Avis and Budget to pay a $3 million penalty to resolve concerns over unattainable prices
OTTAWA, June 2, 2016 /CNW/ - As part of an agreement reached with the Competition Bureau, Aviscar Inc. (Avis) and Budgetcar Inc. / Budgetauto Inc. (Budget) will pay a $3 million administrative monetary penalty for what the Bureau concluded was false or misleading advertising for prices and discounts on car rentals and associated products. They will also be paying $250,000 towards the Bureau's investigative costs and will be required to implement a corporate compliance program.
A Bureau investigation concluded that certain prices and discounts initially advertised by the two companies were not attainable because consumers were charged additional mandatory fees that were only disclosed later when making a reservation. The prices were advertised on Avis and Budget's websites, mobile applications and in emails, as well as in certain newspaper advertisements, television commercial and flyers. The Bureau concluded that the representations were misleading even though an estimate of the fees was disclosed before consumers completed their reservation. The mandatory fees could increase the cost of a car rental by 5% to 20% above the original advertised price, depending on the rental location and vehicle type.
To address the Bureau's concerns, Avis and Budget will not advertise car rentals and associated products at prices that are not attainable due to additional mandatory fees. Furthermore, the companies will revise the description of the additional fees to ensure they do not give the misleading impression that governments and agencies require them.
The consent agreement reached today resolves the Bureau's concerns and sends a clear message to the marketplace that these types of business practices will not be tolerated.
- The Bureau filed an application with the Competition Tribunal in March 2015 seeking to put an end to what it alleged was false or misleading advertising by Avis and Budget. In July of the same year, the two companies proactively and voluntarily made changes to a number of their advertising materials, resolving some of the Bureau's concerns.
- Certain mandatory fees charged by Avis and Budget to consumers were described as taxes and surcharges and were applied systematically when renting a car and other associated products, such as a GPS. The Bureau concluded that Avis and Budget used the additional revenue to recover part of their own cost of doing business.
- This agreement also addresses the concerns raised by the conduct under the new provisions of the Competition Act that came into force when Canada's Anti-Spam Legislation was adopted. As such, the agreement applies to all representations regarding prices and discounts, including those distributed in electronic messages.
- The Bureau will continue to examine similar issues in the car rental market and will take action as necessary.
"Prices advertised to consumers, including on digital platforms, must be accurate. I am confident that the Bureau's investigation and settlement of this case will serve as an important deterrent to false or misleading advertising in the Canadian marketplace. "
Commissioner of Competition
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SOURCE Competition Bureau
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