I have a little personal story to share about how government regulations have rescued me from my own lapse into limited-thinker status while vacationing this summer and so was determined to link my story to some silliness put out by the Oklahoma Council of Public Affairs. It didn’t take long to find a post on October 14, 2016, “Free Market Friday: A Simple Truth” by Jonathan Small, President of the OCPA. He relays “According to a study by the Small Business Administration, federal regulations drain from $1.75 trillion to $2.02 trillion from our economy each year.” When I searched for the study here is part of an official statement of clarification about the study that appears on the SBA website, “However, since the latest iteration of the study was released, the findings of the study have been taken out of context and certain theoretical estimates of costs have been presented publicly as verifiable facts.” Say it isn’t so; surely the President of the OCPA wouldn’t take findings of a government study out of context and present them as verifiable facts.
I can’t wait to read the entire report, something I doubt anyone at the OCPA has done, because they would have noticed the part where the authors say, “This report does not address the benefits of regulation, an important challenge that would be a logical next step toward achieving a rational regulatory system.” It’s like if Mr. Small told us that Amazon took $5,000 from him on Cyber Monday—shocking that a big bad corporation would rob an individual of his hard earned cash—leaving out the part about the big screen TV, new computer and other gadgets soon to be delivered to his house. And I bet no sales taxes were collected. After I read the report I’ll have more to say in a later post.
Now for my story of shame and redemption. Over the last 35 years Linda and I have enjoyed many interesting travels to all 50 states and a few foreign countries. Most of our trips involved flying to a destination and then renting a car. Being a good econ, a rational decision-maker, or as my Italian daughter-in-law describes me, a pidocchioso (Italian slang for “stingy or cheapskate”), I always look for a low cost rental. Knowing that the comprehensive and collision coverage through my auto insurance, as well as using a credit card that promised the same, would cover any damage to the rental car, I always decline the “full coverage” they try to frighten you into when picking up your car. Their scare tactics did succeed in making me focus on the part of the routine where you carefully document existing scratches and dents to the vehicle—quite common with the rentals we used.
I’m guessing we have experienced at least 100 rentals over those years, including a couple of broken windows and flat tires, but the only times I paid more than the contract price were once when I returned a car inside the Chicago loop with a mostly empty tank after an out and back day trip to the highpoint of Iowa, then learned the contract estimated gallons used based on miles driven so I bought a couple of tanks at inflated prices, and again when I thought a parking ticket wouldn’t catch up with me in San Diego—lessons learned.
Now for my sad story beginning with our visit to see our son and his sposa in San Diego this past June. We have usually rented a car when in San Diego, both for convenience and to take side trips to near attractions like Julian and Palm Springs during the work, from a variety of discount agencies like Fox, ACE, Payless, etc. This visit the best deal was with Payless which we had used often enough that the agent didn’t even press me when I declined the insurance coverage. This was my first time at the new multi-story shared facility that has replaced the many scattered rental locations near the airport. I checked in on the first floor then went with the paperwork to the third floor to collect our car. The attendant there handed me the key and told me the car’s location. I found the Hyundai Accent, drove to their check-out line for the inspection, and then left. After a nice week with our children just hanging out close to their house we returned the car to catch our flight, replacing all the fuel we used that week on the way for $13.23 at California prices and paying exactly the amount agreed, $142.95, for the week rental.
Mid July I was checking my Discover card activity online; this is a card I have used regularly, most years as my primary card, since 1987. The econ in me likes their business model—easy to claim cash back with no overbearing promotion of confusing points, etc. What I found, in addition to confirming the $142.95 for the rental, were two charges on July 11, more than two weeks after we had left San Diego, by Payless for $55.56 and $472.48. I called Payless for an explanation. The manager informed me that my rental car, on the Friday evening before we left on Sunday, had been identified by FasTrak, California’s equivalent of PikePass, for violating a 75 cents toll outside of San Francisco. I informed them that there must be some obvious mistake because we had driven less than 150 miles total and never left San Diego with the car. I asked for the documentation they had and, remembering their check-out procedure, asked that they review their records to see if they had our vehicle’s paperwork switched with a different Hyundai Accent.
