Introducing: “Tuesdays at 2”

Every Tuesday at 2pm (EST), you can count on some useful tips from various industry experts, brought to you by the IEDA. We hope that all of our members will find value in a variety of topics to be covered throughout the year. Feel free to reach out to Dave Gordon, Executive Director, with topics of interest for upcoming blasts.

Maximizing Rental Revenues Legally

(Navigating the Regulatory Maze) By James Waite, Esq. 

Question from Dealer: I understand that it is legal to charge customers for a number of fees associated with equipment rentals, but that it also ILLEGAL to charge others. What can I do to make certain I’m charging customers fairly, in accordance with industry practice, and most importantly, legally? James Waite’s Answers: That’s correct.  There are a great many costs and fees that can, and in many cases should, be charged through to equipment lessees.  Consideration should, of course, also be given to issues such as customer perception and the local competitive environment, and legal compliance is critical. With that in mind, following is a list of some of the more common pass-through and/or additional charges and fees that can be charged to lessees in many cases, but that are commonly overlooked. I am also including some notes regarding enforceability and legality in order to provide some perspective regarding how such charges are dealt with in different areas, as laws can vary considerably from jurisdiction to jurisdiction:

  1. Delivery / Transportation:  This is usually stated as a simple per-mile charge, though some of the larger rental companies have created more elaborate models involving variable components for fuel costs, and fixed components for standing costs, running costs, depreciation, Tier 4 / Stage IV compliance, etc.  For most dealers, however, a simple “per-loaded-mile” charge is usually best.
  2. Credit Card Surcharges:  Surcharges of up to 4% of the transaction amount are legal in 46 states, but are currently, at least technically, Illegal in 4 states (Kansas, Colorado, Massachusetts and Connecticut) and Puerto Rico – I say “technically” because they are subject to a number of exceptions, and because so many merchants in the states that prohibit them appear to be charging them anyway (Notably, surcharge prohibitions have recently been repealed or overturned in New York, California, Texas, Florida, Maine and Oklahoma)/
  3. Environmental Fees:  For management and disposal of potentially hazardous materials such as fuel, oil, greases, solvents and batteries and their waste by-products.  Note:  These fees are not typically statutorily-mandated. Instead, larger rental companies began charging these a number of years ago in an effort to, directly or indirectly, offset their additional costs associated with environmental compliance (cleaning, wash racks, disposal, etc.).  They have been the subject of some debate, particularly where they haven’t been tied to any specific environmental costs or programs. Nonetheless, they continue to proliferate.  Expect them to continue to do so.