attorney General’s Office found that, in some cases, Zipcar charged consumers damage fees before notifying consumers of suspected damage.

Zipcar’s membership contracts provide that consumers are liable for any damage to the rental vehicle that occurs while the car is in their possession – whether they cause the damage or not.

Zipcar failed to provide consumers with notice of the damage and the amount of liability, and an opportunity to inspect the damaged vehicle before charging for damage to the vehicle, as required by New York law.

Instead, when damage to a vehicle occurred, Zipcar conducted an investigation to determine which Zipcar member had the car reserved at the time the damage occurred.

It then notified the consumer it deemed responsible for the damage, and charged the consumer’s account for the damage – up to a limit of $1,000 – before the consumer had the opportunity to dispute the charge. Under this policy, Zipcar charged 5,000 New York consumers for damage to its vehicles from 2011 through 2015.

In one instance, Zipcar charged a consumer $750 for scratches on a car before it even notified the consumer of the damage. When the consumer complained that the damage had not occurred at the time of his reservation, Zipcar reviewed the file but refused to refund the money it had charged.

Under the settlement with the Attorney General, Zipcar has agreed to refund any damage charges that were assessed against consumers who contested their responsibility for the vehicle damage. Zipcar has also agreed to pay $35,000 in fees and costs to the Attorney General’s office.

In addition, Zipcar has agreed to comply with New York law, and not to charge consumers for damage to its vehicles unless they affirmatively agree that they are liable or Zipcar obtains a legal determination of liability.

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