After that unpleasant phone conversation I immediately went online to dispute both transactions. The $55.56 was for their “administrative cost” in handling the notice of the toll violation. The $472.48 was an assessment for miles driven outside the rental area of Southern California. I had not paid attention to that or to the 150 miles per day (1050 total) restrictions because we were not going to drive much and were staying in the city. If the car was driven outside Southern California the contract provided that all miles driven would be assessed at 35 cents per mile. Their version of the final contract showed the car driven 1101 miles, 51 in excess of the allowed miles, and not enough to support $472.48 at 35 cents per mile. They never explained how the amount was calculated or why I wasn’t charged for the 51 excess miles when I returned the car.
Me and the car at the base of Mount Soledad
The disputes I filed with Discover were pursuant to the Fair Credit Billing Act and attendant regulations of the Federal Trade Commission which is responsible for its enforcement. Upon filing the disputes, the two charges were immediately credited back to my account pending investigation of the matter. I submitted what documents I could find: the gas purchase receipt and a Friday evening restaurant meal signed receipt, both with my Discover card, the photo above of our car which was blue contrary to the contract which said gray, and my Friday golf green fee receipt; and offered eye witness testimony from the four of us that the car never left San Diego.
The Discover representatives said none of that was relevant; all they could consider was the contract with my signature and the same tag number as the car that violated the toll. But, I argued, if the problem began because Payless gave me the keys to the wrong Hyundai Accent there is no way I can prove otherwise if all you consider is the contract that identifies the wrong car. My lawyer brain spun several times over the realization that eyewitness testimony has been accepted for over two hundred years in this country to send people to prison and their deaths, too many times in error, but Discover would not consider it concerning a $525 billing dispute.
The two charges were then re-posted to my account and I was left to consider my options. One was to sue Payless but the venue would be San Diego County and, even though my son is a lawyer, the expense of travel, cost of litigation and time involved are all reasons not to do that and reasons why the Fair Credit Billing Act was enacted to regulate resolution of these kinds of disputes where the consumer otherwise has little practical recourse. Another was to let Discover try to collect from me, an option that would probably work for someone like me who could withstand the little damage it would do to my credit rating because I have no need to borrow money and already have other credit cards to use for convenience. I chose the latter but also decided to avail myself of one more regulatory option—the Consumer Financial Protection Bureau that is one legacy of the Great Recession.
I went on the CFPB website and filed a complaint against Discover for failing to conduct a “reasonable investigation” concerning my dispute with Payless as required by the Fair Credit Billing Act. That resulted in both charges being reversed again pending investigation of my CFPB complaint by Discover’s “executive offices” which also gave me a single point of contact with Discover. I don’t know if this new investigation would have yielded a different result because at this same time something completely different happened—I got notice from FasTrak that the 75 cents was still due.
I had wrongly assumed that part of the $55.56 was 75 cents that Payless paid to FasTrak to clear the toll violation. While pondering my response to FasTrak, I noticed something huge—the car tag on the Payless contract and FasTrak notice is 7E JE933, but the photo image used by FasTrak shows 7F JE933. I filed an online dispute with FasTrak about that discrepancy (when I pointed this out to Discover they said the photo was not clear) and about two weeks later FasTrak expunged the violation. I provided copies of the expunging email to both Discover and Payless because this unpaid toll was their “proof” the car I rented from Payless was driven outside of the permitted area. I heard nothing from Payless but, about four and a half months after this all began, received notification from Discover that both charges were removed.
Without the FCBA and the CFPB I would probably be waiting for Discover to sue me or, a choice most consumers would not have, using my parental influence to have my son sue Payless in San Diego. But what about the huge cost to our economy that worries Mr. Small and the OCPA? The regulations are a burden or cost to Discover. Revenue to pay that burden comes from merchants, like Payless, who give Discover a percentage of the transactions it processes. Standard business practice among rental car companies encourages customers to use a credit card rather than cash or debit card for the simple reason that it offers easy protection, up to the customer’s credit limit, for damage to the rental car. Seems one could almost argue that the regulatory environment works to the advantage of the rental companies, as well as consumers, by providing each with protections around a transaction that is fraught with risk.
It’s like Amazon taking that money from Mr. Small on Cyber Monday—he’s not complaining because he got value in exchange. Maybe Discover would like to do away with the FCBA and the CFPB, but Discover passes the regulatory cost on to Payless that in turn passes it on to its customers who in turn should be damn glad to have the protections that facilitate commerce throughout our country which benefits Discover and Payless as well. And when you rent a car confirm the license plate because it could be different than what is on your contract.
Lunch is on me if you are the first to ID the location of the top photo. In honor of Jonathan Small and the OCPA a clue is the word Liberty.