FTC Staff Comment to the Hon. Thomas F. Allgood Concerning Georgia H.B. 565 to Require Auto Rental Companies to Assume Liability for Vehicle Damage

Room 1000
1718 Peachtree St., NW.
Atlanta, Georgia 30367
(404) 347-4836
UNITED STATES OF AMERICA
FEDERAL TRADE COMMISSION
ATLANTA REGIOKAL OFFICE
V890085
COMMISSION AUTHORIZED
November 	20, 	1989
The 	Honorable 	Thomas 	F. 	Allgood
Majority Leader
Georgia 	State 	Senate
Post 	Office 	Box 	1523
Augusta, 	Georgia 	30904
Dear 	Senator Allgood:
The 	staff 	of 	the 	Federal 	Trade 	Commission 	is 	pleased to 	have
the 	opportunity to 	respond 	to 	your August 	15, 	1989, 	letter
requesting comments 	on 	both Georgia House 	Bill 	565 	("H.B. 	565")
and 	the 	proposed 	substitute 	for 	H.B. 	565 	("the 	substitute
bill,,).l 	We 	understand 	that 	H.B. 	565 	has 	passed 	the 	House 	and
that 	the 	Senate 	will 	be 	considering 	it, 	along 	with 	the 	proposed
substitute, 	during 	the 	next 	legislative 	session. 	Our 	comments
address 	the 	implications 	for 	consumers 	of 	the 	two 	bills. 	We
would 	be 	pleased 	to 	offer 	additional 	assistance 	on 	any 	particular
amendments 	that 	are 	offered.
Both bills 	concern 	the 	costs 	and 	risks 	associated 	with
damage 	to 	a 	rental 	vehicle 	and with 	the 	sale 	of 	so-called
collision damage 	waivers 	("CDW"). 	Under 	these 	arrangements,
vehicle 	rental 	companies, 	for 	a 	fee, 	agree 	to 	hold 	the 	consumer
harmless 	for 	damage 	to 	a 	rental 	vehicle. 	H.B. 	565 	would 	require
the 	rental 	companies 	to 	assume 	the 	liability 	for 	damage 	to 	the
vehicle 	in most 	situations, 	thus 	effectively mandating 	the
purchase 	ofCDW. 	It 	would 	also 	prohibit 	the 	companies 	from
requiring renters 	to 	put 	up 	any 	security or 	deposit 	for 	those
damages 	for 	which 	the 	renter 	remains 	responsible. 	We 	are
concerned that 	these 	aspects 	of 	the 	bill 	might 	result 	in
increased costs 	to 	consumers 	who 	rent 	vehicles 	without 	providing
significant benefits 	to 	the 	majority of 	renters 	or 	to 	the 	public
at 	large.
The 	substitute 	bill 	would prohibit 	the 	rental 	companies 	from
offering a 	CDW unless 	a 	required 	disclosure 	-- 	the 	main provision
of 	which 	advises 	the 	consumer 	to 	determine 	whether 	his 	personal
automobile 	insurance 	policy affords 	him coverage 	for 	damage 	to 	a
rental 	vehicle 	-- 	appears 	on 	the 	face 	of 	the 	rental 	agreement.
These 	comments 	are 	the 	views 	of 	the 	staff 	of 	the 	Atlanta
Regional 	Office 	and 	Bureau 	of 	Consumer 	Protection of 	the 	Federal
Trade 	Commission. 	They 	are 	not 	necessarily 	the 	views 	of 	the
Commission or 	any 	individual 	Commissioner.

The 	Honorable 	Thomas 	F. 	Allgood 	-- 	Page 	2
If 	there 	is 	a 	problem with the 	sale 	of 	COW, 	we 	believe 	that, 	in
general, 	the 	disclosure 	approach 	taken 	by 	the 	substitute 	bill 	is
more 	likely 	to 	serve 	the 	interests 	of 	consumers 	than 	that 	taken
by H.B. 	565.
