Remember that heartwarming commercial that ran during the Super
Bowl where Bob Dole cannot buy lunch with a check at a diner in his
Kansas hometown but can with his Visa debit card? Well, if Dole had
tried to rent a car with that card, he would have gone nowhere.
The big car rental companies, including Hertz and Avis, have
recently stopped letting people rent cars using just a Visa Check
card or the similar Master Money card from Mastercard. The card
companies, and the banks that issue these cards -- known as debit
cards -- are furious. And so are some customers.
For years, the car rental companies have used possession of a
credit card as a crude way to weed out potentially risky renters,
just as they have usually ruled out renters under the age of 25.
But this test does not work with debit cards, because banks will
now give them to nearly any one with a bank account. Charges on
debit cards, which go under many names, come directly out of a
customer's checking account almost immediately rather than appearing
on a monthly credit card statement. And in contrast to using a
credit card, which the debit cards physically resemble, no loan is
involved in the transaction.
Debit cards "provide no qualification of creditworthiness," Lisa
LoManto, a Hertz spokeswoman, said. "Hertz is entitled to a certain
level of confidence because in car rental, unlike almost any other
business, the customer is given total control of a vehicle with an
approximate value of $20,000."
There are now more than 60 million Visa and Mastercard debit cards
in use. They differ from debit cards linked to automated teller
machine networks like NYCE or MAC because their use at a retailer
requires a signature rather than a personal identification number.
As these debit cards become increasingly popular, strains are
appearing among customers, merchants and banks. The problems range
from difficulties when the cards are lost or stolen to complaints
from merchants -- including the nation's biggest retailer, Wal-Mart -
- that the fees to accept these cards are too high. The new car
rental rules represent the first case in which debit cards cannot be
used in the same way as credit cards.
Jack T. Kelly, owner of Pied Piper Real Estate in Provincetown,
Mass., gave up all of his credit cards because he liked using his
Master Money card instead. But he found himself potentially stranded
when Hertz told him it would not accept his card to reserve a car
a coming vacation in Palm Springs, Calif.
"They say that this card is usable anywhere a Mastercard is, and
it certainly is not," he said in a telephone interview, fuming that
the $23,900 balance in his checking account did not get Hertz, a
of the Ford Motor Co., to change its policy. "There are a lot of
people like me who have done away with their credit cards and now
The rental car companies are requiring a customer with only a
debit card to follow the same procedures as someone who pays cash to
rent a car. That involves making an application several weeks in
advance and leaving a substantial deposit.
Consumer advocates, who have battled the rental companies over
accusations that they practice racial and age discrimination in
renting and charge unjustifiably high insurance rates, said the new
debit card rule might well be reasonable.
The card companies are split over how hard to defend their
longstanding policy that credit and debit cards should be treated