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Anyone who has tried to rent a car lately has probably noticed that the business seems to be stuck in another era. Between poor communication about pick up and drop off times, long wait times at rental kiosks, and hidden fees and limited availability, even when a car has been booked well in advance, it’s no wonder customers are unhappy. In fact, they’re very unhappy. “Rental car companies have been facing significant challenges, both in terms of vehicle supply and staffing — and a combination of rising costs and long lines at the airport is having a negative effect on customer satisfaction,” J.D. Power Travel Intelligence Lead Michael Taylor said in a recent company announcement about customer satisfaction. Now one of the biggest players in the space, Avis Budget Group Inc., will have to pay $19 million to resolve a class-action lawsuit alleging its subsidiary Payless Car Rental Inc. improperly charged renters for certain ancillary services, namely the Gas Service Option (GSO) and Roadside Protection (RSP), from Jan. 1, 2016, to Nov. 25, 2023, as reported by Claim Depot. The Avis-Payless lawsuit explained Under the settlement, consumers who rented from Payless in the U.S. and paid one or both of those charges may receive up to $20 per rental for GSO fees and $12 per rental for RSP fees, subject to pro-rata adjustment. The case, Bacon et al. v. Avis Budget Group, Inc. et al., Case No. 2:16-CV-05939-MCA-KM (D.N.J.), was filed in September 2016 and reached preliminary settlement this year, according to Class Action. The lawsuit alleged that Payless routinely added GSO or RSP charges even when customers declined them, or without clear disclosure, and kept those funds — conduct plaintiffs said violated the New Jersey Consumer Fraud Act and other state statutes. Payless, acquired by Avis Budget in 2013, is positioned as a “deep-value” rental brand and has publicly acknowledged higher penetration of ancillary products compared to other brands. The settlement documents do not require an admission of wrongdoing by the company. Avis-Payless settlement details Settlement fund: $19,000,000 Source: Claim Depot Class period: Jan. 1 2016 – Nov. 25 2023 Source: Top Class Actions Maximum per-rental payout: Up to $20 (GSO) / $12 (RSP) Source: Claim Depot Case number: 2:16-CV-05939-MCA-KM (D.N.J.) Who is eligible for the car rental settlement? Eligibility: U.S. or Canadian residents who rented a vehicle from Payless in the United States between Jan. 1, 2016, and Nov. 25, 2023, and paid a GSO and/or RSP fee. Source: Claim Depot Payment terms: Up to $20 per rental for GSO, up to $12 per rental for RSP, before proration; 48% of the net fund is earmarked for GSO reimbursements and 52% for RSP. Source: Claim Depot Mechanics: No claim form required for most class members — the settlement administrator will issue payments automatically unless the class member opts out or chooses a digital payment method. The payment-election/opt-out deadline is November 10, 2025; the fairness hearing is set for December 2, 2025. Source: Top Class Actions Reform commitments: According to the notice, Payless has agreed to update its sales process for add-on and ancillary products, including requiring affirmative consent before charging customers — an operational change with compliance implications. Source: Class Action What the Avis-Payless settlement means for the car rental market Ancillary products (fuel options, roadside plans, damage waivers, etc.) are a key profit driver for rental companies, especially as base rental day-rates come under pressure. The settlement highlights the risk of revenue-growth strategies that rely heavily on add-ons without clear disclosure or opt-in consent. More on retail and bankruptcy: Walmart store closing, auctioning off laptops and flat screen TVs Home Depot CEO soundWalmart store closing, auctioning off laptops and flat screen TVs – TheStreets the alarm on a growing problem Famous restaurant files for Chapter 11 bankruptcy “Car rental companies are quietly raising revenue through add-on charges, and recent litigation shows just how costly it can be to consumers,” wrote consumer advocate Christopher Elliott on Elliott Confidential. This specific settlement does not explicitly discuss earnings per share or capital impact for Avis Budget. And while the $19 million cost is modest relative to the company’s scale, the operational changes and potential reputational damage warrant attention. What investors need to know about the Avis class action lawsuit For investors in Avis Budget Group, the settlement amount is immaterial on its own (given the company’s revenue base). However, monitoring how the company adapts its ancillary revenue model could matter for margin trends. If add-on uptake is curtailed by stricter consumer consent rules or heightened regulatory scrutiny, rental margin expansion from ancillaries could slow. Additionally, the settlement may encourage similar suits against other rental brands, increasing sector legal and compliance risk.