The 	Federal 	Trade 	Commission 	is 	charged with promoting
competition 	and protecting consumers 	from 	unfair 	and deceptive
commercial 	practices. 2 In 	fulfilling 	this 	mandate, 	the 	staff 	of
the 	Federal 	Trade Commission often 	submits 	comments, 	upon
request, 	to 	federal, 	state, 	and 	local 	governmental 	bodies 	to 	help
them 	assess 	the 	competitive and consumer welfare 	implications 	of
pending 	policy 	issues. 	In enforcing the 	Federal 	Trade 	Commission
Act, 	the 	Commission 	has 	gained considerable 	experience 	in
analyzing 	the 	impact 	of 	various 	private 	and 	governmental
restraints 	on competition and 	the 	costs 	and benefits 	to 	consumers
of 	these 	restraints, 	including matters 	involving the 	car 	rental
industry. 	The 	Commission commented on both the 	Preliminary and
Final 	Guidelines 	prepared by the 	National 	Association of
Attorneys 	General's 	("NAAG") 	Task 	Force 	on Car Rental 	Industry
Advertising 	and 	Practices. 3 In 	1989, 	the 	Commission has 	brought
enforcement 	actions 	against 	two 	car 	rental 	companies, 	Alamo 	and
General, 	for 	failing 	to 	disclose 	certain mandatory charges 	to
consumers 	seeking to 	obtain price 	information. 4 In addition, 	the
Commission 	staff 	has 	sent comments 	to 	executives 	and 	legislators
considering COW 	regulation 	in 	Illinois, 	New 	York, 	New 	Jersey,
2 See 	15 	U.S.C. 	S 	41 	et 	seg.
3 See, 	Letter 	from 	the 	Federal 	Trade 	Commission
(Commissioner Strenio 	not 	joining) 	to 	Art 	Weiss, 	Deputy Attorney
General, 	Kansas, 	(November 	4, 	1988) 	commenting on 	National
Association of 	Attorneys 	General, 	Draft 	Guidelines 	of 	the 	Task
Force 	on 	Car 	Rental 	Industry, 	Advertising 	and 	Practices 	(1988);
and 	Letter 	from 	the 	Federal 	Trade 	Commission 	(Commissioner
Strenio 	not 	joining) 	to 	Robert 	T. 	Stephan, 	Attorney General,
Kansas 	(February 	24, 	1989), 	commenting 	on 	National 	Association 	of
Attorneys 	General, 	Final 	Guidelines 	of 	the 	Task Force on Car
Rental 	Industry Advertising 	and 	Practices 	(1988) 	("NAAG
Guidelines.") 	The 	allocation of 	liability 	portion of 	H.B. 	565 	is
very 	similar 	to 	portions 	of 	these 	NAAG Guidelines.
4 	In 	re 	Alamo 	Rent-A-Car, 	Antitrust 	& Trade Reg. 	Rep. 	(BNA)
No. 	1397, 	at 	13 	(January 	5, 	1989); 	In 	re 	General 	Rent-A-Car
Systems, 	Antitrust 	& Trade Reg. 	Rep. 	(BNA) 	No. 	1407, 	at 	420
(March 	16, 	1989).

The 	Honorable 	Thomas 	F. 	Allgood 	-- 	Page 	3
Texas, 	Washington 	and 	Florida.~ 	Finally, 	in 	1989, 	the 	Commission
published a 	brochure 	entitled 	"Car Rental 	Guide," 	to 	help
consumers 	evaluate 	rental 	car 	policies.
H.B. 	565
Depending on 	the 	terms 	of 	the 	rental 	agreement, 	consumers
who 	currently rent vehicles 	in Georgia may be held 	responsible
for 	all 	or 	a 	substantial 	part 	of 	any damage 	to 	that 	vehicle.
However, 	for 	a 	separate 	fee, 	the 	consumer ordinarily 	has 	the
option of 	purchasing a 	CDW under 	which the 	rental 	company 	agrees
to 	assume 	some 	or 	all 	of 	the 	risk 	of 	damage 	to 	the 	vehicle.
