Fast Fees: An Analysis of E-Z Pass Fees at Rental Car Companies in NYC

EXECUTIVE SUMMARY

Over the past two decades, one of the key policies that has helped to reduce congestion and its effects in New York City and beyond has been the introduction of electronic tolling, or E-Z Pass, at the region’s bridges, tunnels, and turnpikes. Studies have shown how increased use of e-tolling has greatly reduced congestion and emissions while improving public health.

This is an important development, given that congestion is estimated to cost the New York City metro area 628 million man hours, 297 million gallons of gas, and over $14.7 billion in lost productivity and other costs in 2015 alone.

However, despite the strong demand for E-Z Pass and its profound effect on congestion and public health, individuals who rent cars in New York City are saddled with significant costs when choosing to use E-Z Pass. This leaves consumers with two unenviable options:

1. Enjoy the convenience of E-Z Pass for a cost far exceeding the actual tolls; or
2. Choose to forego E-Z Pass, clogging our roadways in the cash lane and contributing to pollution that has led some New York City neighborhoods to have the highest asthma rates in the nation.1

This report, by Comptroller Scott M. Stringer, analyzes E-Z Pass fees charged by the 10 rental car companies operating at LaGuardia and John F. Kennedy Airports, as well as a new entry to the New York City rental car market, Silvercar. We found the following:

• 10 of the 11 companies charge a daily “convenience fee” ranging from $3.95 to $21.49 to use E-Z Pass. 2 This fee is assessed each day the vehicle is rented, even if the E-Z Pass transponder is used just once in the course of a weeklong rental.
• 8 of the 11 companies charge tolls to customers at the higher cash rate, despite the fact that E-Z Pass, which provides a discount on tolls, is used.
• 5 of the 11 companies saddle consumers with significant penalties—up to $25 per toll— for using E-Z Pass without signing up for their costly programs.
• Silvercar provides an E-Z Pass transponder at no cost, though consumers still have to pay for the cost of tolls.
• There is no rental car industry standard with respect to e-tolling and some policies are not clearly and conspicuously disclosed to consumers until the point of sale. In certain cases, phone calls to customer service representatives yielded conflicting answers, while in other cases, fees that varied by location/duration of rental were not disclosed online.

The net effect of these charges, as detailed below, is that New York City rental car users can pay double or even triple the cost of tolls when using a rental car’s E-Z Pass. For example:

• A three-day trip from Brooklyn to Schenectady, New York costs a regular E-Z Pass user $22.77 in tolls, while an Avis or Budget customer would pay $41.40 in fees/tolls using the rental car’s E-Z Pass transponder—an 82 percent premium.
• Likewise, a four-day trip from New York City to Washington D.C. costs a regular E-Z Pass user $48.45 in tolls, while a Dollar or Thrifty rent-a-car customer would pay $85.96 in fees using the rental car’s E-Z Pass transponder—a 77 percent premium.

In addition, penalties are often extremely high if consumers use the rental car’s E-Z Pass device without signing up for an e-toll plan. For instance, customers at Alamo/Enterprise/National who used E-Z Pass on the George Washington Bridge without signing up for the “TollPass” program would pay $39 (the $14 cash toll plus a $25 penalty)—more than triple the cost of the E-Z Pass toll ($11.75).

These exorbitant fees are a problem across the country.3 However, they are particularly concerning in New York City, where over 1.7 million households (55 percent of the total) do not own a car.4

As a result, many New Yorkers rely on rental car companies to take trips out of town, go on grocery runs, or pick up a new sofa, especially in neighborhoods where public transportation options are either unavailable or inconvenient. Millions more rely on rental car companies when they visit New York City and the surrounding area.5

Given the clear public interest in encouraging electronic tolling, the State of New York and other tolling authorities within the Tri-State region (including MTA and the Port Authority of New York and New Jersey) should work with rental car companies to reduce excessive E-Z Pass fees and provide consumers with a fair, affordable way to use electronic tolls when they rent a car.

In lieu of such action, the State of New York should introduce legislation to:

• Mandate that any tolls billed to the renter are billed at the E-Z pass rate;
• Cap the “convenience” fees that rental car companies in the Empire State are permitted to charge; and
• Require rental car companies to state—prior to the point of sale and in plain language— what their e-toll fees/penalties are and whether or not the e-toll program is optional.