Affordable Car Hire has issued a counterclaim for $15 million in damages against Avis Budget after the car hire giant began legal action in the US suing the broker for $2.2 million.
Documents lodged with the District Court of New Jersey allege Avis Budget “engaged in a three-year campaign to decimate” Affordable’s business.
Court documents claim Affordable’s success had “not pleased” Avis Budget’s UK unit because it dealt direct with the US. The UK broker also alleges its clients were “preyed on”.
Affordable alleges breach of confidentiality that saw it lose a lucrative deal with USAirtours after exclusive trade rates agreed with Avis Budget in the US were disclosed to the operator.
It also claims rates were increased without Affordable’s knowledge, and that resultant invoicing errors for 15,000 bookings over a 17-month period amounted to a breach of contract.
Avis Budget began legal action in January, accusing Affordable of failing to pay monthly invoices since August and alleging cash was being moved into subsidiaries to avoid payments.
Affordable denies all Avis Budget’s claims against it including two of breach of contract and one of unjust enrichment.
It claims an agreement in January 2015 for Affordable to use fluid retail rates as well as static wholesale rates was never properly implemented.
This caused invoicing discrepancies, with prices charged to Affordable rising by as much as 60%, the court document states.
Avis Budget was said to have blamed the problem on Affordable’s booking system and initially denied it had made any errors.
Continuing disparities into 2016 saw the broker lose a series of major partners and suffer declining sales with others.
Affordable claims Avis Budget admitted errors and offered compensation but continued to issue invoices “based on knowingly false rates”.
The situation was compounded last year after the UK Brexit referendum when the pound’s value slumped against the US dollar meaning Affordable’s costs increased further.
Avis Budget named Affordable’s husband and wife directors James Moore and Angela Day as defendants, claiming guarantees they signed made them personally liable.
Affordable argues these were superseded by a later UK wholesale agreement.
Day said: “Our lawyers tell us we have a strong constructive case.
“The continued support from our travel trade and other car rental partners has been truly amazing, I cannot begin to thank everyone enough.”
The legal case is expected to take at least 18 months, and Affordable has requested it be heard by a jury.
Avis said it does not comment on ongoing legal proceedings.
Day confirmed merger talks with Auto Europe are on hold while the legal case is ongoing.