Whether 	it 	is 	in 	a 	consumer's 	interest 	to 	purchase 	a 	CDW
depends 	on 	a 	number of 	factors. 	These 	include 	the 	circumstances
under which 	he 	is 	responsible 	for 	damage 	to 	the 	rental 	vehicle,
his 	potential 	liability 	if 	he 	elects 	not 	to 	purchase 	the 	CDW, 	and
the 	amount 	of 	comparable 	coverage 	he 	may 	already 	have 	under 	his
personal 	automobile 	insurance 	policy, 	by 	paying with 	a 	particular
credit 	card, 	or by belonging 	to 	a 	motor or 	travel 	club 	or 	some
business 	or 	professional 	organization. 	It may be 	that 	consumers
confronted with a 	choice 	about 	CDW 	lack 	sufficient 	information
about 	the 	risks 	and 	alternatives 	involved. 	If 	the Georgia
legislature 	finds 	that 	a 	significant 	information 	problem 	exists,
then 	government 	regulation 	designed 	to 	provide 	adequate
information to 	consumers 	may 	be 	appropriate.
Lessor 	Liability
H.B. 	565 	requires 	rental 	companies, 	as 	an 	integral 	(and
therefore 	not 	separately billable) 	part 	of 	every 	rental
transaction, 	to 	assume 	all 	responsibility 	for 	damage 	to 	the
5 	See, 	Letter 	from 	C. 	Steven Baker, 	Director, 	Chicago
Regional 	Office, 	to 	the 	Honorable 	James 	R. 	Thompson, 	Governor 	of
Illinois 	(Dec. 	22, 	1988); 	Letters 	from Michael 	J. 	Bloom,
Director, 	New York Regional 	Office, 	to 	the Honorable 	Peter M.
Sullivan, 	New York Assembly 	(March 	16, 	1989) 	and 	the 	Honorable
Wayne R. 	Bryant, 	The Assembly, 	State of 	New 	Jersey 	(March 	16,
1989); 	Letter 	from 	Thomas 	B. 	Carter, 	Director, 	Dallas 	Regional
Office, 	to 	the 	Honorable 	Gwyn 	Shea, 	Texas 	State House 	of
Representatives 	(March 	27, 	1989); 	Letter 	from 	Janet 	M. 	Grady,
Director, 	San Francisco 	Regional 	Office, 	to 	the 	Honorable 	Peter
Von 	Reichbauer, 	Washington 	State 	Senate 	(March 	27, 	1989); 	and
Letter 	from 	Paul 	K. 	Davis, 	Director, 	Atlanta 	Regional 	Office, 	to
the 	Honorable 	Elaine Gordon, 	Florida House of 	Representatives
(April 	17, 	1989).

6
The 	Honorable 	Thomas 	F. 	Allgood 	-- 	Page 	4
vehicle 	in most 	situations. 6 This 	requirement, 	which effectively
would mandate 	that 	consumers 	purchase COW 	coverage with every
rental 	transaction, 	would 	restrict 	consumer 	choice 	among COW-like
coverages. 7 As 	a 	result, 	some 	consumers 	will 	incur 	greater
costs, 	primarily 	in 	the 	form 	of 	higher 	base 	prices, 	than they
otherwise would 	to 	cover 	the 	accident 	losses 	statutorily shifted
The 	Bill 	provides 	that 	an 	"authorized driver" 	may be
held 	liable 	in 	a 	limited 	number of 	situations 	for 	damage 	or 	loss:
(1) 	caused 	intentionally or 	as 	a 	result 	of 	the 	authorized
driver'S 	wilful 	or wanton misconduct; 	(2) 	arising out 	of 	the
authorized driver's 	operation of 	the 	vehicle 	while 	illegally
intoxicated or under 	the 	influence 	of 	any 	illegal 	drug: 	(3)
caused while 	the 	authorized driver 	is 	engaged 	in 	any 	illegal
speed contest 	or drag racing; 	(4) 	based on 	information 	supplied
by 	the 	renter with the 	intent 	to 	defraud 	the 	company; 	(5) 	arising
out 	of 	the 	use 	of 	the 	vehicle 	while 	committing or otherwise
engaged 	in 	a 	criminal 	act 	in which 	the 	use 	of 	the 	vehicle 	is
substantially related to 	the 	nature 	of 	the 	criminal 	activity: 	(6)
arising out 	of 	the 	use 	of 	the 	vehicle 	to 	carry persons 	or
property 	for 	hire; 	(7) 	arising out 	of 	the 	use 	of 	the 	vehicle
outside 	the 	United States 	or 	Canada 	and 	such 	use 	is 	not
authorized 	by the 	rental 	agreement. 	An 	authorized driver 	is
defined 	as 	"the person 	to whom 	the 	vehicle 	is 	rented or 	leased;
the 	spouse 	of 	such person 	if 	the 	spouse 	is 	a 	licensed driver 	and
satisfies 	the 	rental 	company's 	minimum 	age 	requirement; 	the
person's 	employer or 	a 	co-worker of 	the 	person 	if 	the 	employer or
co-worker 	is 	engaged 	in 	business 	activity with 	the 	person, 	is 	a
licensed driver, 	and 	satisfies 	the 	rental 	company's 	minimum age
requirements; 	any person who 	operates 	the 	vehicle 	during an
emergency 	situation; 	any person who 	is 	employed 	to 	park vehicles
at 	a 	commercial 	establishment; 	or 	any person who 	is 	expressly
listed by 	the 	rental 	company on 	the 	rental 	agreement 	and
authorized 	to 	operate 	the 	vehicle. 	House 	Bill 	565 	§§ 	10-1-731 	&
732.
