Discount car rental penalised for advertising unattainable prices
News release
Close to $6M in total penalties for the car rental industry
October 11, 2018 – OTTAWA, ON – Competition Bureau
The Competition Bureau has reached an agreement with a fourth car rental company, Discount Car & Truck Rentals Ltd., to address what the Bureau views as misleading representations. As part of the agreement, Discount will review its practices to ensure they comply with the law, and will pay a $700,000 penalty.
Following an investigation, the Bureau found that Discount advertised rental prices that were unattainable due to mandatory fees added later during the purchasing process. The Bureau also concluded that the company advertised rebates that gave the impression that consumers would get a percentage off of their total bill, but in fact the rebate was not applied to the total amount and the additional mandatory fees still had to be paid in full.
Finally, the Bureau found that some of the fees charged were deceptive because they were described as mandatory taxes or surcharges imposed by various governments. They were actually imposed by the company to recover their own costs.
This is the fourth agreement in a series of Bureau investigations into drip pricing practices by car rental companies. So far, these investigations have led to a total of $5.95 million in administrative monetary penalties. Avis/Budget, Hertz/Dollar Thrifty and Enterprise all reached similar agreements with the Bureau.
Quotes
“A few years ago, car rental companies routinely advertised unattainable prices. The Bureau intervened against Avis and Budget in 2015 and continued pressing forward, demanding change across the industry. As a result, the four major players in Canada’s car rental market have now committed to correcting their marketing practices.”
Matthew Boswell,
Interim Commissioner of Competition
Quick facts
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Drip pricing occurs when companies offer low prices up-front, but additional mandatory fees or charges are added later in the purchasing process and the real price of the product or service to the consumer ends up being much higher.
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Research tells us that drip pricing affects consumers’ purchasing decisions. People are drawn to attractive prices and are then less willing to continue shopping around, even when additional mandatory fees are dripped throughout the purchasing process. As a result, consumers end up paying more.
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The concerning representations were made online, on banners displayed on trucks and vans, as well as in emails and in stores since at least 2009.
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