New law lets rental car companies charge security deposits

DES MOINES — A new state law will let rental car companies charge a security deposit for vehicle rentals in Iowa, starting in July. 

New York and Iowa have been the only two states to make it illegal for rental car companies to place a security deposit or temporary authorization on a credit card. It’s typically about $200, plus the cost of the rental.

Representative Gary Mohr is from Bettendorf, where one rental car company has its regional office.  “Just Enterprise rental cars in Iowa, 50 cars a month are not returned on the date that they’re paid through,” Mohr says, “so they have to charge extra and go after those people for those additional days that they keep the car.”

Mohr says on average, three or four rental cars get stolen in Iowa every month, plus 30 percent of ALL car rentals in Iowa have some sort of excess charges when they’re returned that were not initially authorized, like extra days or weeks, toll road charges or an empty gas tank. “They have the same problems hotels do when you check in and you drink alcohol out of the bar in your room or you eat snacks from the bar,” Mohr said during House debate this spring.” The credit card deposit simply covers some of those costs.”

The bill authorizing rental deposits for Iowa car rentals passed the House and Senate unanimously and was signed into law by Governor Reynolds last week.

Once a vehicle is returned to the rental car agency, it typically takes a couple of weeks to get a security deposit hold lifted from your credit car if there are no excess charges.