Prevents rental car companies imposing excessive fees on credit cards before expiration of rental period

Title of bill

An act to amend the general business law, in relation to preventing rental car companies from imposing certain charges on customers' credit cards

Purpose

This bill protects rental car consumers from having charges placed upon their credit cards prior to the agreed expiration date of the rental agreement.

Summary of specific provisions

Section 391-1 of the general business law, as re-designated by chapter 694 of the laws of 1995, is amended by adding a new subdivision 4.

Justification

Consumers who rent automobiles and agree to pay for the rental with a credit card find that the lessor will engage in a practice known as blocking. Blocking is defined as a temporary debit, hold, reserve or withdrawal from a line of credit or an account on deposit at a financial institution.

In other words, a portion of the consumer's credit is set aside by the credit card company at the request of the lessor as a form of security. This amount, known as a block, can be substantial, and this is done without the consumer's knowledge. This obviously limits the credit available to the consumer in a manner that the consumer has not planned on. This can create a very difficult situation, especially since rental cars are most often used when one is away on business or vacation, when one's need for credit is at its greatest. This bill would prohibit this practice by requiring that the amount and duration of the block is disclosed to the consumer.

Prior legislative history

This legislation was previously introduced.

Fiscal implications

None.

Effective date

Immediately.