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Catch of the Week: Rental Car Add-ons

Posted  June 11, 2021

If you travel often, you probably hate the rote sales pitch of a la carte add-ons at the car rental counter.  Perhaps you check in online not just to save time but to avoid the whole spiel.

Wouldn’t you like the peace of mind of adding on the collision damage waiver?  The loss damage waiver?  Supplemental liability coverage, also known as additional liability insurance?  Personal accident insurance?  Personal effects coverage?

The U.S. government rents a lot of cars, and it wisely bypassed the risk of its employees snapping up these additional coverages by making centralized decisions and baking them into its contracts.  It seems this strategy may not have deterred the persistent salespeople, however, because this week Avis Budget agreed to pay $10.1 million to resolve allegations that it had violated those contracts by making false claims for payment for the whole variety of add-ons listed above.  That’s why it is our Catch of the Week.

The Allegations

According to the contentions in the settlement agreement, the U.S. government’s deal with Avis Budget Group, Inc., prohibited the company’s Avis and Budget brands from charging government renters any of the add-ons above.  (Indeed, your author recalls travel trainings at DOJ on not paying these fees.)  The contract also allegedly already included collision/loss damage waivers and supplemental liability coverage, so any charges for those add-ons would be duplicative of fees baked into the overall arrangement.

Nonetheless, after an investigation conducted by DCIS and the Defense Travel Management Office, the U.S. alleged that Avis Budget made false claims for payment to the United States for these various add-ons.  These charges were all prohibited by the contract, and some were double-dipping.  Avis Budget resolved the claims without admitting liability.

Government Contracting Fraud

These allegations are a classic example of government contracting fraud, precisely what the False Claims Act was designed to combat.  The law was originally created to stem a tide of contractors abusing the government’s trust and passing off substandard goods.  Although there were no allegations of Avis Budget pretending a soapbox derby car was a Chevy Malibu, allegedly requesting payment for fees that were duplicative or prohibited by the contract is simply a different flavor of fraud.

With this settlement, Avis Budget joins a string of other contractors who have felt the bite of the False Claims Act when they tried to get away with something other than what they promised the government.  In 2020, Constantine Cannon represented OnTheGo Wireless, LLC, along with 30 California political subdivisions in a series of False Claims Act suits that culminated in the nation’s major wireless carriers paying $138.7 million to resolve allegations of charging more than their contracts had promised.  Although the claimed fraud there involved an alleged failure to meet obligations to charge the lowest cost available, the similarity is clear.

Charge the government for more than you are permitted, and you may face serious liability.

If you would like more information about government contracting fraud or would like to speak to a member of the Constantine Cannon whistleblower lawyer team, please contact us for a confidential consultation.

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Tagged in: Catch of the Week, FCA Federal, Government Procurement Fraud,