7 	These 	options 	include 	refusing 	to 	purchase 	insurance 	and
assuming 	the 	full 	risk 	("going 	naked"), 	purchasihg COW, 	relying
on 	personal 	automobile 	liability 	insurance 	that 	extends 	to 	rented
cars, 	or using coverage 	provided by a 	third party such as 	a
credit 	card company, 	a 	travel 	club, 	or 	a 	professional
organization. 	Initially, 	credit 	card 	providers 	extended these
benefits 	to 	holders 	of 	their 	"prestige" 	cards, 	such as 	"gold,"
"platinum," 	and corporate 	cards. 	However, 	American Express 	has
extended 	rental 	car damage 	coverage 	to 	its 	basic 	"green" card.
The 	Record, 	Jan. 	IS, 	1989, 	at 	B2, 	col. 	2. 	Visa 	and Master
Charge, 	on 	the 	other 	hand, 	have 	not 	extended 	coverage 	to 	their
basic 	cardholders.

8
The 	Honorable 	Thomas 	F. 	Allgood 	-- 	Page 	5
to 	the 	rental 	companies. 8 A recent 	article 	in 	Business 	Week
regarding 	adoption of 	COW-bundling 	legislation 	in 	Illinois
appears 	to 	support 	this 	point:
As 	legislators 	in 	Florida 	and 	other 	states 	toil
over 	their 	bills, 	they will 	look closely 	at 	what
has 	happened 	in 	Illinois 	and New York, 	where 	the
COW 	is 	for 	the 	most 	part 	gone. 	In 	Illinois, 	Hertz
and 	Budget 	Rent 	a 	Car 	Corp. 	say 	that 	since 	the COW
was 	banned, 	they 	have 	raised their 	rates 	around
8%. 	Weekend 	rental 	rates 	in Hertz's 	Chicago
locations 	have 	gone 	up 	about 	12%. 	Hertz, 	Avis,
and 	Budget 	say 	they 	need 	higher 	prices 	to 	cover
the 	costs 	of 	insurance, 	capital 	improvements, 	and
interest payments. 9
According 	to 	the 	NAAG Guidelines, 	consumers 	lack 	adequate
information 	about COW 	and 	they 	encounter 	deceptive 	or high
pressure 	sales 	tactics 	designed 	to 	sell 	COW 	at 	the 	rental
counter. 10 	However, 	where 	consumers 	suffer 	from 	insufficient 	or
Many consumers 	who would have 	declined purchasing COW
would be 	injured because 	they would be 	required, 	in essence, 	to
pay 	for 	coverage 	twice: 	first 	for 	the 	coverage 	provided by 	their
own 	insurance, 	which 	reflects 	their own driving 	records, 	and 	also
for 	rental 	car company-provided 	insurance, 	which pools 	good 	and
bad 	drivers. 	Moreover, 	it 	is 	possible 	that 	in 	response 	to 	this
change 	some 	consumers 	would become 	less 	careful 	with 	rental
vehicles. 	If 	this 	were 	to 	happen, 	rental 	companies 	would
experience 	higher 	repair 	costs 	and 	an 	increase 	in 	the 	proportion
of 	vehicles 	under 	repair 	at 	any 	given 	time. 	Increased costs 	are
likely 	to 	be 	passed 	through 	to 	consumers 	as 	higher 	rates. 	For 	a
theoretical 	treatment 	of 	this 	issue, 	see 	Brown, 	Toward 	an
Economic 	Theory of 	Liability, 	2 	J. 	of 	Legal 	Stud. 	323 	(1973);
Diamond, 	Single 	Activity Accidents, 	3 J. 	of 	Legal 	Stud. 	107
(1974); 	and 	Shavell, 	Strict 	Liability vs. 	Negligence, 	9 	J. 	of
Legal 	Stud. 	1 	(1980).
