Class Action Lawsuit Takes Issue with Hertz Currency Conversion Fees

According to a class action lawsuit filed Tuesday in New Jersey federal court, The Hertz Corp. fails to disclose currency conversion fees to customers who rent vehicles abroad until they receive their final bill for the car rental.

“Hertz quotes these customers rates for vehicle rentals that do not include the fee, charges the fee directly to the customer’s credit card, and then falsely claims that the customer specifically chose to be overcharged in this manner,” the class action lawsuit says.

Daniel Margulis filed the class action lawsuit after he noticed the currency conversion fees after renting cars from Hertz while traveling in Italy and England in 2013. He claims that the car rental company automatically converted the bills into U.S. dollars at a rate approximately 4.5 percent higher than the exchange rate between U.S. and European currency.

Margulis says that Hertz employees refused to convert his bills to euros and pounds, claiming that it was the company’s policy to charge U.S. credit cards in dollars.

According to the class action lawsuit, credit card issuers automatically convert charges from credit card transactions in a foreign country to the cardholder’s currency. These currency conversion fees typically amount to no more than 3 percent, although some issuers offer cards with “no foreign transaction fee,” which many credit card users apply for in order to avoid the currency conversion fees.

However, Margulis says that some merchants engage in “dynamic currency conversion,” an allegedly predatory scheme that is widely recognized as deceptive and harmful to consumers. With this scheme, a customer who pays for a transaction with a foreign credit card is offered the option of having it billed in local currency or in U.S. dollars. However, Margulis alleges that merchants typically fail to disclose that customers who choose U.S. dollars will have their currency conversion “carried out at a far higher rate than any credit card company would charge.”

While most merchants do give customers a choice about which currency to use when billing the credit card, Margulis alleges that Hertz “unilaterally converts transactions into a cardholder’s own currency, charging a 4.5 percent fee for a service that many credit card issuers offer for free.” Further, he alleges that Hertz falsely claims that customers are given a choice about which currency to use during credit card transactions.

The class action lawsuit alleges breach of contract, unjust enrichment and consumer protection claims. Margulis has also accused Hertz of violating the New Jersey Consumer Fraud Act by hiding the currency conversion fees, effectively misrepresenting the actual cost of its car rentals.

Potential Class Members of the Hertz currency conversion fee lawsuit include anyone who rented vehicles from Hertz in a foreign country and had Hertz convert some or all of the charges to U.S. currency after Feb. 12, 2008.

Margulis is represented by James E. Cecchi of Carella Byrne Cecchi Olstein Brody & Angello PC.

The Hertz Currency Conversion Fee Class Action Lawsuit is Margulis v. The Hertz Corp., Case No. 2:33-av-00001, in the U.S. District Court for the District of New Jersey.