Avis, Payless Hit with $19M Settlement Over Hidden Fees NOW!

UPDATE: Avis Budget Group Inc. and its subsidiary Payless Car Rental Inc. are facing a $19 million settlement over a class-action lawsuit involving hidden fees. The lawsuit claims that between January 1, 2016 and November 25, 2023, Payless improperly charged customers for optional services without clear consent.

The settlement comes amid growing dissatisfaction among rental car customers, who have expressed frustration over hidden fees, long wait times, and poor communication. “Rental car companies have been facing significant challenges, and a combination of rising costs and long lines at the airport is having a negative effect on customer satisfaction,” stated Michael Taylor, J.D. Power Travel Intelligence Lead.

The lawsuit, titled Bacon et al. v. Avis Budget Group, Inc. et al., was filed in September 2016 and alleges that Payless routinely charged customers for the Gas Service Option (GSO) and Roadside Protection (RSP) even when these services were declined, violating the New Jersey Consumer Fraud Act. Under the settlement, affected consumers may receive up to $20 per rental for GSO fees and $12 for RSP fees.

Who is eligible? U.S. and Canadian residents who rented from Payless in the U.S. during the specified period and paid these fees are eligible for reimbursement. Payments will be issued automatically unless individuals opt out. The deadline for opting out or choosing a digital payment method is November 10, 2025, with a fairness hearing set for December 2, 2025.

Importantly, while Payless has agreed to update its sales processes to require affirmative consent before charging for add-ons, the settlement does not require an admission of wrongdoing. This operational change raises questions about how rental companies will adapt their revenue models moving forward.

As ancillary products like fuel options and roadside plans are crucial profit drivers for rental companies, the settlement underscores the risks of relying on add-ons without transparent disclosure. “Car rental companies are quietly raising revenue through add-on charges, and recent litigation shows just how costly it can be to consumers,” noted Christopher Elliott, a consumer advocate.

For Avis Budget Group investors, although the $19 million settlement may seem minor relative to the company’s overall revenue, the implications for operational changes and potential reputational damage are significant. The case may inspire similar lawsuits across the industry, increasing compliance risks and potentially slowing margin growth.

This developing situation highlights the urgent need for reform in the car rental industry. As customers demand better transparency and service, rental companies must adapt to maintain their reputations and financial health. Stay tuned for updates as this story unfolds.