9 	Business 	Week, 	May 	1, 	1989, 	p. 	97. 	Alamo 	has 	put 	a 	20%
rate 	increase 	into 	effect 	in 	Illinois. 	The 	N.Y. 	Times, 	April 	2,
1989, 	§ 	5 	at 	3.
10 	See 	generally NAAG Guideline 	3.1 	(c) 	and 	following
discussion. 	The Guidelines 	make 	three 	alternative 	legislative
proposals, 	two 	of 	which would 	irrevocably 	allocate most 	of 	the
risk 	of 	damage 	to 	or 	loss 	of 	a 	rental 	car 	to 	the 	rental 	car
company. 	The 	final 	legislative 	proposal 	would 	permit 	a 	rental
car company 	to 	hold 	consumers 	liable 	for 	damages 	resulting 	from
their 	negligence 	or 	intentional 	misconduct 	provided 	that 	the
(continued ... )

The 	Honorable 	Thomas 	F. 	Allgood 	Page 	6
confusing 	information, 	remedies 	requiring 	the 	disclosure 	of 	more
or 	better 	information 	often may 	resolve 	the 	problem without 	the
need 	for 	more 	intrusive 	regulatory 	action. 	In 	addition,
providing consumers 	information on COW may 	be 	more 	effective 	and
less 	costly 	than 	requiring 	that 	COW 	be 	purchased whether 	or 	not
consumers 	want 	it. 11
Accordingly, 	we 	believe 	that 	a 	legislature 	considering
whether 	to 	regulate 	the 	risks 	associated with damage 	to 	a 	rental
vehicle 	should 	first 	determine 	whether 	information now
conveniently 	available 	to 	consumers 	permits 	informed
decisionmaking with respect 	to 	cow. 	In 	the 	event 	that 	the 	Senate
determines 	that 	currently 	available 	information 	is 	inadequate, 	we
suggest 	that 	it 	then explore 	the 	efficacy of 	information
disclosure 	measures. 12 And, 	if 	consumers 	are 	encountering unfair
or 	deceptive 	marketing practices 	at 	some 	car 	rental 	counters, 	the
most 	effective 	remedy may be 	law enforcement 	action against 	the
offenders.
Prohibition of 	Security Requirements
Another 	provision of 	H.B. 	565 	states 	that 	"no 	security or
deposit 	for 	damages 	in 	any 	form 	may 	be 	requested 	or 	required by
the 	rental 	companl during 	the 	rental 	period or 	pending 	resolution
of 	any 	dispute."1 	Thus, 	for 	example, 	under 	the 	bill, 	a 	rental
car company would 	be 	prohibited 	from 	securing 	the 	rental 	of 	an
automobile 	worth 	thousands 	of 	dollars 	through 	a 	"hold" 	on 	a
consumer's 	credit 	card 	account, 	even 	if 	the 	consumer 	agreed 	and
the 	hold were 	limited 	in time 	and 	amount. 	If 	enacted, 	this
10( ... continued)
rental 	car company offered to 	sell 	to consumers 	a 	waiver 	at 	a
regulated price 	related 	to 	the 	company's 	loss 	experience. 	See
NAAG Guideline 	3.1.
11 	See 	Beales, 	Craswell 	& Salop, 	"The 	Efficient 	Regulation
of 	Consumer 	Information," 	24 	J. 	L. 	& Econ. 	491 	(1981).
