ALBANY, N.Y. -- Enterprise Rent-A-Car has agreed to refund approximately $2 million to consumers who purchased supplementary liability protection (SLP) in the state of New York during a five-month period in 2001.
In addition, Enterprise will pay $200,000 in costs to the state. The company's consent to a court order for refunds follows three years of litigation with the New York attorney general's office. However, the company continues to deny that it ever violated New York state law or deceived customers.
In a lawsuit originally filed in May 2000, Attorney General Eliot Spitzer alleged that Enterprise had failed to provide its customers with the minimum liability coverage required by state law. The minimum amount of personal liabiity coverage is $25,000 to $50,000 for bodily injury, $50,000 to $100,000 for death, and $10,000 for property damage.
Spitzer's lawsuit argued that instead of providing the state-mandated insurance coverage, Enterprise would sue its renters to recover any liability incurred by the company as the vehicle owner.
Further, Spitzer alleged, by informing customers that the company provided no insurance, Enterprise prompted more customers to purchase supplemental liability protection at an extra cost of $6.95 to $7.95 per day. The SLP provides consumers with $1 million in extra coverage.
"This litigation resulted in a significant change in the practices of this rental car company that benefits consumers," Spitzer said. "The court order compensates consumers who were deceived into purchasing liability insurance through Enterprise even after the state's highest court held that rental car companies are required by law to provide coverage for their renters."
However, Enterprise denies any wrongdoing. The dispute, Enterprise said, stems from an April 2001 change in state law. During the months following the change, Enterprise continued to use its pre-existing rental contracts but added an addendum that provided the coverage information required under the newly changed law.
"We still maintain that our approach to implementing the required contract change was timely and responsible," said Andy Church, Enterprise's New York group vice president and general manager. "But we understand and accept the state's viewpoint and have agreed to refund a portion of the SLP cost to any customer who purchased SLP from us in New York during that five-month period."
Enterprise Rent-A-Car estimated that approximately 100,000 customers purchased SLP in New York during the period in question, April through August of 2001. The refund will average $20 per customer.
"We made an administrative decision to implement our contract addendum on a timely basis," Church said. "The attorney general took exception to our decision, and we felt the refund was a pragmatic and cost-effective course of action for us. We do not, however, agree with the attorney general nor are we admitting to any wrongdoing."
Enterprise said it expects to mail refunds within 60 days from the date of the settlement agreement, dated July 17.