A Hertz car rental office in Livonia, Michigan
A Hertz car rental office in Livonia, Michigan (Dwight Burdette)

The Hertz Corp. is being sued in federal court in Newark by U.S. customers who say they were hit with undisclosed currency conversion charges when renting vehicles abroad using credit cards.

The putative class action, Margulis v. The Hertz Corp., alleges that the 4-year-old practice violates New Jersey’s Consumer Fraud Act, which carries the potential of treble damages and attorney fee shifting if the plaintiffs prevail.

The suit also includes claims of breach of contract with customers, common law fraud and unjust enrichment. It seeks compensatory and statutory damages as well as attorney fees and costs.

According to the complaint, Hertz quotes customers vehicle-rental rates that do not include the extra fee, which comes later in the form of an exchange rate higher than that charged by most credit-card companies.

Hertz unilaterally imposes a 4.5 percent fee for the currency conversion service, whereas credit card companies typically charge from 3 percent down to nothing, the complaint says.

What’s more, Hertz allegedly states falsely that the customer has chosen to have the service performed and that the company’s method is cheaper than conversion by a credit-card issuer.

Named plaintiff Daniel Margulis says he was hit with the 4.5 percent conversion rate twice in 2013 while renting cars in Italy and in Wales, whereas his own credit card company does not charge for currency conversion. When he protested, Hertz told him he opted for the service and authorized the billing.

Plaintiff lawyer Jason Solotaroff, of Giskan Solotaroff Anderson & Stewart in New York, says he believes the nationwide putative class to number in the tens of thousands.

He says that the New Jersey Consumer Fraud Act applies because Hertz’s headquarters is in this state and the company’s policies are formed here.

Paul DePetris of Medford, a consumer law authority, says federal banking laws commonly are held to preempt state law claims. In addition, a judge might be reluctant to apply the Consumer Fraud Act to such a wide class of potential claimants, since the allegedly fraudulent conduct could have occurred out of state or out of country, he says.

Application of the New Jersey statute can be defeated by a finding that each state has the greatest interest in having its own law applied, and claimants will have to carefully address how common questions of law or fact predominate amid multiple relevant state laws, says DePetris, author of New Jersey Consumer Fraud Act & Forms, published by the Law Journal.

Jonathan Rudnick, a consumer law attorney with Carton & Rudnick in Tinton Falls, agrees that variations in consumer laws among the states form a significant hurdle to class certification for the case. He also thinks class certification could be defeated on typicality and commonality grounds if the circumstances Margulis describes, surrounding signing of documents and representations made by Hertz employees, are not borne out by other customers.

Solotaroff acknowledges that case law has gone both ways on whether the statute can apply to a nationwide class and says it’s “conceivable it could apply only to New Jersey class members.” But the suit’s other counts can be applied nationwide, he says.

He says he’s not aware of federal law that would preempt the Consumer Fraud Act claims but adds the question is “hard to answer in the abstract.”

Hertz spokeswoman Paula Rivera says the company does not comment on pending lawsuits.

Solotaroff’s co-counsel is Oren Giskan of his firm. Local plaintiff counsel is James Cecchi and Lindsey Taylor of Carella, Byrne, Cecchi, Olstein, Brody & Agnello in Roseland.

Contact the reporter at ctoutant@alm.com.