12 	The 	authors 	of 	the 	NAAG Guidelines 	state 	that 	they do
"not 	believe 	that 	this 	[COW] 	information 	gap can be 	filled 	by
more 	disclosures 	. 	.. 	" 	Comment 	to 	NAAG Guideline
3.1 	(c). 	No 	explanation 	is 	offered 	for 	this 	belief. 	Neverthe-
less, 	if 	this 	conclusion 	is 	supported, 	traditional 	law
enforcement 	efforts 	might 	be 	adequate 	to 	prevent 	deception or
unfairness 	in 	the 	marketing of 	cow. 	These 	alternatives 	are 	worth
exploring 	in detail 	before 	concluding 	that 	mandated purchase 	of
cow 	is 	the 	proper 	solution 	to 	the 	problem of 	unwanted 	purchase 	of
cow.
13 S 	10-1-734.

The 	Honorable 	Thomas 	F. 	Allgood 	-- 	Page 	7
provision may 	increase 	the 	number 	of 	instances 	in which 	rental
companies 	are 	unable 	to 	obtain payment 	for 	damages 	for 	which 	the
renter 	is 	responsible. 	The 	costs 	associated 	with 	any 	increase 	in
unpaid 	charges 	would 	likely be 	reflected 	in 	rental 	rates,
effectively requiring 	honest 	and 	careful 	consumers 	to 	bear 	costs
incurred by 	less 	careful 	and 	scrupulous 	consumers. 14
The 	Substitute 	Bill
The 	substitute 	bill 	would 	prohibit 	car 	rental 	companies 	from
offering a 	COW 	as 	part 	of 	the 	rental 	agreement 	unless 	the
following 	disclosure 	appears 	on 	the 	agreement's 	face:
Notice: 	This 	contract 	offers, 	for 	an 	additional
charge, 	a 	collision damage 	waiver 	to 	cover your
responsibility 	for 	damage 	to 	the 	vehicle. 	Before
deciding whether 	to 	purchase 	the 	collision damage
waiver, 	you 	may wish 	to 	determine 	whether your 	own
vehicle 	insurance 	affords 	you 	coverage 	for 	damage 	to
the 	rental 	vehicle 	and 	the 	amount 	of 	the 	deductible
under your 	own 	insurance 	coverage. 	The 	purchase 	of
this 	collision damage 	waiver 	is 	not 	mandatory 	and may
be waived.
Because, 	in our view, 	mandating 	that 	rental 	companies
include 	COW coverage 	in every 	rental 	transaction 	restricts
consumer 	choice 	among COW 	and 	its 	alternatives, 	we 	believe 	the
disclosure 	approach of 	the 	substitute 	bill 	is 	more 	likely 	to
benefit 	consumers 	than 	the 	approach 	taken by H.B. 	565.
Before voting 	to 	enact 	the 	particular disclosure 	contained
in 	the 	substitute 	bill, 	however, 	(or 	any others 	that 	might 	be
considered), 	we 	suggest 	that 	the 	Senate weigh 	the 	benefits 	of 	any
information 	it may 	require 	to 	be 	disclosed against 	the 	costs 	that
14
as 	it 	may
financial
result 	in
Further, 	the 	proscription of 	security-taking, 	insofar
lead 	some 	drivers 	to 	conclude 	that 	they 	have 	a 	lesser
stake 	in avoiding 	all 	harm 	to 	rental 	vehicles, 	may
reduced 	care 	by some 	consumers.
Significantly, 	although 	the 	NAAG Task Force 	expressed
concern 	regarding certain 	rental 	companies' 	practices 	relating 	to
deposits, 	credit card holds, 	and 	the 	like, 	the 	NAAG Guidelines
would 	not 	bar 	these 	practices 	generally. 	The 	approach 	adopted 	in
the 	NAAG Guidelines, 	instead, 	tends 	to 	focus 	on 	ensuring 	adequate
disclosure 	of 	and consumer consent 	to 	deposits, 	credit 	card
account 	holds, 	and 	similar rental 	car company 	requirements. 	See,
~., 	NAAG 	Guideline 	3.4. 	This 	approach, 	although 	not 	cost-free,
entails 	fewer 	costs 	to 	consumers 	than would 	be 	imposed 	by 	the
H.B. 	565.

