OAKLAND (CBS SF) – Alameda County District Attorney Nancy O’Malley and other prosecutors announced Tuesday that two rental car companies have settled a suit that alleged that they overcharged customers for repairs to damaged rental cars.

O’Malley said E-Z Rent-a-Car and Advantage OpCo LLC, which acquired E-Z in 2015, have agreed to pay $3.3 million in civil penalties, $1 million in restitution and $300,000 for investigative costs to settle the consumer protection lawsuit, which was filed in Alameda County Superior Court.

E-Z and Advantage are in the business of renting automobiles to the public and operate at many locations in California, including airports, O’Malley said.

She said customers sometimes have accidents or cause other damage to the cars they rent and car rental companies, in turn, may be able to work out discounted rates at auto body shops used to repair their cars.

California laws prohibit a rental car company from making a claim against the renter that is more than the actual cost of repair, including any discounts and price reductions the company receives, which means that rental companies must pass along the discounts they receive.

But the lawsuit alleged that E-Z and Advantage violated those laws and other laws, claiming that they frequently billed renters based on third-party repair estimates that were higher than the actual cost of repair and failed to pass along the discounts they received.

“We all know how frustrating it is to accidentally damage a rental car. If you happen to do so, you should not be charged an excessive amount to repair the car or need to worry about whether the cost of repair work is being used to generate revenue,” O’Malley said in a statement.

California Attorney General Xavier Becerra, whose office also participated in the suit, said the companies’ practices “caused real economic harm to California consumers, who naturally assumed that the repair bills they received were accurate.”

The complaint alleges that the overcharging practices started with E-Z and were incorporated into Advantage following the merger between the two companies in June 2015.

O’Malley said the companies took steps to change their practices and come into compliance with California law after her office contacted them.

About half of the $1 million in restitution will be distributed by the rental car companies as direct refunds and the rest will be distributed by prosecutors as set forth in the settlement, she said.

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