Injunction Against Rental Car Companies for Unfair Competition
In People v. Dollar Rent-A-Car Systems, Inc, 211 Cal. App. 3d 119, the trial court issued a civil judgment and permanent injunction against three rental car companies for, inter alia, unfair competition under the Unfair Competition Law (UCL).
The agencies had sold a collision damage waiver (CDW) to numerous customers on the basis of several misrepresentations. Also, when making repairs to cars damaged during a rental, the agencies often charged customers a marked up price.
The body shops that made the repairs charged the defendants a discounted "wholesale" price due to the high volume; the defendants were also able to purchase replacement parts at more than a 30 percent discount. (Id. at p. 125.)
Instead of passing these savings along to their customers, the defendants "prepared new repair invoices to reflect a higher 'retail cost' rather than these actual costs for repair.
They never informed the customers of this practice, nor did defendants supply customers with an itemized list of the inflated charges.
This practice left customers with the erroneous impression that defendants are passing on only the actual repair charges." (Ibid.)
One of the form rental agreements Dollar utilized "did not contain any notice that the customers would be billed at the inflated retail rate even though this was defendants' practice at the time. "(People v. Dollar Rent-A-Car Systems, Inc. (1989), 211 Cal. App. 3d at p. 129.)
Accordingly, upholding the judgment of the trial court that the defendants' conduct constituted an unfair business practice under the UCL, the Court of Appeal found that "the language in the subsequent contracts that customers were liable for the 'retail value' of all damages does not resolve the ambiguity.
The absence of any notice that the customers are liable for damages or loss of use beyond their actual cost is misleading and constitutes an unfair business practice." (Id. at pp. 129-130.)