15
The 	Honorable 	Thomas 	F. 	Allgood 	-- 	Page 	8
mandatory 	disclosure 	of 	that 	information may 	impose 	on 	the
companies. 15 	The 	Senate may want 	to 	consider 	altering 	the
disclosure 	proposed by 	the 	substitute 	bill 	to 	mention 	that 	COW
coverage may 	also 	be 	provided 	by payment with 	certain 	credit
cards 	or membership 	in 	a 	club 	or 	professional 	organization. 	This
would 	reflect 	a 	more 	complete 	statement 	of 	alternatives 	to 	a 	COW
purchase. 	For 	example, 	the 	disclosure 	contained 	in 	the
substitute 	bill 	could be 	revised 	to 	read:
Notice: 	This 	contract 	offers, 	for 	an 	additional
charge, 	an 	opportunity to 	shift 	responsibility 	for
damage you 	may do 	to 	the 	vehicle 	from 	you 	to 	the
rental 	company 	(collision damage 	waiver). 	Before
purchasing 	this 	option, 	you 	may want 	to 	determine
whether your 	own vehicle 	insurance, 	credit 	card
company, 	or 	any 	travel 	or 	professional 	organization
to 	which you 	belong, 	affords 	you coverage 	for 	damage
to 	a 	rental 	vehicle 	and 	the 	amount 	of 	the 	deductible
applicable 	to 	such coverage. 	The 	purchase 	of 	this
option 	is 	not 	mandatory 	and may 	be 	waived.
Conclusion
The 	substitute 	bill 	takes 	what we 	regard 	as 	the 	preferred,
information disclosure 	approach 	to 	the COW 	issue. 	The 	"bundling"
option represented by H.B. 	565 	would 	restrict 	consumer choice
among COW alternatives 	and 	could 	result, 	on 	balance, 	in 	higher
rental 	prices. 	In addition, 	we 	suggest 	that 	you 	consider whether
it 	is 	advisable 	to 	shift 	to 	some 	consumers 	part 	of 	the 	losses
that 	may 	be 	caused by 	other 	consumers, 	as 	may 	result 	from 	the
bill's 	provisions 	relating 	to 	the 	holding of 	security.
The 	cost 	to 	the 	rental 	companies 	of 	disseminating 	any
required 	information will 	depend on 	the 	timing 	and medium
specified: 	point 	of 	purchase, 	time 	of 	reservation, 	or
advertising. 	Careful 	consideration 	of 	all 	relevant 	costs 	and
benefits 	will 	help avoid 	any 	tendency 	to 	force 	information 	about
the 	characteristics 	of 	COW 	into 	anyone 	medium. 	For example,
advertising 	is 	often not 	the 	most 	efficient 	or effective vehicle
for 	disclosing 	detailed 	and comprehensive 	information. 	One 	goal
of 	advertising 	in 	the 	rental 	car 	context 	is 	to 	impart 	general
information 	and 	to 	signal 	consumers 	to make 	further 	inquiry.
Subjecting car 	rental 	companies 	to 	detailed 	disclosure
requirements 	in 	advertisements 	may 	clutter 	those 	advertisements,
thereby making 	them 	a 	less 	effective medium. 	Additionally,
advertisers 	may 	respond 	to 	such 	disclosure 	requirements 	by 	simply
restricting 	the 	amount 	of 	advertising 	in which 	they engage, 	which
in 	turn will 	also 	reduce 	the 	amount 	of 	information 	they 	provide
to 	consumers.

The 	Honorable 	Thomas 	F. 	Allgood 	-- 	Page 	9
We 	hope 	that 	these 	comments 	will 	help you 	in your
determination of whether 	either 	bill 	is 	likely 	to 	achieve 	the
goal 	of 	protecting consumers 	and 	fostering 	a 	competitive
environment 	in 	the 	vehicle 	rental 	industry.
We 	appreciate 	this 	opportunity 	to 	present 	our views. 	If 	you
have 	any 	questions, 	please 	feel 	free 	to 	contact 	us 	again.
~erely,
,~ 	Q_''-~ ----
Paul 	K. 	Davis
Director
Atlanta Regional 	Office