This is SOP for Avis in Manhattan. Makes no difference at all what the gauge reads - they don't even check it. If you have travelled less than 100 miles you will be charged for fuel even if you have filled it up. I finally figured this out after checking receipts a little more carefully (on a personal rental - the previous had been business).

Staff there were perfectly open about it - it's their "policy" and you have to go into the office, complain, show the gas station receipt and get refunded the gas charge.

This is on top of their $100+ per day rates (although that is just the standard in Manhattan)